Journalist: Wang Fan Editor: Zhang Haini
Have you found that the Coca Cola bottle you bought always bears the words "Coca Cola is authorized to use the trademark by Coca Cola Company, the trademark holders such as' Coca Cola 'and' Coca Cola '". In the producer column, the southern market probably writes Taigu Coca Cola, while the northern market may be COFCO Coca Cola.
This small detail reveals the business model of Coca Cola, a 138 year old super large single product in the beverage industry, in China: Coca Cola Company holds the trademark, is responsible for brand management and marketing, and sells the main concentrate to two major bottlers in China, Taikoo Coca Cola and COFCO Coca Cola. The bottlers are responsible for canning, production and distribution.
In the past two years, the price increase of Coca Cola has caused a heated debate, and the healthy sugar free consumption trend and the substitution effect of new products such as bubble water have also formed a pinch on the traditional carbonated drinks, resulting in the obvious lack of sales growth of Coca Cola's soda products in China. However, Coca Cola bottlers in China still choose to continue to build new factories. On May 21, Taikoo Coca Cola held the foundation laying ceremony of the intelligent green production base in the Dawan District in Guangzhou, with a planned investment of 1.25 billion yuan.
On May 23, the reporter of the Daily Economic News interviewed Taikoo Coca Cola China CEO Party Building in writing. He said that the company is actively expanding its low sugar and sugar free product portfolio to better meet market demand. Swire Coca Cola is investing more and developing more in China with full confidence, and is accelerating its commitment to invest 12 billion yuan in China.
Photo source: Daily Economic News (data picture)
Guangdong factory expansion fulfills investment commitment in China
When it comes to the "Happy Fat House Water" cola, it has been popular around the world for more than a hundred years. The formula of Coca Cola is a mystery all over the world, and its pioneering "bottling authorization system" also protects and consolidates this barrier.
In the Chinese market, Coca Cola's bottling partners are Taikoo Coca Cola and COFCO Coca Cola, which are respectively affiliated to Taikoo Group, a foreign-funded enterprise, and COFCO Group, a state-owned enterprise. These two major bottlers are responsible for the production and sales in different provinces. Coca Cola's beverage brands produced by them include Coca Cola, Sprite, Fanta, Minute Maid, Costa Costa, Chunyue, Yiquan, Shuidongle, etc.
According to the 2023 financial reports of Taikoo A (HK00019) and China Food (HK00506), the listed entities of the two major bottlers, the revenue of Coca Cola series beverage products sold by the two companies in the mainland of China is about 24.7 billion Hong Kong dollars (about 22.7 billion yuan) and 21.4 billion yuan respectively. In other words, Coca Cola products sold about 44 billion yuan in China last year.
In recent years, Coca Cola bottlers have continued to build new factories. On May 21, the construction of the intelligent green production base in Dawan District invested by Taikoo Coca Cola in Guangzhou was officially started, with a planned investment of 1.25 billion yuan and a plant area of nearly 128000 square meters. A total of 11 new beverage production lines, three-dimensional warehouses and supporting facilities will be built. Previously, the production capacity of Swire Coca Cola in Guangdong was distributed in three soda production bases in Guangzhou, Huizhou and Foshan, as well as two non soda production bases in Foshan and Dongguan. The new factory will increase the regional capacity by about 66%.
In an exclusive interview with the reporter of the Daily Economic News, the party building of the CEO of Taikoo Coca Cola China said: "We are optimistic about the development potential of the Great Bay Area, and this new factory will help further improve the capacity allocation of Taikoo Coca Cola Great Bay Area. In 2023, we announced that the total investment in mainland China in the next ten years would exceed 12 billion yuan. This is a milestone in this investment plan and an important part of Swire Coca Cola's long-term strategy in the Chinese market. "
In fact, in addition to the franchise rights of Coca Cola in some provinces of China, the franchise area also covers Vietnam and Cambodia, and provides management and administrative support services for Coca Cola Pacific in the United States.
