Coke plans China push

22 August 2011

BEIJING: Coca-Cola, the soft drinks giant, plans to spend $4bn in China in the next three years, on a range of marketing-related areas from innovation to customer loyalty.

During the first six months of 2011, Coca-Cola sold 1bn unit cases across China and the country now accounts for 7% of the company's worldwide volume sales.

Muhtar Kent, Coca-Cola's chief executive, told the Wall Street Journal: "It's our third-largest global market, growing at double-digits. We work hard to demonstrate our long-term commitment not only through our business investment, but also by supporting China's broader development goals."

Over the three decades to 2009, Coca-Cola, the owner of brands such as Fanta and Sprite, allocated $1.6bn to China. As a sign of the Asian nation's growing importance, the group's spending should hit $7bn from 2009 to 2014.

Kent said: "You create your fate two or three years before it happens, at least in the way our business works.

"Besides our infrastructure and capabilities, the new investment will also focus on enhancing the consumer experience, ensuring product affordability and building brand loyalty which deliver sustainable growth."

Euromonitor, the research group, estimated that Chinese soft drinks sales nearly doubled to 270bn yuan ($42.2bn) in 2010, with Coca-Cola taking a 17% share, ahead of Tingyi on 13%, Wahaha on 7% and PepsiCo on 6%.

One of Coca-Cola's most successful initiatives in China to date has been the formulation of Minute Maid Pulpy, a juice drink now available in 30 countries, and logging annual revenues topping $1bn.

Kent added: "We don't see China only as a great growth market. We see China as a future market for further innovation that will benefit our business globally."

Going forward, Coca-Cola is emphasising organic growth rather than buying any local rivals, Kent said the possibility of listing on the Shanghai Stock Exchange was an appealing one.

"I think it will be good for Chinese investors to be able to invest in global companies and companies like my own, which has a global reach, the best-known trademark in the world, and is the best-known brand in the world," he said.

Data sourced from Wall Street Journal, Financial Times, China Daily; additional content by Warc staff