The soft-drink battleground has now turned toward new overseas markets. While once the United States, Australia, Japan, and Western Europe were the dominant soft-drink markets, the growth has slowed down dramatically, but they are still important markets for Coca-Cola and Pepsi. However, Eastern Europe, Mexico, China, Saudi Arabia, and India have become the new "hot spots." Both Coca-Cola and Pepsi are forming joint bottling ventures in these nations and in other areas where they see growth potential. As we have seen, international marketing can be very complex. Many issues have to be resolved before a company can even consider entering uncharted foreign waters. This becomes very evident as one begins to study the international cola wars. The domestic cola war between Coca-Cola and Pepsi is still raging. However, the two soft-drink giants also recognize that opportunities for growth in many of the mature markets have slowed. Both Coca-Cola, which sold 10 billion cases of soft-drinks in 1992, and Pepsi now find themselves asking, "Where will sales of the next 10 billion cases come from?" The answer lies in the developing world, where income levels and appet

Traditionally, Pepsi held the lead in Hungary with a strategy of putting the infrastructure in place, upgrading it, and then marketing to the consumer. Pepsi plans to invest $115 million which includes acquiring FAU, an Eastern European bottler. Because of this, Pepsi will have greater control over distribution and quality. In May of 1993, Pepsi introduced Pepsi Light and had outdoor and television advertising blitzes. Coca Cola, on the other hand, introduced Coke Light in the beginning of 1993, but did not mention its product name during the first few weeks of promotional advertising. Coca-Cola's strategy was to advertise internationally for Central Europe. Hungarians saw the 'Always Coca-Cola' commercials, along with the rest of the world, in April 1993. In 1992, Coca-Cola lead Pepsi. In addition, Coca-Cola participates in counter trade agreements with Hungary. Coca-Cola trades its concentrate for glass bottles which are exported and then sold to bottlers.

The new battleground for the cola wars is in the developing markets of Eastern Europe (Russia, Romania, The Czech Republic, Hungary, and Poland), Mexico, China, Saudi Arabia, and India. With Coca-Cola's and Pepsi's investments in these countries, not only will they increase their sales worldwide, but they will also help to build up these economies. These long-term commitments by both companies will raise the level of competition and efficiency, and at the same time, bring value to the distribution and production systems of these countries. Many issues need to be overcome before a company can begin to produce its goods in a foreign country. These issues include political, social, economic, operational, and environmental topics which must be addressed. When companies like Coca-Cola and Pepsi effectively analyze and solve these problems to everyone's liking, new foreign markets can translate into lucrative opportunities in the long run.

The Mexican government recently freed the Mexican soft drink market from nearly 40 years of price controls in return for a commitment from bottling companies to invest nearly $4.5 billion and create nearly 55,000 jobs over the next 7 years. Naturally, Mexico has become another battleground in the international cola wars. In Mexico, Coca-Cola and Pepsi command 50% and 21% of the market respectively. The cola war is especially hot here because the per capita consumption of Coca-Cola and Pepsi exceeds that of the United States (Murphy, 6). Mexico is the only soft-drink market in the world that can make this claim. The face off in Mexico is between Gemex, the largest Pepsi bottler outside the United States, and Femsa, the beer and soft drink company that owns the largest Coca-Cola franchise in the world. Femsa, however, may be at a disadvantage. Despite being part of the conglomerate Grupo Vista, Femsa lacks financial punch because it plays only a small part in the conglomerate's overall interests. The challenge in Mexico is to win market share through distribution efficiency (Murphy, 6). With this in mind, each company is undertaking strategic efforts designed to bolster their shares of the Mexican market. Pepsi is moving in on the Coke-dominated Yucatan peninsula while Femsa, the Coca-Cola franchisee, is planning to invest $600 million more for 3 new Coca-Cola plants next door to Gemex's Mexico City facilities. The parent companies have joined the battles as well. Coca-Cola has made a $3 billion long-term commitment to the Mexican market, and Pepsi has countered with a $750 million investment of its own.

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Approximate Word count = 3487
Approximate Pages = 14 (250 words per page double spaced)