"With full confidence, we are investing more in China and further developing, and are accelerating the implementation of an investment commitment of 12 billion yuan," said Party Construction.
The reporter learned that among the 12 billion yuan investment plan of Taikoo Coca Cola, two projects have been launched, namely, Zhengzhou New Plant (900 million yuan) and Suzhou New Plant (2 billion yuan). "These three investments continue to break the record of single investment of Taikoo Coca Cola in China. At present, the construction of three new factories has been in full swing, which will drive our production capacity in the Chinese market to increase significantly. In addition, we plan to add production lines in the existing factories and continue to put freezers on the market."
Renderings of Guangdong Taikoo Coca Cola Co., Ltd. Dawan District Intelligent Green Production Base Source: provided by the company
Can you deal with the whole category of soft drinks when they are not sold well?
In recent years, with the emergence of consumer demand for healthy sugar free products, the local sugar free track has also attracted new and old brands such as Yuanqi Forest and Nongfu Spring. Traditional soda can be said to be attacked from both sides.
The 2023 financial report shows that the sales revenue of Taikoo Coca Cola in mainland China has reached 24.7 billion Hong Kong dollars, down from 26.1 billion Hong Kong dollars in 2022, but the revenue in RMB (including the revenue of Shanghai Shenmei and excluding the sales to other bottling companies) is similar to that in 2022; The mainland market should account for 755 million Hong Kong dollars in profit, a year-on-year decrease of 16%.
Among them, soda, as the product of Taikoo Coca Cola that contributes 60% of its revenue to the Chinese market, saw its revenue decline by 4%, while the revenue of juice drinks, tea drinks and energy drinks increased by 12%, 16% and 28% respectively, although their plates were small. The revenue of high-end coffee and tea drinks increased by 25% and 16% respectively. In other words, the double-digit growth of Taikoo Coca Cola's non soda beverages, to some extent, made up for the decline in soda sales.
Therefore, diversification and full category development have become the operating keynote of Coca Cola Company and even its cooperative bottlers in recent years. This strategy is directly reflected in capacity expansion. "The new plant in Guangzhou covers more than 140 kinds of packaging products in the soda and non soda categories under Coca Cola," the party building told reporters
Party building said: "The increase of other beverage sales in 2023 shows that the strategy of Taikoo Coca Cola to accelerate the growth of high-value products and categories is effective. We are also actively expanding the combination of low sugar and sugar free products, expanding categories, and implementing the strategy of multi packaging products to better meet the market demand."
The reporter of the Daily Business News also noted that Taikoo Coca Cola acquired six companies producing non carbonated drinks under the Coca Cola Company in early 2023, demonstrating its determination to develop non carbonated drinks.
However, in the competitive Chinese beverage industry, it is not easy to be a "king" of the whole track. Through a hundred years of development, Coca Cola has created long-lasting super large items such as Coke and Sprite, while each segment of the non soda track in China has several leaders. For example, functional drinks include Red Bull and Dongpeng Special Drinks, tea drinks include Nongfu Mountain Spring and Suntory, drinking water includes Nongfu Mountain Spring, Yibao and Wahaha, and juice has Huiyuan and Tongyi.
So, how does Taikoo Coca Cola deal with the "nip" of its rivals in diversified development? One of the key points mentioned by the party building is the launch of freezers: "Up to now, we have launched more than 1 million freezers, which continue to be launched every year. In the past year alone, we have placed more than 150000 new freezers on the market to promote business growth." The party building said.
He said that the freezer is the nerve endings of sales. Close contact with consumers is the most timely channel to perceive consumption. The freezer not only reflects excellent sales data, but also is an effective display cabinet for consumers.
"The competition for the share of freezers is bound to be the general trend of the industry, so we can better meet the demand by grasping the immediate trend of consumers. We have adopted digital means in the input and management of freezers, and the assessment includes lighting (to attract target consumers), and qualified display (to ensure that the products are fully displayed and the freezers are fully used) We also installed smart tags on each freezer, which helps to conduct sufficient data analysis, supervision and management, and effectively implement the implementation strategy. " Party building.
