Coca Cola: In Search of non-Soda Success in China

Just hours ago, it's reported that Coca-Cola offered HK$ 17.9 billion (about $ 2.3 billion) in cash to buy Huiyuan Juice Group (HKEx1886), China's biggest pure juice maker. In the statement to the Hong Kong Stock Exchange, Huiyuan Juice said, "The Coca-Cola Company is expecting to use its expertise as a global beverage company to further develop the Huiyuan Juice brand. There are anticipated synergies that will drive operational and cost efficiencies, particularly in Huiyuan's production footprint and in the Coca-Cola Company's distribution and raw-material purchasing capabilities."

According to AC Nielsen figures cited by Huiyuan, the company controls 46% of China's pure juice market. Established in 1992, Huiyuan Juice Group has grown to be the leading brand in China's beverage industry, and built their strong R&D arm. To date, there are 30+ plants acorss the country and 500+ kinds of products have been developed and produced. And its 100% series have become the classic pure juice drinks in China.

The offer is still waiting for Huiyuan shareholders' feedback. But it shows the undoubted determination of Coca-Cola China's strong diversified operation strategy. Even in the year of Beijing Olympics, when the mass is overwhelmed by Coke's large-scale and integrated marketing campaigns around the Bird's Nest and all over the country, there's still a highlight in the fast expansion of its local drinks on tea and juice.

In the tea drinks market, despite the failure of two tea products ("天与地" and "茶研工坊") whose sales was respectively stopped in 2001 and 2008, Coca-Cola shows no intention of giving up the lucrative tea drinks market in China by bringing out a new line focused on "Original Tea" this summer. Jack Chan and his son Fang Zu Ming were invited to team up to speak for this new product. Not only commercials are played on the prime time, but interactive campaigns are used to attract more attention.

In the juice market, Coca-Cola has already established its presence with the star product of "Minute Maid Orange Pulp". It is said in the annual report of Coca-Cola that this product unit case volume in China grew more than 60% last year and is the No. 1 juice brand in the key metropolitan markets. Now the world's largest soft drinks maker has made the step further to offer the acquisition of Huiyuan. If there's a happy ending to arrive, we'll expect the start of another exciting and suspenseful localization tale in China's white-hot consumer markets.