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Tuesday 24 February 2009

José Carlos Vaz e Dias

Coca-Cola Beats the Crisis and Announces a New Set of Investment in Brazil: A Trademark Case to Study

Today, Tuesday, February 24th, is officially the last day of Carnival in Brazil!!! The streets of Rio de Janeiro, Salvador, Recife and other main Brazilian cities are crowded with people celebrating and taking part in the festivities. Samba, Axé and Frevo music are played all over. It is hard to keep quiet with so much energy in the air. Carnival is definitely a popular party and a business too worth participating in. Most importantly, Carnival is a period of high temperature in Brazil reaching at the moment 410C (1050F). The beverage manufacturers, especially soft drinks and beer industries, celebrate this moment, since sales grow as fast as the temperature rises.

Nevertheless, the already set investments for this frightening year of 2009 by such manufacturers have been shy, despite the competitiveness of beverage industry. Nothing seems wrong with this strategy as the investment slowdown follows the initial effects of the world economic situation on the Brazilian business players. According to recent statistic data published by IBGE - official government agency for statistic data - unemployment raised to reach 8.2% last January and the balance of payments were in deficit up to US$ 524 million. This January has been called “A Cruel Month”. It is expected that, as a general rule, consumers will be less inclined to spend.

Nevertheless, there is a group of companies that, ignoring the pessimist projections, has recently announced high investments for Brazil in 2009. These companies have one thing in common: targeting on the promotion of specific trademarks and consumers. An example worth mentioning is the announced investment by COCA-COLA in Brazil for this 2009, which will reach R$ 1.75 billion (approximately US$ 800 million). A considerable amount will be focused on marketing of its main brand COCA-COLA to class “C” consumers. This strategy is based on the fact that the population included in this class has been, since 1994, increasingly consolidating its position as a representative consumer market that had been previously, either ignored or not mainly targeted. Further to that, the company will launch a new version of KUAT, its Guarana based soft drink: KUAT EKO. Guarana comes from an Amazonian fruit extract with this same name and it is a very popular soft drink in Brazil. The KUAT EKO will use the so called “green appeal” to gain both the teenagers and the consumers that value environmental friendly products.

The main objective of the local subsidiary is to place Brazil as the second most important market for COCA-COLA products, ahead of Mexico e behind the United States, as the Group wants to keep the increasing pace observed in the past years.

The interest of COCA-COLA Group in the Brazilian market can be better distinguished by observing its actions involving acquisitions of local brands, such as the well known: MATTE LEÃO. This trademark identifies tea based products prepared with a tea species harvested in the south of Brazil. COCA-COLA has invested heavily in the promotion of the MATTE LEÃO ice tea to beat the Brazilian heat and thirst. To better accomplish its purpose, COCA-COLA is about to inaugurate a new industrial facility in the city of Curitiba, which is intended to increase the production capacity of MATTE LEÃO up to 40%. COCA-COLA will soon launch a new version of MATTE LEÃO ice tea to be sold in cans, since they have been traditionally sold in plastic cups.

COCA-COLA is easily recognized as a huge competitor to play against in Brazil (as it is worldwide) This company knows the price of being a leader in a competitive market and, therefore, has carefully chosen its weapons to lead its success in Brazil: marketing creativity, consistency at the Brazilian Patent and Trademark Office and increased demands in law courts to prevent free riders, look alikes, ambush marketing and all sort of unfair competition practices.

José Carlos Vaz e Dias

José Carlos Vaz e Dias