Summer's here: Let the cola wars begin!

It’s that time of the year when an increasing number of ads on television urge you to use cooling talcum powder, buy environment-friendly airconditioners and drink glucose water everyday. Yes, summer is most definitely here.

It’s also peak season for the two global soft drink giants Pepsi and Coke, which generate almost 40 percent of their annual revenues in summer. But competition in the $10 billion Indian soft drinks industry is getting hotter by the day.

Even as both global giants figure out new ways and means to keep consumers guzzling, they’ve raised prices of their aerated beverages selectively.

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Business Standard reportsthat while Pepsi raised the price of Pepsi, 7UP, Mountain Dew and Mirinda from Rs 25 to Rs 29 for its 600 ml plastic bottles, Coca-Cola increased the prices of Coke, Sprite and Fanta from Rs 27 to Rs 29. Both increases were made in select markets.

Both Pepsi and Coca-Cola have explained that a hike in taxes, packaging and transport costs and fuel costs have forced them to raise prices. Despite the price rise, neither is expected to suffer in terms of market share because both Pepsi and Coca-Cola have hiked prices to similar levels.

Since there is little to distinguish one brand of carbonated beverage from another,ads have a major role to play in making or breaking a soft drink brand, notes this Economic Times report.

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And the advertising wars are certainly getting more aggressive. Coca-Cola recently roped in Kareena Kapoor for a whopping Rs 5 crore for two years for Limca, while Sachin Tendulkar promotes Coke. It has also associated itself with the London Olympics, scheduled to open later this year, just so it can offer competition to Pepsi’s association with the World Cup.

Not to be left behind, Pepsi has signed up Ranbir Kapoor and an impressive “Change the game” ad campaign in the wake of the Indian cricket team’s dismal performance over the last couple of months.

Despite repeated claims that some of the ingredients used in such drinks can be cancer-causing,“for the past 22 quarters, Coca-Cola India has seen growth ahead of many other markets in the Asia-Pacific and African regions” while PepsiCo saw double-digit growth in beverages in the past few quarters, points out a _Business Standard_report.

But in an era of increasing inflation, will higher prices help or hinder the future growth of these companies? Only time will tell. It is possible that as in the US, soft drink companies could become like cigarette makers, who charge different prices for different brands. They particularly hike prices more comfortably for premium brands like energy drinks which fetch them high margins anyway.

Premium pricing could change the rules of the game though. One thing’s for sure, in the still-growing Indian beverage market, the competition is just warming up.