Coca-Cola in China - Building Its Next Billion Dollar Brands through Localization
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Case Code: BSTR438 Case Length: 12 Pages Period: 1979-2013 Pub Date: 2013 Teaching Note: Available |
Price: Rs.300 Organization: The Coca-Cola Company Industry: Beverage Countries: US, China Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Coca-Cola's Foray into China
In 1979, CCC obtained the unique distinction of being the only international entity given the opportunity to sell packaged cold drinks in China. CCCfound that most Chinese could read only the Chinese alphabets and not Latin ones.So during market entry, the company adapted its name in Chinese. CCC put in significant efforts into finding a Chinese name thatwould convey the brand image without being ludicrous or meaning something adverse...
Coca-Cola's Failed Bid to Acquire Huiyuan
In late 2008, CCC made a bid to acquire China-based Huiyuan Juice Group Ltd. (Huiyuan) for US$ 2.3 billion. According to Bloomberg L.P , the deal -the largest overseas acquisition for the company-was also the biggest takeover of a Chinese company ever undertaken by a foreign entity. The deal was expected to enable CCC to double its share in the Chinese fruit juice market that was growing annually at 16%, as of 2008.This growth in the juice market was almost double that ofthe carbonated drinks market, which was rising at just7%. ...
Launch of Pulpy Super Milky
CCC then shifted its focus to driving the growth of complementary products. It targeted China's rapidly growing dairy drink market. According to beverage research firm Canadean , as of 2008, over 6.2 billion liters of dairy drinks were sold each year in China,which was second only to the sales of tea drinks. In March 2009, CCC invested in a new US$ 90 million 'Global Innovation Technology Center' (GITC)in Shanghai, China. The center, which was committed to continuous innovation, employed about 100 people, who hailed from Europe, America, China, and other parts of Asia.
The GITC developed a new drink under the 'Minute Maid Pulpy' umbrella, called ‘Pulpy Super Milky'. The unique drink was a mix of fruit juice, milk powder, whey protein, and coconut bits.This gave thefruit flavored dairy drink a creamy texture....
The Road Ahead
For most of the 2000s, China maintained a double digit growth in its soft drinks market. According to Euromonitor International, the Chinese juice market was expected to grow to US$ 23.9 billion revenues, by 2015. However, some analysts opined that due to market saturation, the growth in the Chinese soft drink market would slow down in the future.
However, there was rising competition in the Chinese beverage market, not only from multinational beverage companies such as PepsiCo. , but also from several rapidly growing Chinese beverage companies. The key competitors for the company's 'Minute Maid Pulpy' brand were Pepsi's 'Tropicana Fresh Pulpy' and Chinese company, Hangzhou Wahaha Group's brand 'Nutria Pulpy'. Shaun Rein (Rein), Managing Director of China Market Research Group in Shanghai, added, "Fifteen years ago, foreign brands were really all there were but now Chinese companies are competing head to head against foreign brands.Foreign brands need to understand the needs of evolving Chinese consumers more and react faster to their desires"...
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