The consumer wins as Varun battles Delta for dominance in the Zimbabwean soft drinks market

On a hot summer day in Zimbabwe, a consumer decides to cool down with a beverage. With a dollar in hand, the consumer’s options are multiple as they can either choose between a Pepsi which goes for 50 cents or a Coca-Cola drink which only until recently goes for the same price. The recent competition in Zimbabwe’s carbonated drinks sector is a tale of foreign investment, aggressive pricing, foreign currency shortages, and the heavily commercial sentimental period of Zimbabwean Christmas. 

The main actors at play are the perennial market share dominators Delta which distributes brands such as Sprite, Spar Letta, and Fanta against ambitious Indian-owned company Varun which distributes Pepsi, Mountain Dew and Mirinda. This is the story of the ongoing cold beverages war between Varun and Coca-Cola to gain market share in Zimbabwe. 

The cultural relevance of Coca-Cola in Zimbabwe

Since the 1960’s the brand Coca-Cola has been engraved into the minds of consumers as the standard for soft drinks. So much so that it has become the generic name for soft drinks of any nature with any carbonated drink being termed “koko” (coke) by locals. This speaks of a history of brand dominance in the market as Coca-Cola historically has managed to capture both rural and urban market share. Zimbabwean’s affinity with Coca-Cola over the years has matured into the brand becoming a staple at Christmas time with the beverage heavily in demand during the festive season. During the 2019 festive period, however, the brand would go missing on shelves due to foreign currency shortages which affected production with the shortages overlapping into 2020. According to The Exchange Africa, in 2019 Coca-Cola’s market share dropped to as low as 35% in the carbonated drinks market. Coca-Cola’s products were 100% more expensive than Varun’s as the beverages were priced at $1 and 50 cents respectively. With Varun’s entry into the market in 2018 reliant on strategies of competitive pricing and continuous expansion into rural areas, there were early signs of a rivalry that would go on between the two companies for market.

The Rise of Varun in Zimbabwe

Indian-owned RJ Corp’s subsidiary Varun Pepsi Bottler entered the Zimbabwean market in 2018 establishing a greenfield production. Upon entry, Varun pledged to build US$23 million plant (and already had a $40 million plant that had 600k bottles/day capacity) leading to the company acquiring Special Economic Zone status which translated to priority access to foreign currency on the central bank auction system, a 5-year tax break and the privilege to import raw materials and equipment duty free. With a long-term vision of dominating Zimbabwe's carbonated drinks market, Varun commissioned a $30 million plant and invested a further $150 million in its first 5 years.