In 2018, Coca-Cola will participate in the Chengdu Sugar & Wine Fair in March for the first time in its history, but this is not news. Since two years ago, when COFCO Tunhe, a subsidiary of COFCO Group, acquired seven subsidiaries of China Sugar & Wine Group Corporation (referred to as Zhongtang), it is not surprising that Coca-Cola, also under COFCO, would participate in the Sugar & Wine Fair hosted by Zhongtang this year.

What is noteworthy is what products Coca-Cola, the world's No.1 beverage seller, will bring to the fair. Today, reporters from Food Business Observation finally learned the exact new product information from Sichuan Coca-Cola Company: they will focus on promoting two products at the fair—one is Monster energy drink, and the other is Coca-Cola's internet-famous new product Sprite Plus (Chinese name: Sprite Fiber+). They will set up an outdoor booth at the Western Expo City during the fair, covering an area of 288 square meters.

According to media reports, in the Asia-Pacific region alone, Coca-Cola has launched more than 500 new products in the past three years. Why choose these two products?

"Soda has no market these years. Does our factory still have a future?"

Fang Xiang, who took over as General Manager of COFCO Coca-Cola (Sichuan) Company in 2017 after moving from Hainan to Sichuan, remembers this incident vividly: a production line employee asked him with confusion, "Soda has no market these years. Does our factory still have a future?"

In Fang Xiang's view, the fundamental issue is to change employees' mindset and reshape Coca-Cola's advantage in the beverage market. Now, Coca-Cola's participation in the Sugar & Wine Fair with Sprite Plus and Monster energy drink shows their confidence in these two products.

"When beverages are relatively saturated, we need innovation. Novelty is what attracts market attention." On the afternoon of February 2 this year, at the "Model China·2017 Top Ten Economic Influential Figures in Sichuan" award ceremony held at Chengdu Jinjiang Hotel, Fang Xiang, one of the award winners, said in an interview with media: "In March this year, COFCO Coca-Cola Sichuan market will launch a new beverage, Sprite Plus."

"Japan's Internet Celebrity" Lands in China, Expected to Be One of the Highlights of the Sugar & Wine Fair

According to media reports, for the Chinese market, Coca-Cola's principle is "while building a broad product portfolio, also concentrate efforts." Based on this strategy, the company will build four core brands in China in the future: Coca-Cola, Sprite, Minute Maid, and Ice Dew, and then launch new products on this basis. Among them, Sprite has long been the third-largest carbonated beverage in China, after Coca-Cola and Pepsi, and can be considered a strategic major product under Coca-Cola.

The Sprite Plus to be showcased at the Sugar & Wine Fair originates from Coca-Cola Japan and emphasizes the health concept of "zero calories." The product is positioned as "Sprite Fiber+ Lemon-flavored Soda," with each bottle containing dietary fiber equivalent to two apples and zero sugar. Fang Xiang believes: "For female friends who like Sprite but worry about weight, this will be good news."

According to reporters' investigation, before Coca-Cola officially sold Sprite Plus in the mainland market, it had already sold Japanese-produced products on Tmall Global. The promotional images on Tmall Global show that the retail price for a net content of 470ml×6 is 49 yuan (excluding import tax), with a second item free, which translates to about 4.5 yuan per bottle, positioning it in the mainstream to upper-middle price range of beverages.

Based on buyer reviews, this new product also has highlights in taste and packaging.

Zou Wenwu, a fast-moving consumer goods marketing expert, believes that Sprite Plus will be a highly distinctive new product at the Sugar & Wine Fair. "From the consumption environment, modern people pursue health and fashion. Sprite Plus's zero-calorie, zero-sugar concept, as well as its refreshing white packaging design, meets the needs of these people. From the consumption trend, health drinks with light-fat and fat-reduction concepts will be the innovative trend for beverages in the coming period, with significant market potential. Therefore, this new Coca-Cola product will definitely attract the attention of distributors at the Sugar & Wine Fair."

Combined with Sprite's endorsement effect and Coca-Cola's strong promotional capabilities, Sprite Plus may become a star new product in the domestic beverage market in 2018.

Monster: The Energy Drink Most Qualified to Challenge Red Bull

In addition to Sprite Plus, Monster energy drink will also be a sharp tool for Coca-Cola to break into the market.

Among many new brands, the American Monster energy drink, which just entered the Chinese market over a year ago, is most favored by the industry, and it is even predicted to become the strongest competitor to China Red Bull.

According to reports, Monster relies on Coca-Cola's bottling system to expand in the Chinese market and has already entered Sichuan, Tianjin, Hebei, Shandong, Henan, Anhui, Zhejiang, Jiangsu, Guangdong, and other places. In fact, in the international market, Monster is Red Bull's biggest competitor. Its bold and avant-garde brand image and youthful packaging design have already "attracted countless fans" in the U.S. market. Euromonitor data shows that since 2008, Monster has overtaken Red Bull and become the No.1 in the U.S. energy drink market share.

In a research report released in March 2017, Deutsche Bank stated that China Foods (a listed company under COFCO) had strong sales of functional "Monster" beverages in the Asia-Pacific region, and management was optimistic about its growth potential in China. As one of the major Coca-Cola bottlers in China, Deutsche Bank estimated that energy drinks would contribute 5.6% and 7.7% to China Foods' beverage sales in 2017 and 2018, respectively.

At the same time, another report by Deutsche Bank analysts also indicated that China Foods under COFCO has been a distributor of Monster beverages since 2016. "After the internal restructuring is completed, we expect China Foods' management to allocate more resources to this category." The bank predicts that China's functional beverage category can grow by 16% in the next three years.

In this regard, an industry insider said, "It is estimated that by 2020, China's functional beverage retail volume will reach 15.037 billion liters, and retail sales will reach 163.528 billion yuan, making the functional beverage market extremely competitive. However, since 2016, China Red Bull has been embroiled in a trademark renewal dispute with Thai Red Bull, and its target sales have significantly shrunk. This has left a nearly 10 billion yuan gap in the existing market. Coincidentally, 2018 is the 'World Cup year' that attracts global attention, which will inevitably bring incremental effects to functional beverages. This will be an opportunity for Monster to seize market share."

Source: Food Business Observation (ID: fbc180) -END-