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Kola Real Ajegroup Case Study

1471 words - 6 pages

The Ajegroup has been very successful since it was founded in 1988 by Eduardo and Mirtha Ananos by taking a $30,000US second mortgage on their home. The company has grown into a multinational enterprise currently represented in 20 countries worldwide with its holding company in Spain. In order to strengthen bonds within all its market sectors, the company has gained ownership of 22 factories and 120 fulfillment centers employing over 20,000 people. Its infrastructure reaches out to more than 1,000,000 retail outlets worldwide enabling Ajegroup to sell over 3 billion liters of beverages including beer, sports drinks, energetic and isotonic drinks, water, various juices and tea (1).
According ...view middle of the document...

6. Its distribution system. Ajegroup distributed its products via small, privately-owned trucking companies, which in turn, was responsible for distributing Kola Real via their own means. Because Ajegroup did not have to invest in its own distribution system, this “subcontracting” distribution contributed to fast sales growth. In fact, by 2006, Ajegroup had nearly 180,000 points of sale in Peru (2).
These were several key success factors that led to fast growth and profitability in Peru alone. What about markets outside of Peru? In 1999 when Ajegroup decided to enter foreign markets so that its success (or failure) would not solely be dependent upon Peru, it decided to do business in countries that had a high concentration of low socioeconomic population and where there was low soft drink consumption. These countries included Venezuela, Ecuador, Mexico and Costa Rica. Ajegroup utilized its same “blueprint for success”—sell more for less.
Its key success factors in Venezuela included the introduction of Kola Real in non-returnable plastic bottles. Up to this point (1999), soft drinks had always been packaged in glass bottles. With the plastic bottling strategy, AJEGROUP gained a 12% market share in Venezuela—an equivalence of 30% market size in Peru. Further, AJEGROUP captured 8% market share in Ecuador; by 2005 gained 8% market share in Mexico, equivalent to 70% of the Peruvian market; and penetrated the Central American soft drink market by investing $10-15 million US to build a plant in Costa Rica. The plant was able to produce over 1,000,000 liters each month and by 2006 it was fueling sales in both Guatemala and Nicaragua (2).
After doing an online search for Ajegroup since this case was written, here’s what I discovered.
* The company has begun to produce its products in Brazil. In January 2011 the company announced that its factory in Rio would have the capacity to produce 80 thousand bottles of soda per hour. Also, the manufacturer would market its main brand there in four different versions: (cola traditional, zero caffeine and zero calorie) and Guarana. Although prices had not yet been defined, Ajegroup would have a different pricing strategy. "But we will not be the cheapest brand in the market," says sources.
Also, the distribution in supermarket chains will be made by the company itself and other point of sale, by third-party carriers (3).
* Although AJEGROUP began operations in Nicaragua in 2005, when the beverage brand Big Cola entered the country after discovering its potential for soft drinks and with an initial investment of approximately US$1 million, the company announced in August 2011 that it would expand its operations in Nicaragua by reinvesting approximately US$25 million to further distribute its product in the Nicaraguan market. At the time of the announcement AJEGROUP had generated approximately 300 direct jobs and 150 indirect jobs in the country; however, this expansion plan would increase direct...

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