Coke pushes low-sugar options in China

CHINA - The Coca-Cola Company, the world's leading beverage maker, is expected to enhance the availability of low or no calorie beverages in China and continue to emphasise its marketing of carbonated drinks in second- and third-tier cities, a top executive said on Thursday.

Ahmet Bozer, president of Coca-Cola International, said customers in the central and western regions of China will have more opportunities to purchase Coke Zero and Coke Light beverages in addition to the drink's sugared version.

Bozer spoke after visiting the Xinjiang Uygur autonomous region in western China and Zhengzhou, Henan province, in the country's central region.

He said the low or no calorie beverages are part of the company's global pledge to help fight obesity in more than 200 countries by offering more choices and transparency to customers.

The commitments, which were announced on Wednesday, include offering low or no calorie beverage options in every market, supporting physical activity programs and not advertising to children under 12 years old.

Bozer said obesity is one of the most challenging health issues in the world.

Coca-Cola's efforts are a response to a trend in China that has seen healthy drinks take a larger share of the market, while that of carbonated beverages has decreased, according to an industry report last year.

The China Industrial Information Issuing Center report found carbonated beverages' market share reduced to 21.91 per cent compared with water's 25.7 per cent and juice's 22.24 per cent. Carbonated beverages had a 36 per cent share in 2000.

Coca-Cola's first quarter sales in China this year grew just 1 per cent due to the bad weather and economic slowdown.

But the soft drink maker is pleased with the performance of its carbonated and juice categories, and considers the slowdown to be temporary, according to Bozer.

David Brooks, president of Coca-Cola Greater China and Korea, said it is important the company maintains its presence in these categories.

The carbonated product that takes up 60 per cent of Coca-Cola's portfolio of beverages in China will continue to be the company's major growth driver, propelled by market potential in second- and third-tier cities as well as the countryside.

Sprite, a product of Coca-Cola, is the most distributed brand of any drink across all of villages and towns in China, said Brooks.

Between January and September 2012, Coca-Cola ranked No 1 in the carbonated beverage market, followed by PepsiCo and Mirinda, according to the report.

Sales from the Chinese market accounted for 8 per cent of Coca-Cola's global businesses, or its No 3 market after the United States and Mexico.

To have their carbonated business available even in remote villages will put Coca-Cola in head-to-head competition with local brands, such as Master Kong of Tingyi Holdings Corp and Wahaha, which have cultivated stronger distribution channels in lower-tier cities.

Bozer said the company's "secret formula" is creating local partners, distribution systems and its own organisation, so as to get the brand to consumers in a way that is relevant to them.

The "old product, new market" strategy will provide Coca-Cola a strong growth engine after it has reached market saturation in first-tier cities, said Gao Jianfeng, general manager at Shanghai-based Bogo Consultants.

Meanwhile, local beverage makers are competing more fiercely in first-tier cities with their newly developed tea drinks and water products.

"It is a battle at each other's main stronghold," Gao said.