Coca-Cola aims for China's non-fizzy drinks market
SHANGHAI, Aug 31 (AFP) - With 30 percent of China's carbonated drinks market under its belt, Coca-Cola is now aiming for the non-fizzy segment, telling Chinese their tea drinking habit is "hip," a company official said Monday. Mickie Leong, vice president and general manager, China brand, of the the US company, told AFP ready-to-drink tea is one of the segments where Coca Cola aimed to be the market leader. The company now has just under one percent of the Chinese non-carbonated beverage market which makes up 60 percent, of the entire beverage market of 62.4 billion cans. "We have come to the conclusion that the tea segment will grow rapidly and become an important segment in the coming years," Leong said. "Tea drinking is becoming hip. It's a new drink that is going to thrive." Growth for Coca-Cola's China brands, which include Tianyudi tea, mineral water and fruit juices and Smart carbonated fruit juices, would be 10-fold this year and next year, Leong said. Coca-Cola enjoyed a 26 percent growth in sales of all its products in China in the first half of the year but expects the summer's floods to affect production and consumption in the third-quarter. For the entire year, the company has forecast strong double digit growth. Leong said the company was happy with its 30 percent share of the fizzy-drinks market but could do better in a growing market. Mainland Chinese consumed just six servings of cola a year compared to 150 servings in Hong Kong and 400 servings in the United States where Coca-Cola had a 43 percent market share, Leong said. "The Chinese market has incredible potential," he said. To launch its Tianyudi brand of Oolong and Jasmine tea, Coca-Cola has signed on Hong Kong's top Canto-pop singer Jacky Cheung. The teas, which were recently launched in trend-setting Shanghai and Hangzhou, an important tea producing area, were targetted at young Chinese aged 16 to 35 who were on the go and health conscious, Leong said. Leong said the company would succeed in a country where tea-drinking was a way of life but also where 99 out of 100 new products fail. "We believe we are going to be successful," Leong said. "A lot of it has to do with identifying an opportunity and understanding the market, its competitors and consumers."
U.S. giants riding out overseas storms - multinationals mostly immune to economic crises, so far
WASHINGTON (CBS.MW, 9/4/98) -- While many U.S.-based multinational companies have seen their business in Asia and Latin America catch a chill from the economic viruses in those regions, few seem concerned about the potential for full-blown pneumonia...international companies have lots of experience with overseas turmoil and know how to adjust. Take Coca-Cola (KO), the world's largest maker of soft drinks. Even though sales fizzled in Japan, Indonesia and Thailand in the second quarter, the company's saw overall volume jump a healthy 10 percent. And the Japanese slump can be traced to the first price increase in that country in years, said Bill Hensel, a company spokesman.
Hensel said the economic troubles in Asia, which accounts for 23 percent of Coca-Cola's sales, and Latin America, which accounts for 11 percent, have their benefits, too. Since Coke tries to buy most raw materials in the countries in which it operates, it pays less for sweeteners, packaging, advertising and the like when local currencies decline against the dollar.
Coke has also taken advantage of the decline in currencies to step up investment in many of the more than 200 countries in which it hasoperations.
"We've had a lot of experience," Hensel said. "We've got a pretty good handle on how to do this."
Indeed, after the peso crisis in 1994-95, which led to a sharp devaluation, Coke took a series of steps aimed at reducing the cost of its drinks with the goal of retaining the loyalty of Mexican consumers whose incomes had fallen. Since then, the company has boosted its share of the Mexican market to 68 percent from 57 percent.
Interesting article about Indonesia in today's New York Times.
"Rice currently sells at the market for 17 cents a pound, more than double the Government's target price. For a family of five to buy 22 pounds of rice per capita each month, it would cost $18.70. About 40 percent of Indonesia's families earn less than that, meaning that nearly half the population cannot afford even a minimum supply of rice. "
"People are in survival mode. They're not interested in buying designer jeans. They're interested in buying the next kilo of rice."
I don't reckon they are interested in buying too many Coca Cola's either.