Coke lures China shoppers

28 April 2011

BEIJING: Coca-Cola, the soft drinks giant, is adapting its "packaging architecture" in China to attract greater numbers of shoppers.

The company's sales in Asia Pacific rose 5% during the last quarter, with China, alongside Korea, among the primary contributors behind such a trend, Muhtar Kent, Coke's ceo, revealed on a conference call.

"Our return to double-digit growth in China was driven by the effective execution of our Chinese New Year programs and sustained investment in our brands across multiple categories," he said.

Offerings at the forefront of this expansion included Coca-Cola and Sprite, both lodging upticks of more than 10%, helping the latter brand reach its highest market share for over two years.

Minute Maid Pulpy, created specifically for China, also delivered a 27% surge, and since hitting store shelves in 2005 has been rolled out in several other countries, generating revenues of $1bn as a consequence.

Kent said: "Minute Maid Pulpy is a great example of how we've developed a unique brand experience, tailored to meet local taste in China and then leveraged our scale despite the success across multiple regions."

One of Coca-Cola's core tactics in the world's most populous nation is selling a range of products in smaller sizes.

"We're making some proactive changes to our packaging architecture in China," said Kent.

Such a model, which is also being implemented in markets from the Philippines and Germany, can fulfil various purposes, but relates to broadening the target audience when discussing China.

"We are introducing a wider variety of packages in China to promote affordability and enhance the consumer experience with our brands, all with the focus to drive increased transactions and to build brand equity," said Kent.

"In support of this strategy, we launched the new single-serve 300ml package for our sparkling beverages across parts of the country and have plans to introduce a 500ml offering nationwide this summer."

Given the challenges of surging commodity costs and the resultant pressure to raise prices, Kent suggested adopting a dynamic approach yields major benefits.

"We're employing a much more flexible, fast, nimble brand-priced pack channel architecture that is designed to ensure that we don't have to take across-the-board pricing," he said.

"And that's why this business of ours actually performs so well across the world in such a troubling microeconomic environment."

Coca-Cola is currently "ahead" of the planned $2bn a year it anticipated spending in China in 2009, demonstrating the Asian powerhouse's rising importance within the organisation's future.

"The three plants that we opened last year ... are all contributing to being a part of the communities that they serve," Kent added.

Data sourced from Seeking Alpha; additional content by Warc staff