The ready-to-drink (RTD) coffee battlefield is about to welcome a new heavyweight. This time, the strategist is Coca-Cola. This is also the first RTD coffee product launched in China by Coca-Cola after its $5.1 billion acquisition of COSTA. It is reported that the new product will officially hit the market at the end of this month. FBIF learned from COSTA that starting from late March, this new product will be available on e-commerce platforms, major supermarkets, convenience stores, retail outlets, and vending machines. From May, the new product will also appear in COSTA China stores. Looking at China's RTD coffee market: dairy giants Mengniu and Yili have launched RTD latte coffees, while Nongfu Spring has entered with its Carbon Clever (Tan Bing) unsweetened and low-sugar RTD coffees, focusing on restoring the authentic taste of coffee. COSTA has also charged into China's RTD coffee market. Why has RTD coffee attracted so many major brands? Let's look at a set of data. According to the "China Shopper Report 2019 Series 1" jointly released by Kantar Worldpanel and Bain & Company, RTD coffee has become one of the top ten high-growth categories. From 2016 to 2018, RTD coffee sales grew at an average annual rate of 17%. On average, one in three Chinese consumers has purchased RTD coffee, and choosing RTD coffee has become a habitual label for more and more domestic consumers. Image source: Bain & Company Where there are opportunities for beverage innovation growth, there are the "Two Colas." Coca-Cola and Pepsi have been competing over sugary sodas for most of their lives, and now they face the big "sweet bun" of RTD coffee. How are the "Two Colas" leveraging their strengths in this rapidly growing category? -01- @Pepsi Café, Coca-Cola × COSTA RTD Coffee is here! COSTA's new British Classic Series Espresso Drink Coca-Cola's new coffee strategy begins with COSTA RTD coffee. The new RTD coffee product launched by COSTA this time is named "New British Classic Series Espresso Drink," with two variants—Pure American and Smooth Latte. This series uses the same Mocha Italia coffee beans as COSTA stores, allowing bottled RTD coffee to retain the flavor of freshly brewed coffee from stores. The low-sugar, low-fat formula is another highlight, reflecting the brand's sugar reduction initiative. The new product comes in a resealable 300mL portable bottle, making it convenient for consumers to drink in portions during commutes and travels. Shakir Moin, COSTA's Chief Operating Officer for International Markets, said, "For months, our Chinese R&D team has worked closely with COSTA's Global Chief Coffee Master, Gennaro Pelliccia, using the same Mocha Italia coffee beans as our stores to craft RTD coffee tailored to the needs of the Chinese market." It is worth mentioning that this new product is the first RTD series specially customized for the Chinese market since COSTA launched RTD coffee in its home country, the UK, last June. It also marks COSTA's official entry into its first core international market for this category (RTD coffee). Image source: World Coffee Portal Since joining the Coca-Cola family, COSTA's every move has attracted attention from the food and beverage industry. What kind of sparks will this powerful alliance create? Let's start with the story of Coca-Cola and COSTA. In August 2018, Coca-Cola acquired coffee chain brand COSTA for a high price of $5.1 billion, shaking the entire acquisition circle. This bold move allowed Coca-Cola to formally establish a global coffee business platform. What Coca-Cola saw was not COSTA's retail store business, but the global coffee supply chain that COSTA possesses. COSTA can provide professional technical support, including procurement, vending and distribution channels, as well as scenario-based combinations, fully laying out Coca-Cola's total beverage strategy. COSTA provides Coca-Cola with channels and users for expanding its coffee platform. Image source: Seeking Alpha According to Renub Research data, by 2025, the global RTD tea and coffee market will reach $122.88 billion, with RTD canned beverages becoming the fastest-growing beverage sub-category globally. Coca-Cola stated that expanding its coffee business platform starts with RTD coffee. Last April, Coca-Cola announced plans to launch COSTA RTD coffee. Subsequently, in June last