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Coca-Cola's Strategy In China? Be More Chinese

The American beverage giant has tried to pursue customers interested in healthier and more traditional beverages. But can they sell tea to the Chinese?

A Coca-Cola bottling plant in Shijiazhuang, northern China
A Coca-Cola bottling plant in Shijiazhuang, northern China
Wei Siyu

BEIJING — Two weeks ago, Coca-Cola announced the acquisition, for $400 million in cash, of the Xiamen Culiangwang Beverage Technology Co. This is a Chinese company primarily selling health-conscious, whole grain and plant-based protein drinks.

The American food and beverage giant's goal is very clear. In China, plant-based drinks are a new category of products with a surging annual growth rate of over 20%. They can help Coca-Cola enter this category of drinks and develop a product portfolio outside of carbonated beverages.

Objectively speaking, it would seem to be smart thinking for Coca-Cola to get into healthy drinks when the carbonated beverage market is on the slide in China. But the problem is that, even before Culiangwang, several firms — such as Deyufang, Yili and, Mengniu — had already made outstanding progress in China's natural drinks market, and that by 2013 the market scale had already reached 42 billion RMB ($6.8 billion).

Meanwhile, Culiangwang doesn't have the same visibility as those beverage giants, which is reflected in its national market share.

To enjoy a competitive advantage, a cardinal rule is to be among the first comers in any market. Just as Coca-Cola created carbonated beverages, there is no one to shake its dominant position, though its imitators are legion. Thus it is also particularly tough when the role is reversed and Coca-Cola is playing catch-up to break through into China's current grain-based drinks market.

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Coca-Cola ad in Kunming, southwest China — Photo: azotesdivino

In the role of upstart, Coca-Cola has already experienced a number of setbacks in the Chinese market. In 1998, the American beverage giant launched the "Heaven and Earth" tea drink. At that time, China's instant tea market was already dominated by Uni-President and Master Kong, two Taiwanese food companies. While the timing wasn't favorable, the American giant also valued the concept rather than the content of the product, due to its patent lack of a bonafide Chinese tea culture. The product was withdrawn after a three-year tryout.

After that, Coca-Cola attempted several comebacks. In 2001, it launched the Lanfeng honey green tea drink. In 2002, it was the turn of Sunshine iced fruit tea. In 2004, it launched, along with Nestlé, Nestea, on the Chinese market. And again in 2005 it offered the "Tea Research Workshop" series, with two versions of tea addressed respectively to men and women.

Unfortunately, all these attempts were rejected while China's instant tea market was galloping along at a pace of 300% annual growth. It is self-evident that after long being a leader in the beverage world, Coca-Cola is not used to running after others from behind.

What's particularly cruel is that so many new drinks are joining a market where consumers’ choice is unprecedentedly large. The situation where Coke and Sprite were the dominant pair has become a thing of the past. Carbonated drink is becoming only one of the many categories of beverages. Not to mention that carbonated drinks are also seen as contradictory to today's growing health awareness.

This is why Coca-Cola has been actively developing its product line. Between 2001 and 2004 it introduced water, sports beverage and lemonade, and the Simply Orange brand of Minute Maid. In addition to the recent takeover of Culiangwang, last year, it acquired a 10% share of Green Mountain Coffee and a 16.7% share of the Monster energy drink, as well as launching a premium dairy product — Fairlife.

However, apart from Minute Maid orange juice, Coca-Cola’s other soft drinks have all failed to obtain important market share or brand recognition in China. The country's largest juice producer Huiyuan is highly reputed for its concentrated juice.

So what does the American beverage king need to launch a successful new brand in China? "First it's best to separate it from the original brand," said Zhu Danoeng, a branding expert at Chinese Institute of Food and Beverage. "A new team has to work with a set of specific mechanisms that match the new product."

[rebelmouse-image 27088973 alt="""" original_size="1024x683" expand=1]

"In China, Coca-Cola means "delicious happiness'" — Photo: sarah b.

Yet as the aircraft carrier of the beverage industry, Coca-Cola's over-centralized operational mode makes it difficult to achieve rapid response to the market. As some of Coca-Cola China's former executives have pointed out, the company has a bloated structure and responds slowly, and even a simple material procurement requires many levels of approval.

Moreover, the company's marketing and legal teams act independently making it difficult to coordinate their management. This also makes it impossible to determine who is entitled to make a decision.

On top of all this, the merged brands are generally managed from the American headquarters and are not given sufficient operational independence.

All that said, as a relatively stable fast-moving consumer goods enterprise, Coca-Cola is far from reaching the brink of despair. If company leaders mix its strong investment capability and distribution capacity with management autonomy for the Chinese branch, the beverage giant will be able to build on its famous brand in the search for viable new products..

Whether it's through acquisition or investment, Coca-Cola is no longer the creator of the products it sells. It has become a follower. The best way for the American brand to bounce back is to not only produce more drinks, but to invent a whole new category of drinks.

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The Colonial Spirit And "Soft Racism" Of White Savior Syndrome

Tracing back to Christian colonialism, which was supposed to somehow "civilize" and save the souls of native people, White Savior Syndrome lives on in modern times: from Mother Teresa to Princess Diana and the current First Lady of Colombia, Verónica Alcocer.

photo of a child patient holding hand of an adult

Good intentions are part of the formula

Ton Koene / Vwpics/ZUMA
Sher Herrera


CARTAGENA — The White Savior Syndrome is a social practice that exploits or economically, politically, symbolically takes advantage of individuals or communities they've racialized, perceiving them as in need of being saved and thus forever indebted and grateful to the white savior.

Although this racist phenomenon has gained more visibility and sparked public debate with the rise of social media, it is actually as old as European colonization itself. It's important to remember that one of Europe's main justifications for subjugating, pillaging and enslaving African and American territories was to bring "civilization and save their souls" through "missions."

Even today, many white supremacists hold onto these ideas. In other words, they believe that we still owe them something.

This white savior phenomenon is a legacy of Christian colonialism, and among its notable figures, we can highlight Saint Peter Claver, known as "the slave of the slaves," Bartolomé de Las Casas, Mother Teresa of Calcutta, Princess Diana herself, and even the First Lady of Colombia, Verónica Alcocer.

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