Pepsi goes smaller to push sales, follows Wisynco
Pepsi-Cola Jamaica Bottling Company is hoping to increase sales of its flavoured and carbonated lines through the introduction of smaller drinks aimed primarily at students, and households challenged by low disposable income.
Two months ago, the beverage company launched its new 12-ounce line of Tropicana juice drinks, called 'Tropics', to a better reception than Pepsi Jamaica itself had anticipated, according to Trade Marketing Manager Ricardo Skyers.
He declined, however, to divulge actual volumes or sales realised since the new product was launched at an introductory price of $60.
Skyers said Pepsi Jamaica's the new marketing ploy aims to grow market share through more economically priced servings.
It's an idea that occurred to Jamaican rival Wisynco Group from two to three years ago, when that company sought to grow business by going small.
Wisynco has made smaller sizes of "basically the entire portfolio", said Chairman William Mahfood. Wisynco's lines includes Bigga, Wata, CranWata, Coke, Sprite, Minute Maid, and Hawaiian Punch, among others, which now come in smaller containers.
Going smaller has led to generally more volume sales but not necessarily greater margins, Mahfood told Sunday Business.
"We have seen increased sales because of the introduction of the smaller size (and) increased revenues, but not significantly higher profits, because the cost of the smaller package is more money," said Mahfood.
Various vendors in downtown Kingston say they no longer sell the larger 20-ounce Tropicana, because their customers cannot afford it. That situation worsened in the Christmas period when roadside sellers spiked the price from $100 to $150.
Skyers did not speak to that product's performance but said Pepsi Jamaica had otherwise detected no decline in sales for the even larger two-litre product. He also indicated that the company was aware of the challenges regarding affordability, for which the response was the launch of the 12-ounce drink.
A two-litre Topicana retails for $250, while the 20-ounce remains at $100.
"It's all in response to the market conditions and needs. We have seen where the market is asking for a small or lunchbox size and we are thinking about the kids," he said.
"If we want to gain more market share we have to answer what the consumer wants. If a man only has $100 in his pocket and wants a juice and a biscuit, he should be able to get a juice for $60 and still hold a cheese trix," Skyers reasoned.
The same holds true for Mahfood, who noted the erosion of consumer spend due to inflation and depreciation of the dollar.
"What you find is that with inflation, three, four years ago a consumer could buy maybe two patties and a drink for $250. The price of the patty now is $130/$140, so the price of that meal is now $300. What they are doing is finding ways to stretch their purchasing power a little further," he said.
Pepsi Jamaica has also reduced the size of its other core products, such as Pepsi Bubbla, Ting, Ginger Beer and the D&G flavoured line.
"The size is appropriate. There are competitors or other brands out there with smaller packaging - so there is a need," Skyers said, adding that Tropicana is the number one juice drink by market share.
"The 12-ounce is primarily geared towards the young children going to school because persons are looking for a healthier beverage and are moving away from carbonated beverages. It doesn't have the amount of sugar as per, say, a soda and is in line with that market," Skyers said.