---
title: "How to Beat Coca-Cola?"
description: "In recent years, many new soda brands have emerged with various concepts like sugar-free, fruity, juice, national trend, aesthetics, and retro soda, but most are not selling well due to too many pseudo-concepts and insufficient understanding of market and channel pain points. Making soda in China is tough because of the formidable competitor Coca-Cola, which has millions of outlets, tens of thousands of distributors, and sales reps. Their business model, authorized bottling plus the 101 distribution system, is highly successful. However, even giants have weaknesses, and small brands can find opportunities in neglected demands and channels."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-04-18"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/how-to-beat-coca-cola-65d54724/"
markdown: "https://xinjignxiao.com/en/articles/how-to-beat-coca-cola-65d54724.md"
original_source: "https://mp.weixin.qq.com/s/ah4gOvx5rizcXrFnG9Y44w"
translation: "https://xinjignxiao.com/zh/articles/%E5%A6%82%E4%BD%95%E6%89%93%E8%B4%A5%E5%8F%AF%E5%8F%A3%E5%8F%AF%E4%B9%90-65d54724.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/how-to-beat-coca-cola-65d54724/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# How to Beat Coca-Cola?

> In recent years, many new soda brands have emerged with various concepts like sugar-free, fruity, juice, national trend, aesthetics, and retro soda, but most are not selling well due to too many pseudo-concepts and insufficient understanding of market and channel pain points. Making soda in China is tough because of the formidable competitor Coca-Cola, which has millions of outlets, tens of thousands of distributors, and sales reps. Their business model, authorized bottling plus the 101 distribution system, is highly successful. However, even giants have weaknesses, and small brands can find opportunities in neglected demands and channels.

In the past two years, many new sodas have been launched with various product concepts: sugar-free, fruity, juice, national trend, aesthetics, retro soda, etc. However, most brands are not selling well. On one hand, there are too many pseudo-concepts; on the other hand, there is insufficient understanding of market and channel pain points.

Making soda in the Chinese market is actually very difficult because there is a very powerful opponent: Coca-Cola.

They have millions of outlets in China, tens of thousands of distributors, and tens of thousands of sales representatives. Their business model, authorized bottling + 101 distribution system, can be said to be very successful in China. Their brand is highly recognized among Chinese consumers. Their product, the combination of carbonation, sugar, and caffeine, makes consumers unable to resist.

The question we discuss today is: **In front of such a powerful opponent, how do you find market opportunities and succeed?** I think this is a question every soda entrepreneur must consider.

**Demands and channels that big companies overlook are opportunities for small brands.**

Even the strongest opponent has weaknesses. How to find the weaknesses of a powerful opponent like Coca-Cola?

Clayton Christensen analyzed in "The Innovator's Dilemma": **A leading company does not make a product not because it is technologically backward; on the contrary, they have always been at the technological forefront. They can develop any product they want. The reason they don't develop it is because they think it's not worth it.**

Leading companies are not arrogant or lax in management; on the contrary, they are always striving for excellence.

Salespeople of leading companies go to customers every day to understand their needs. Their IT departments and CIOs constantly update systems and make market forecasts. Their financial management departments always pursue high growth rates, fearing that development is too slow.

Christensen gave an example from the American steel industry.

Large American steel companies have been pursuing technological progress and continuously improving product grades. Only small steel companies use electric arc furnaces to melt scrap steel. They can only produce rebar.

Rebar is mixed in concrete and has lower quality requirements, so it is a typical low-end market.

Can large steel companies produce rebar? Yes, they can.

They are happy to give up the rebar market because the profit margin is too low and customers lack loyalty. Let the small steel companies fight over a bone; we can focus on higher-end products. Isn't that better?

The rebar market was quickly occupied by small steel companies. Due to fierce competition, small steel companies had to move up and produce better steel products like angle steel, flat steel, and bar steel.

Large steel companies continued to climb and produce structural steel. The structural steel market had higher profit margins and larger market capacity.

Later, small steel companies made technological breakthroughs and began producing structural steel, while large steel companies had already moved to the more profitable steel plate market.

The problem is that due to repeated attacks by small steel companies, large steel companies were eventually compressed into a corner, only able to stay in the high-end market and unable to return to the low-end market.

You see, leading companies lose competitiveness not because they do poorly, but precisely because they do too well.

Focusing on customer needs, predicting market trends, pursuing financial performance, and meeting shareholder profit requirements are all things that companies must do well under normal circumstances. However, your customers are just a small part of the market; new customers are not in your phone book.

Customers actually do not know future market developments. If you ask customers about their needs, they often give you wrong answers. Technological evolution is unpredictable. Overly pursuing profit margins will cause you to miss opportunities in emerging markets: by the time the emerging market becomes established, it is too late to enter.

