Coca-Cola targets Chinese consumers

14 September 2009

SHANGHAI: Coca-Cola is hoping to further increase its sales in China, where consumption levels are under 10% of those in North America, despite the rapid growth the soft drinks titan has enjoyed in the country.

The company posted a 14% uptick in Chinese sales in the second quarter of 2009, but the typical consumer there buys just 28 bottles of its various brands each year, compared with some 412 in North America.

It is currently responsible for a 52.5% share of the carbonated drinks market in the world's most populous nation, according to Euromonitor International, with PepsiCo on 32.8%.

While Coke lags behind its main rival in the cola category, taking 22.2% compared with the latter's 23%, the biggest-selling carbonated drinks brand in the Asian country is Sprite, owned by Coca-Cola.

Doug Jackson, the Atlanta-based firm's China president, said its main aim at present is to help shoppers suffering in the downturn, and who have a smaller amount of "kuai" – slang for money – to spend.

"If you have a little less kuai in your pocket, folks look for 'where do I save that one kuai'. Instead of drinking nothing, I can handle that cheaper one. It's just giving them an option," he said.

Recently, the owner of Fanta and Vitaminwater launched a 355ml bottle priced at just 35 cents, and it has previously sold even smaller products for as little as 15 cents in what is now its third biggest market.

One obstacle facing Coca-Cola in China is the dearth of refrigerators to keep Coke at what is regarded as its optimal drinking temperature in certain areas, meaning it is often served warm, or even boiled.

Coca-Cola is thought to have spent $400 million (€274m; £239m) on sponsoring and advertising related to the Beijing Olympics last year, and during this time it encouraged consumers to drink Coke cold.

The beverage manufacturer also announced plans to invest a total of $2 billion in the world's most populous nation in late 2008.

While its bid to purchase The Huiyuan Juice Company was blocked by the Communist government, Jackson said the US corporation now intends to "build rather than buy and move forward."

"We know exactly where we are going. The government says, 'We'll urbanize 20 million people this year, and we'll do it sustainably through to 2020. We'll nearly urbanize the population of the United States over the next ten years,' I can be very assured that I can place my bets for the company," he concluded.

Data sourced from Time Magazine; additional content by WARC staff