At one time Pepsi was competing head to head with Coca Cola. This picture has changed in recent years and the entry into the market of Cola Turka has been to Pepsi’s disadvantage. Its market share has fallen from around 50 percent to 20 percent. In order to change this situation, the Pepsi Bottling Group has appointed Jim Zaza as the head of its operations in Turkey. Zaza has initiated a programme of change and is quite candid about the mistakes that have been made. “Our long-term target is to reach 50 percent again,” he says.
To date, Pepsi has had mixed fortunes in Turkey. Its market share has fallen from 50 percent ten years ago to 20 percent. Now it is preparing to go on the offensive and expand. This operation has been entrusted to Jim Zaza, an executive who knows the Turkish market very well. Zaza is a very outspoken executive who is candid enough to admit that Pepsi lost the connection that it had formed over time with the consumer. He believes that Pepsi found itself in this position as the result of being a global company which neglected Turkey. Its operations in Turkey were damaged by focusing too much on different markets.
As a first step, Zaza has established a team of top executives who can be described as ‘the best of the best’ and ‘agents of change’. He says that the new team, which he captains and in which he has complete confidence, will restore the good old days at Pepsi. The second part of the plan is to develop a distribution network. We spoke with Jim Zaza about the problems experienced by Pepsi, the new team he has formed and their plans for the future.
What is Pepsi’s position on the market?
As a firm, our total size is US$425 million. At the moment we currently account for 20 percent of the market.
It is said that Pepsi has been most damaged by new entries into the market. Do you think this is true?
At the moment Coca Cola’s position on the market is that of the image brand. Cola Turka is known as a brand because of Ülker. Pepsi is squeezed between the two of them. Again Pepsi, even though it has been neglected for years, has begun to move towards becoming a brand. For this reason, Ülker has been applying a lot of pressure on the market in terms of price. In fact, Pepsi is an image brand. We are trying to add value in terms of our creativity, image and price. I think that a price-focused approach is the easiest method that can be applied on the market. Of course new entrants will affect Pepsi more than Coca Cola. But again we are not the only ones affected by this.
Remember, when Ülker entered the market, Coca Cola’s market share had fallen from 63 percent to 57 percent. At the moment they have regained their former market share and, to put it candidly, they have done well. But, once again, it is Ülker which has meant that over time the players on the market have focused on innovation and creativity.
Has Pepsi’s distribution network weakened over time?
Yes. Over time our distribution network did deteriorate. My target is to develop this network. I can say that, at the moment, we are doing very well in this regard. At the moment we have coverage in 70 percent of Turkey.
What about your rivals in terms of distribution?
Coca Cola has coverage of 85 percent. That means that its products reach 85 percent of all of the sales outlets such as the supermarkets, cornerstores, cafes and restaurants. Ülker has coverage of 80 percent. Our coverage has fallen to 59 percent. At the moment we are trying to raise this to 70 percent. Personally, I think that this figure must be at least 80 percent of the distribution network. We are also working to realize this target.