**What are Coca-Cola's weaknesses?**

Undoubtedly, to defeat an opponent, you must deeply understand them. Tang Binsen, the boss of Genki Forest, once said that when he sold his game company and started investing, he studied what the world's most powerful people were investing in.

Tang Binsen studied Buffett and Duan Yongping and discovered that Buffett had been investing in Coca-Cola since 1989 and had never stopped for over thirty years. So Tang Binsen deeply studied Coca-Cola and found that selling soda is such a profitable business that he resolutely entered the soda industry.

Here, we must mention a book: "For God, Country, and Coca-Cola" by Mark Pendergrast, a famous American journalist and nonfiction writer, published in 2015. It details the 130-year history of Coca-Cola from 1884 to 2014, clearly revealing how Coca-Cola evolved from an ordinary soda into America's national beverage and how it conquered the world step by step.

"For God, Country, and Coca-Cola" clearly summarizes Coca-Cola's three success secrets:
1) Coca-Cola's unparalleled brand marketing is its core advantage.
2) The bottling authorization system is the fundamental business logic that maintains Coca-Cola's ultra-high profit margins.
3) Binding with the government and military, rapidly advancing through World War II, is the most critical part of Coca-Cola's global expansion.

**It can be said that advertising is Coca-Cola's lifeline. Although Coca-Cola has changed hands several times, its strategy of extreme reliance on advertising has never changed.** Coca-Cola knows very well that brand marketing is more important than the product itself. Its core advantage is not the so-called "secret formula" deliberately promoted by the official, but the result of over a hundred years of continuous brand marketing.

If brand marketing is the reason consumers keep buying, then the bottling authorization system is the core business model that maintains Coca-Cola's ultra-high profit margins.

Wherever Coca-Cola goes, it seeks the most powerful local businessmen to be its bottlers.

For example, in Japan, it found large zaibatsu like Mitsubishi and Mitsui; in India, it found local religious leaders. In China, it cooperated with Swire Group and COFCO Group.

This way, on one hand, it can leverage the resources and influence of local bottlers to quickly open the market, and on the other hand, it helps Coca-Cola bear market risks.

Coca-Cola only produces concentrated syrup, with extremely low production costs and only a limited number of production workshops. Until the end of the 20th century, Coca-Cola only had 8 concentrated syrup factories.

How many bottling plants does Coca-Cola have? There are thousands globally. These bottling plants are costly, but their profits are much lower than producing syrup.

Whenever there are market fluctuations, economic recessions, political turmoil, etc., these local bottling plants may fall into bankruptcy.

Later, Coca-Cola changed to providing sugar-free concentrated powder to foreign bottlers, letting them add syrup according to the formula, make the drink, and then bottle it. This further shifted the risk of international sugar price fluctuations to the bottlers, allowing Coca-Cola to enjoy risk-free high profits.

This is why Coca-Cola has gone through major historical upheavals such as World War I, the Great Depression, World War II, and the Cold War, yet its ultra-high profitability has been almost unaffected.

Here, I want to say that although the 101 model helps Coca-Cola seamlessly cover the vast majority of sales points, this model also has a major drawback: the profit margins for channel partners are extremely low. For distributors seeking stability, Coca-Cola is definitely a job that can support a family, but making a fortune through Coca-Cola is almost impossible.

Not only do 101 partners earn little, but channel partners also earn little.

Retailers can tolerate it, but restaurants, constrained by high upfront investment and labor and rent costs, find selling Coca-Cola at low prices very unprofitable.

However, because Coca-Cola has extremely high brand awareness and a very high consumer self-order rate, the restaurant channel has to sell Coke.

So we can conclude that the restaurant channel has long suffered from Coca-Cola!

Not only that, but even Coca-Cola's own people are unwilling to sell Coke. Why?

Restaurants are channels with low output per store and complex maintenance. Salespeople are unwilling to do this; they prefer to sell in channels with higher input-output ratios.

This is the weakness of powerful Coca-Cola: overemphasis on financial indicators, over-reliance on advertising, excessive focus on human efficiency, insufficient channel profit margins, and insufficient service depth in some niche channels. This leaves enough space for competitors to operate.

**How does Dayao Jiabin leverage the restaurant channel?**

When I was researching the market in Jilin in 2019, I found Dayao Jiabin doing table displays in a small barbecue restaurant. At that time, I found this product very interesting and knew how to fight Coca-Cola.

I remember sending a WeChat message to Tang Binsen, saying you should study this brand carefully.

I specifically learned about Dayao Jiabin. It is a soda brand from Inner Mongolia. It does no online advertising, and its packaging is extremely rustic. But such an Inner Mongolia enterprise, without spending a penny on advertising or online, has achieved revenue of over 3 billion yuan.

