Cola Wars as Coke Moves on Baghdad
Coca-Cola has returned to Iraq after an absence of nearly four decades,
triggering a cola war in a lucrative but potentially hostile market.
Coke ended its 37-year exile last week by setting up a joint-venture
bottling company to compete with Pepsi for 26 million consumers.
The upsides for Coke include a thirst-inducing climate and burgeoning
Islamic conservatism which has banned beer and other alcoholic drinks
in much of the country.
The downsides, besides Pepsi's head start, are a raging insurgency
and banditry which threaten supply routes, and a perception that Coca-Cola
is linked to Israel and "American Zionists".
Coke withdrew from Iraq in 1968 when the Arab League declared a boycott
because of business ties to Israel, leaving Pepsi to dominate the
Middle East market for soft drinks. The boycott ended in 1991, but
sanctions and wars kept Coke out of Iraq.
After a trickle of Coca-Cola imports from neighbouring countries,
the company is attempting a proper comeback by launching a joint venture
with a Turkish company, Efes Invest, and its Iraqi partner HMBS, which
will reportedly bottle the Coke in Dubai and distribute it across
"A local bottling company will employ local people to do this," a
Coca-Cola spokesman said yesterday. "This happens in most of the 200
countries in which we operate around the world, despite the perception
of us as an American company."
The response in Baghdad yesterday was mixed. One drink wholesaler,
Abbas Salih, said the initiative was doomed. "Coca-Cola does business
with those who are shooting our brothers in Palestine," he said. "How
can we drink it?"
Abu Ream, a shop owner in Baghdad, repeated a widespread conspiracy
theory: "If you hold up a Coke can to the mirror, the writing says
'No Allah'," Mr Ream said. "Or maybe 'No Mohammad'. I can't remember
But Mr Ream said since supplies became available two years ago he
had sold more Coke than Pepsi. "People like the taste better. And
they like the novelty."
Coca-Cola denies any political or religious bias. "The myth is indeed
sometimes perpetuated, but has no truth to it," the spokesman said.
"We are a local business that employs local people ... Our Palestinian
bottler employs 250 Palestinians."
After the 1990 invasion of Kuwait, sanctions led the Iraqi licence
holder, Baghdad Soft Drinks, to replace the authentic Pepsi concentrate
it had used with fakes smuggled from eastern Europe. Matters were
not helped when Saddam Hussein's son Uday bought 10% of the company.
But Baghdad Soft Drinks says Pepsi is rebuilding, with bottling operations
in the capital and southern Iraq.
In the west, Coke and Pepsi have been targeted as US symbols. Entrepreneurs
have produced alternatives such as Mecca-Cola and Muslim Up. But in
Iraq, hostility to the US is expressed more directly in attacks on
US troops; Sunni Arab insurgent sympathisers have no problem drinking
and serving Pepsi.
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