Reference no: EM131288528

Mecca Cola: marketing of a ‘Muslim' cola to the European market
Until now the cola war has mainly been going on in North America and Europe. But in January 2003 a French Tunisian opened up a second front - by producing a carbonated drink named Mecca Cola, a new soft drink designed to cash in on anti-US sentiment, mainly in European markets. The new drink will be marketed in 1.5 litre bottles and 330ml cans. Mecca Cola - a political choice The new brand, which has a striking resemblance to Coca-Cola, is specifically intended to make a political statement. Its French label and advertising slogan translates as ‘No more drinking stupid - drink with commitment'. The creator of Mecca Cola, prominent French political activist Taoufiq Mathlouthi, claims the drink is not competition for Coke and that his campaign is not anti-American.

Instead, he says, each bottle sold is a protest against the Bush administration's foreign policy. Mathlouthi promises that 10 per cent of profits will go to Palestinian causes, humanitarian aid for Palestinian children, education and preserving their heritage. Mathlouthi hopes to make Mecca Cola the soft drink of choice for anti-globalists everywhere and thus push out that icon of US capitalism, Coca-Cola.

Mr Masood Shadjareh, Chairman of the Londonbased Islamic Human Rights Commission, which is backing calls to shun US brands, predicted huge interest in the new cola. He told the Guardian: The Muslim community is targeting Coca-Cola because people feel that the only thing they can do is hit America economically. It is not only an issue for someone like me who is an activist. I bought some fizzy drinks and my children, who are ten and twelve, found out they were products of Coca-Cola and refused to drink them. I told them I'd already paid for them, but my daughter said ‘Look Daddy, it just won't go down'.

Meanwhile, some religious fundamentalists object to the use of the name of the Muslim holy city on a soft drink. There is no indication Mecca Cola or any other boycott product will do long-term harm to US multinationals, Coca-Cola and Pepsi Cola, but some US manufacturers admit the boycott is having an impact on sales. And no one denies how easy it is for consumers to express their politics by simply switching brands. Coca-Cola's comment was: ‘Ultimately it is the consumer who will make the decision'. CocaCola insists that it is ‘not affiliated with any religion or ethnic group' and does not engage in politics. Zam Zam Cola It is not the first time Coca-Cola has been the target of a ‘buy Muslim' challenge.

Zam Zam Cola, an Iranian drink named after a holy spring in Mecca, has won an enthusiastic reception in Saudi Arabia and Bahrain. US companies such as McDonald's, Starbucks, Nike and the two cola giants admit the general ‘buy Muslim' campaign is wounding them. Sales of CocaCola have dropped between 20 and 40 per cent in some countries. In Morocco, a government official estimates sales of Pepsi and Coca-Cola could fall by half in the north, which is a stronghold of Islamic groups.

In the United Arab Emirates, sales of the local Star Cola are up by 40 per cent over the past three months. Zam Zam, which also produces non-alcoholic ‘Islamic beer', has a long pedigree in Iran, where it was founded in 1954 and today has 47 per cent of the domestic market. For many years it was the Iranian partner of Pepsi Cola until their contract was ended after the 1979 revolution. A Saudi firm owned by one of the kingdom's princes, Turki Abdallah al-Faisal signed an agreement with the Zam Zam Group in January 2003, giving the Saudi company exclusive distribution rights in Saudi Arabia, Egypt and a number of other Arab countries.

Zam Zam was taken over by the Foundation of the Dispossessed, a powerful state charity run by clerics, and today it employs more than 7,000 people in its 17 factories in Iran. It is now planning to build factories in the Persian Gulf. Its cola is already exported to Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, Oman, Kuwait, Afghanistan and Iraq, and the company says it will soon ship its drinks to Lebanon, Syria and Denmark - its first European client. The marketing and internationalization of Mecca Cola Other firms in the Middle East have tried creating different cola drinks, but none has turned its drink into a political weapon.

The first businesses to sell Mecca Cola were what Mr Mathlouthi described as ‘small ethnic shops in Muslim areas'. Now the drink, originally targeted at France's Muslim community, can be found on the shelves of large cash and carry supermarkets in France, Belgium and Germany. The company behind Mecca Cola says the United Kingdom is also a huge market and it already has orders to send about 2 million bottles a month to Britain. While Coca-Cola's revenues in the Middle East represent less than 2 per cent of its global business, it is galling for Coke to lag behind Pepsi in the region. Britain's 1.8 million Muslims have only recently begun to discover a collective voice and it remains unclear whether a boycott or a ‘buy Muslim' campaign will occur.

In Muslim areas of Paris the soft drink is sold for £1.20 per 1.5-litre bottle, approximately the same as its US rival Coke. Developments 2003-2006 Riding on anti-Western anger over issues like Palestine, Iraq, Iran and Afghanistan and also the Danish Muhammed cartoons (January-February 2006), Mecca Cola achieved impressive sales in several Muslim countries. Pakistan, Algeria, Yemen, Malaysia and France are Mecca Cola's top markets. In 2006 the demand for Mecca Cola is estimated to be 1.5 million cans per month in the Gulf region alone.

In 2006 Mecca Cola (with its HQ in the United Arab Emirates) announced it would now launch coffee shops under the brand name Mecca Café to provide an alternative to established Western outlets in Muslim countries. The first coffee shop was ready to be opened at Dubai Healthcare City and would be followed by coffee shops in Kuala Lumpur in Malaysia and Pakistan's Islamabad. Mecca Cola planned to have at least one coffee shop in every Muslim capital. After that it will discuss franchising arrangements with partners for expanding the chain. The company had also launched a new energy drink called ‘Mecca Power', based purely on halal ingredients (Husain, 2006).

Latest developments The soft drink was introduced in 2003 with much hype targeting Arab and Muslim customers around the world, but around 2009 it silently disappeared from shelves in the UAE and Saudi Arabia. While the brand had to be withdrawn from Saudi Arabia because the country did not allow the company to use the name ‘Mecca' for its private business, the reason for its disappearance from the UAE market (where the HQ are located) remains unclear. At the beginning of 2010 the future for Mecca Cola seems unclear.

QUESTIONS

1. What were the main reasons for the success of Mecca Cola around 2005?

2. What are the criteria for the successful implementation of Mecca Cola's international marketing strategies?

3. How should Taoufiq Mathlouthi prepare his sales force culturally for selling Mecca Cola to European supermarket chains?

4. Can Taoufiq Mathlouthi repeat the international Mecca Cola success with the new coffee shop chain and new energy drink Mecca Power?