**I carefully analyzed its product logic: it is a product specifically designed around the restaurant dining scenario.**

The scenario is very clear:
  * **Real ingredients, focusing on mass consumption.**
  * **Focus on small restaurant formats.**
  * **Focus on large-scale in-store stacking and table displays.**

These may not seem unusual. Why mention the table display of Dayao?

Because I found that Dayao Jiabin's entire marketing system is specially designed, a tactic specifically aimed at fighting Coke.

I looked at its product ingredients: white sugar, orange juice, food additives, honey. Why not use sweeteners? Instead, use white sugar and honey?

These give consumers a sense of value.

Why focus on small restaurant formats? As mentioned earlier, Coke's sales representatives do not invest enough energy in restaurants.

Why do table displays?

Dayao's brand power is insufficient. Through table displays, they do terminal interception, prompting consumers who want to drink Coke to make impulse purchases.

Dayao also does not equip salespeople, leaving all profits to the channel, so restaurants naturally have motivation. It also takes advantage of the fact that Beibingyang is too expensive; at the same price, the taste is the same, but the capacity is twice as large. You see, are the product, scenario, pain point, and selling point consistent?

Do you think that's enough? Not yet!

Dayao Jiabin's landed price at the distributor level is 17.5 yuan per case. The distributor sells to the second-tier wholesaler at 21.5 yuan per case. The terminal invoiced price is 30 yuan per case, with a promotion of 5 cases plus 1 free, making it 25 yuan per case. Roughly calculated, the terminal retail price is 5-6 yuan, with a gross profit of 3-4 yuan per bottle, which is very attractive to small shop owners.

The logic here is simple: Dayao saw that small restaurants have long suffered from Coke: selling Coke is not profitable, but they have to sell it. So they formulated a complete set of restaurant channel penetration strategies.

Moreover, Dayao Jiabin did not build factories in strong Coke markets like Henan, Beijing-Tianjin-Hebei, or Shandong, but in relatively weaker markets with lower consumption power such as Inner Mongolia, Liaoning, Ningxia, and Jilin.

In summary, Dayao Jiabin's strategy: **In areas where competitors are relatively weak and channels they have no energy to penetrate, concentrate resources and expenses, give distribution channels and retailers sufficient profits, let them break through at single points in the restaurant channel, expand from points to areas, gradually expand and penetrate, and finally establish their own base.**

When Coke takes it seriously and wants to eliminate the opponent, it may already be very difficult.

**Summary:**

The title today is a bit exaggerated. Facing a product that has been established for over a hundred years, does not need technological iteration and innovation, and relies entirely on brand marketing and channel barriers, Coca-Cola's competitive barriers are too high. To defeat such an opponent, if you take a frontal attack, it is no exaggeration to say that the chance of success is almost zero.

But we must clearly see that big brands are not without flaws. Everything has two sides. Huge success means huge flaws. We cannot only see Goliath's huge body and ignore David's agility. As long as we can find the opponent's weaknesses, there is always a possibility to defeat the enemy.

**For entrepreneurs who decide to enter the soda track, the first step is to find users that competitors do not value or ignore. The second is to provide products with differentiation and continuously improving performance. Enter the segmented markets formed by these users' unmet needs.**

**For Coca-Cola, "can buy, can afford, and are happy to buy" are its core competitiveness in the channel.**

However, "can buy" means Coca-Cola must be ubiquitous. With such a large market, Coca-Cola cannot be evenly distributed in every region and channel. This is also why Dayao Jiabin found opportunities in restaurants.

"Can afford" means Coca-Cola must take care of the purchasing power of most consumers, which means some people's needs cannot be met. This is also why Genki Forest launched a 6-yuan sugar-free sparkling water that consumers strongly support.

"Happy to buy" means Coca-Cola must please all consumers, and its marketing must be politically correct, so a small number of personalized values cannot be satisfied. I think this is also the opportunity for future niche, personalized, and community-based beverage brands.

Jack Trout and Al Ries wrote in "Marketing Warfare" that when facing a brand much stronger than yourself, the primary task is to survive first, protect yourself, and then seize opportunities through flanking and guerrilla warfare to gain survival chances, and then gradually grow stronger.

**Therefore, for small brands wanting to enter the soda track, defeating Coca-Cola is not the goal. The first priority is to find the opponent's weaknesses and survive where the opponent cannot reach.** Do not expose yourself too early. Wait until you are strong, then it is not too late to compete.

| Founder of New Distribution
FMCG industry channel expert, author of over 400,000 words of FMCG industry research articles
For communication, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name.

**Are you "watching" me?**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671