year, canned RTD coffee was launched in the UK, marking the first product released after COSTA was acquired. COSTA canned RTD coffee. Image source: FoodBev Media COSTA canned RTD coffee selected COSTA's three most popular flavors: Classic Latte, Caramel Latte, and American Black Coffee, allowing consumers to enjoy familiar and beloved COSTA coffee anytime, anywhere. This is one of the reasons for choosing the canned format. Additionally, its sugar content is 30% less than most similar products in the UK market, with 250mL of coffee containing only 95 to 120 calories, and each can contains the equivalent of two shots of espresso. COSTA canned RTD coffee was planned to launch first in the UK, followed by Poland and China. Interestingly, Chinese consumers didn't have to wait for the moment of pulling the tab; instead, they were greeted with a customized bottled COSTA RTD coffee. -02- Beverage Giant + Coffee Leader: Opening a New Chapter in the RTD Coffee Market As Coca-Cola's old rival, Pepsi has never stopped advancing in the RTD coffee field. It's not hard to see that Pepsi's coffee journey seems to always have a coffee leader by its side. Starbucks and Lavazza are both Pepsi's partners, continuously expanding the RTD coffee territory through win-win cooperation, while also providing new directions for its own brand coffee development. Lavazza iced coffee. Image source: FoodBev Media Less than a year after Coca-Cola acquired COSTA, Pepsi began searching for teammates globally, and Italian coffee giant Lavazza became Pepsi's new strategic partner. The establishment of the partnership accelerated the new product development process. Last summer, Pepsi made its first response in the coffee battle, launching an iced cappuccino RTD coffee nationwide in the UK with Lavazza. Of course, to accelerate innovation in this rapidly growing segment, the launch of Lavazza iced cappuccino was just the first step in the collaboration between the two giants. Lavazza controls the quality of coffee products, while Pepsi contributes to improving the professionalism of canned beverages. The two complement each other, launching canned coffee that meets consumer coffee needs. Image source: Starbucks official website Starbucks, the coffee overlord, and Pepsi have been working together for 26 years. As early as 1994, Pepsi and Starbucks jointly established the North American Coffee Partnership (NACP) to jointly develop and sell products. The globally popular Starbucks bottled RTD coffee series was created by NACP, with each product having a significant background, including star products like bottled Frappuccino and Doubleshot. Thanks to the strong RTD coffee market, NACP's retail sales have exceeded $2 billion. There's an interesting saying: "Coca-Cola's acquisition of COSTA worried Pepsi and panicked Starbucks." In February this year, before COSTA made its move, Pepsi and Starbucks quickly accelerated their pace, announcing that they were jointly launching a new RTD coffee product, Nitro Cold Brew, whetting the appetite of cold brew enthusiasts. The new RTD coffee comes in three flavors: black coffee, vanilla cream coffee, and dark caramel, with two flavors inspired by Starbucks' in-store specialty drinks. Although RTD nitro cold brew coffee is not a new term in the coffee market, Starbucks is one of the few coffee companies to scale this category. With excellent partners, Pepsi has also captured the attention of some RTD coffee enthusiasts. The powerful alliance of beverage giants and coffee chain brands has opened a new chapter in the RTD coffee market. -03- Not Fighting Over Cola, But Over Coffee: The "Two Colas" Have Been Rivals for 24 Years Although the global carbonated beverage market is undergoing accelerated transformation, and beverage R&D that removes the "carbonated" label has become a new direction, perhaps it's the wonderful charm of carbonation colliding with coffee that has kept the "Two Colas" from giving up on the coffee cola category despite many twists and turns. Interestingly, the "Two Colas" both started their coffee journeys with "cola + coffee." Pepsi Kona. Image source: Facebook The debut of coffee cola can be traced back 24 years, when Pepsi launched a coffee-flavored cola called Pepsi Kona. But Pepsi Kona wasn't really coffee; it was a new flavor of Pepsi-Cola. Pepsi Kona was