PepsiCo appoints Naushud Bhamgara as head of its Kenyan operation, replacing Butch Moldenhauer; move comes as company tries to win market share from Coca-Cola, which has dominated Kenyan market for decades

Nevin Barich

KENYA , January 20, 2014 (Business Daily) – Global soft drinks giant PepsiCo has replaced its Kenyan chief as it tries to win market share from rival Coca- Cola, which has dominated the Kenyan market for decades.

The firm, which is associated with Lebanese businessman Faysal El Khalil, has named Naushud Bhamgara to steer the Kenyan operation.

He replaced Butch Moldenhauer, who last January helped PepsiCo establish a Sh2.4 billion local production plant through Seven Up Bottling Company (SBC) Kenya Ltd, a franchise bottler and distributor of Pepsi products.

The executive shift comes as Coca-Cola used price cuts and multi-billion- shilling investments in its seven local franchises to defend and grow market share.

"I left SBC late last year. I am now with Chandaria Industries," Mr Moldenhauer said without giving details.

Mr Bhamgara has been in SBC Nigeria for more than a decade.

Senior executives at the firm reckon that Mr El Khalil is not at ease with performance of the Seven-Up Bottling Company in Kenya, where he had hoped to steal market share from Coca- Cola.

SBC has operations in Nigeria, Tanzania and Ghana, with headquarters in Beirut, Lebanon. It serves PepsiCo products like Pepsi Light, Mirinda, Mountain Dew, 7 UP and Everess in the Kenyan market.

Mr Moldenhauer refused to divulge the position he is holding at Chandaria Industries, a family owned business that deals in paper products like tissues with its flagship product being Velvex and Toilex.

"I am not going to comment on that," said Mr Moldenhauer.

PepsiCo made its re-entry into Kenya in late 2010 and has been relying on imports to serve the local market. But with importation being a costly affair, PepsiCo decided to set up base in Nairobi to produce its soft drink brands.

READ: Pepsi switches on Nairobi soft drinks production plant

The move ushered in a vicious battle for control of the market as PepsiCo sought to cut the dominance of Coca- Cola. PepsiCo, for instance, offered a larger product of 350ml bottle that is retailing at the same price as Coca-Cola's 300ml bottle.

The management changes at SBC Kenya come at a period when rising demand reversed the drop in soda production witnessed in 2012.

Kenya National Bureau of Statistics (KNBS) data shows that production of soft drinks increased 20.1 per cent to 315,411 metric tonnes in the nine months to September.

Coca-Cola linked the 2012 drop to consumer shift to fresh fruit juices and high inflation in the first half of 2012, which reduced disposable incomes.

READ: Coca-Cola hit as soda sales fall for first time in four years

Coca-Cola cut its prices from Sh25 for the 300ml soda to Sh23 in June 2012 to raise consumption when inflation, which ranged between 18 per cent and 10 per cent, reduced the consumers appeal for non-basic items like soft drinks.

Ready-to-drink juice makers like Kevian Kenya, which sells the Pick N Peel brand, and Del Monte among other players have munched soda's market share.

Coca-Cola is seeking a piece of this market with its Minute Maid fruit juice brand.

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