Chinese market
The Chinese soft drink market is one of the fastest growing and both the cola makers have tailored their strategies to make the most of this boom.
Coca-Cola’s long time strategy has been to make its product inexpensive, widely available and tasty.
As far as taste is concerned, the company had to develop various drinks tailored to Chinese palates. During the China International Beverage Festival held in September, Coca-Cola invited Chinese folk artists to make paper-cuts and mold clay dolls, so as to better combine traditional Chinese art with a foreign brand.
Pepsi also developed its market strategy according to the unique tastes of Chinese customers. They spent huge amounts of money to invite famous singers, stars and soccer players to promote its products. The company called this its “soccer & music” promotional strategy.
The Chinese market presents unique problems. For example, 2,800 local soft-drink bottlers, many of whom are state-owned, control nearly 75% of the Chinese market.
Those bottlers located in remote areas have virtual monopolies. The battle for China will take place in the interior regions. These areas are unpenetrated as most of the foreign soft-drink producers have set up in the booming coastal cities.
China's high transportation and distribution costs mean that plants must be located close to their markets. Otherwise, in a country of China's size, Coca-Cola and Pepsi risk pricing their products as luxury items.
In China, it is easier and politically safer to expand through joint ventures with local bottlers. It is expected that, in China, the company that wins the cola war will win based on the locations of their bottling plants and the quality of the partners they choose.
The Chinese soft drink market is one of the fastest growing and both the cola makers have tailored their strategies to make the most of this boom.
Coca-Cola’s long time strategy has been to make its product inexpensive, widely available and tasty.
As far as taste is concerned, the company had to develop various drinks tailored to Chinese palates. During the China International Beverage Festival held in September, Coca-Cola invited Chinese folk artists to make paper-cuts and mold clay dolls, so as to better combine traditional Chinese art with a foreign brand.
Pepsi also developed its market strategy according to the unique tastes of Chinese customers. They spent huge amounts of money to invite famous singers, stars and soccer players to promote its products. The company called this its “soccer & music” promotional strategy.
The Chinese market presents unique problems. For example, 2,800 local soft-drink bottlers, many of whom are state-owned, control nearly 75% of the Chinese market.
Those bottlers located in remote areas have virtual monopolies. The battle for China will take place in the interior regions. These areas are unpenetrated as most of the foreign soft-drink producers have set up in the booming coastal cities.
China's high transportation and distribution costs mean that plants must be located close to their markets. Otherwise, in a country of China's size, Coca-Cola and Pepsi risk pricing their products as luxury items.
In China, it is easier and politically safer to expand through joint ventures with local bottlers. It is expected that, in China, the company that wins the cola war will win based on the locations of their bottling plants and the quality of the partners they choose.