tested in May 1996, positioned as a soft drink to be consumed at breakfast. Unfortunately, Pepsi Kona lasted less than a year before being discontinued due to poor sales. In 2004, Pepsi tried another coffee-flavored cola, Pepsi Cappuccino. As the name suggests, this cola had a creamy flavor similar to cappuccino, but it also ended up quietly exiting the market. Although these two flavor iterations failed, they helped Pepsi better understand consumer preferences to some extent. Interestingly, the "Two Colas," who have been both loving and fighting for years, always seem to seize opportunities the other missed. Pepsi's two failures inspired Coca-Cola, its old rival, to innovate in coffee + cola. The first time truly let American consumers taste coffee-flavored cola was in 2006. Coca-Cola BlāK. Image source: Time Magazine Coca-Cola launched Coca-Cola BlāK in 2006, selling it in France, Canada, the United States, and other regions. It is reported that Coca-Cola BlāK contained coffee extract, but its timing was off, leading to a tragic ending. After just two years, Coca-Cola BlāK was discontinued in 2008. Coca-Cola Plus Coffee NO Sugar. Image source: Coca-Cola official website Coca-Cola, becoming more resilient with each failure, never gave up on researching cola-flavored coffee. After nine years of accumulation, in 2017, Coca-Cola made a strong comeback with Coca-Cola Plus Coffee NO Sugar. This product was launched in Australia. Unlike the previous two, Coca-Cola Plus Coffee NO Sugar followed the sugar reduction trend, and being sugar-free became its biggest highlight. Pepsi Café. Image source: Pepsi official website Coca-Cola's continuous breakthroughs in cola coffee made Pepsi, which also has a special fondness for cola coffee, unable to sit still. After 13 years, Pepsi officially announced the launch of Pepsi Café at the end of last year, directly targeting the US market. Pepsi's new product, Pepsi Café, plans to launch in original and vanilla flavors, with a sleek, tall can, each 12 ounces (about 355ml). The coffee contains Arabica coffee bean extract, with twice the caffeine of regular Pepsi-Cola, and is expected to hit the US market in April this year. Pepsi's Vice President of Marketing, Todd Kaplan, said, "We believe cola fans, iced coffee drinkers, and anyone needing a caffeine boost will love the wonderful flavor of refreshing Pepsi-Cola mixed with charcoal-roasted coffee." Coca-Cola Plus Coffee NO Sugar's initial launch in Australia gave Coca-Cola a taste of success. After adjusting the original formula, Coca-Cola brought Coca-Cola Plus Coffee into the Asian market a year later, but it wasn't until last year that it launched cola coffee in the US. Pepsi seized this opportunity, and Pepsi Café will be the first to enter the US market this year. In the back-and-forth competition over cola coffee, does it seem like Pepsi has taken the lead? Of course, in the choice of partners, the "Two Colas" are evenly matched. Pepsi already has the best-selling RTD Frappuccino. Not to be outdone, Coca-Cola launched a counterattack: In 2017, Coca-Cola officially partnered with McDonald's USA to launch bottled McCafé Frappe coffee. McCafé Frappe. Image source: BevNet McCafé Frappe comes in three flavors: caramel, vanilla, and mocha, sold in PET bottles, produced, distributed, and sold by Coca-Cola. McCafé, with its price advantage, has a relatively stable customer base and certain performance, and Coca-Cola, with its absolute distribution strength, is a powerful ally for McDonald's to launch McCafé RTD coffee. This collaboration marked the first time a fast-food chain entered the bottled RTD coffee market, and it also meant a further expansion of Coca-Cola's coffee layout. -04- Summary After COSTA joined Coca-Cola, it undoubtedly became a formidable competitor for Pepsi in the coffee track. With COSTA's endorsement of RTD coffee, which has often been questioned for quality, and Coca-Cola's strategic maneuvering as a high-level player with unique marketing "tricks," can it win a chance for RTD coffee to break out of the "contempt chain"? Previously, Coca-Cola and Pepsi fought over the cola market. Now, will this red and blue duo usher in the prelude to an RTD coffee war? Source: FBIF Food & Beverage Innovation (ID: FoodInnovation) Author: Zhou Yue Tips will be paid 400-2000 yuan upon adoption.