AJE Group: Fighting Cola with Kola

AJE LOGOAccording to recent forecasts, the global carbonated beverage market will be worth $412.5 billion by 2023. That is big business by anybody’s standards and sales are, unsurprisingly, dominated by some of the world’s largest multinationals, including, of course, The Coca Cola Company and PepsiCo. But coming up fast on the outside are two brands that a stranger to Latin America and parts of Asia may never have heard of; Kola Real and Big Cola.
The company behind both brands is AJE Group and it is surely only a matter of time before it too becomes a household name. Many more people will also soon be familiar with the Añaños dynasty who founded and run an organisation that in the space of 30 years has bloomed into the tenth largest soft drink company in terms of sales, and the fourth largest producer of carbonated soft drinks in the world. It sells over 3.5 billion litres of soft drinks a year, employs more than 13,000 people either directly or indirectly, and exports its drinks to 26 countries across Latin America, Asia and Africa.
FARC Shining Path guerillasThe AJE Group began life as a cottage industry in the Peruvian province of Huamanga. The story of how the company came to be is heavy with irony, for the drink owes its success to the stringently anti-capitalist Shining Path guerilla movement. In 1988, the waves of violence they instigated forced Don Eduardo Añaños and his family to flee for the relative safety of the provincial capital Ayacucho. Deprived of their livelihoods, he and his son Jorge were looking for another way to make a living when they realised that, by effectively cutting Huamanga off from the rest of the country, the guerillas had created demand for some home-grown products, including soft drinks.
So, Kola Real was born in the back yard of the new family home with a workforce consisting of Don Eduard, his son Jorge and his four siblings. Between them, they put their backs into mixing up the drink’s ingredients, used a basic bottling machine (nicknamed Atahualpa in honour of the last Incan emperor) to transfer the finished product into old beer bottles and then went around the local neighbourhood selling them door to door. Kola Real’s popularity in the province quickly grew, thanks in large part to a pricing policy that consistently kept it 25% cheaper than the alternatives and which has allowed it to build loyal customer bases among low-income consumers everywhere it operates. Its appeal then gradually extended across Peru helped, in yet another twist of irony, by the Shining Path’s policy of allowing local trucks to use the roads that multinationals were not.
AJE Chairman and CEO Angel AñañosBy 1997 AJE had established a foothold in Lima and started exporting to Venezuela two years later. The next significant step change in its operations came in 2002 when it gained entrance to Mexico, the largest soft-drink market in the world. This was a psychological breakthrough, according to the group’s current Chairman and CEO Angel Añaños. “It made us believe that if a business model designed in Peru could work in Mexico, then it could work anywhere.”
And so it has proved, with the group’s combination of a low-cost strategy, clever marketing and relentless focus on emerging markets helping it establish itself as a serious competitor to Coke and Pepsi, most recently in Asia. In 2010, four years after opening corporate headquarters in Madrid, the AJE Group launched the caffeine-free Big Cola with the markets of Asia, including India, Indonesia and Vietnam very much in mind.
It has also been quick to respond to consumers’ growing health consciousness and in recent years has been investing heavily in the development of several new product ranges including water, isotonic and energy drinks, isotonic, teas, and several soft drinks made from natural fruits that grow in the Amazonas and other regions in Peru. Its CIELO water brand is the runaway leader in the domestic market and one of the most important water brands throughout Latin America.
The family’s early traumas have also been instrumental in shaping the Group into a force to be reckoned with. “We learnt out of necessity early on how to make decisions fast and how to build a business without much money.” It’s a headset that has served the group well and with an ever-growing share in a variety of international soft drinks markets the AJE Group looks set to be quenching thirsts all over the world.