A NEW WAR IN VIETNAM

SAM MARSHALL

HO CHI MINH CITY, Vietnam -- It was a marketing coup. Just hours after President Clinton's Feb. 4 announcement of the lifting of the U.S. trade embargo on Vietnam, the switch was flicked on the bottling conveyor belt at International Beverage Co. here, and Pepsi Cola was hitting the streets by late afternoon.

Coca-Cola's biggest rival stole the limelight, cashing in on the fact that local and international press alike were combing the streets looking for the perfect angle to the "embargo" story.

Coke soon volleyed back, pouring into the city with free cans, T-shirts, banners and billboards. A crowd of 2,500 attended a local concert and Coke was there to give away samples. Coca-Cola representatives visited orphanages and schools to offer gifts of cans and T-shirts for Tet (Vietnam's Lunar New Year) and cans were available in the city's Tao Dan Park at less than 20 cents U.S. during Tet week. Posters greeted the revelers with the words, "Glad to come

back to Vietnam."

Having finally left the Vietnam War behind, Clinton's announcement has heralded a new one: one of the most high-profile cola battles in Asia.

Coke's regional manager, Mark Ohlson, said his company was looking forward to supporting major cultural events.

Pepsi blitzed back by erecting a giant inflated replica of a Pepsi can in a prominent city square beneath red banners commemorating the anniversary of the birth of Vietnam's Communist Party.

In Hanoi, Pepsi was nowhere to be seen, while the Coke marketing forces had already mobilized, dressing the crowded streets with red-and-white Coke banners.

Coke followed Pepsi's suit in Hanoi with American-style glitz, flanking the genteel French colonial Hanoi Opera House with giant inflatable Coke bottles and setting the stage full of scantily clad dancers.

The embargo had prevented the two companies from manufacturing and trading here since 1975, when the Vietnam War ended. But it was not the first time the two products had been available in Vietnam. In spite of the embargo, canned Coke and Pepsi have been made widely available through non-U.S. companies in Singapore, Malaysia and Thailand, or through smuggling.

Until now, Coke has been more prevalent in Vietnam, with Pepsi unavailable in the north. On another front, 7-Up has been more popular than Sprite, its Coca-Cola counterpart.

IBC, Pepsi's bottler in Vietnam, flew in enough supplies to produce 10,000 bottles of Pepsi and 7-Up for its relaunch. IBC comprises the Tribeco soft drink company of Ho Chi Minh City and McCondruy of Hong Kong, but soon plans to apply to the State Committee for Cooperation and Investment to bring in PepsiCo as a third joint-venture partner. Tribeco will hold a 40% share, while the two foreign partners will each hold 30%.

Coca-Cola Indochina is partnering with the Chuong Duong Beverage Factory, whose new plant is due to open "in a few weeks," the company said. The Ho Chi Minh City plant will be upgraded at a cost of $28 million U.S., pumped in by CCI.

The market is reportedly worth the fight. The payoff is a market of some 70 million consumers, and Barry Shea, Pepsi Cola's regional president, said he anticipates the annual Vietnamese market for soft drinks will be at 40 million cases and rising as the economy carries on its rapid wave of growth.

Pepsi gets its products to the consumer in highly visible trucks, but both products are also still moving around town the traditional way -- by cycle and heavily loaded motorbikes, which is how products generally go from wholesaler to small outlets and markets here.

In Ho Chi Minh City, there is one huge wholesale beverage market; the rest of the product sells through small restaurants, beverage places and luxury food stores, which buy and then resell. Ham Nghi market, where most foreigners buy food, is several blocks long, and hundreds of cases of Coke can be seen on display there.

Pricing is competitive with the local product. Coke and Pepsi have trimmed their original 50- to 60-cent price per can, very expensive by local standards, to 15 cents a bottle for Pepsi, and roughly the same for Coke with the bottle return of 15 cents. The bulk of the two companies' marketing campaigns is through television advertising, which reaches a huge market. Air time is cheap compared with billboards. Pepsi ran ads with the winner of the Miss Vietnam beauty contest, but the Coke ad hit home with lots of smiling faces and the phrase, "It's good to see you again."