--- title: "Seven Years After 'Marrying Down' to Master Kong: Pepsi No Longer 'Cola', Old Employees 'Displaced'" description: "After selling its China beverage business to Master Kong, PepsiCo enjoys a 'carefree life' of earning money per syrup pack sold. However, former Pepsi employees, forced to leave under Master Kong's arrangements, face a 'displaced' career. 'A drop in the historical torrent'—Xiao Pan and A Wen represent just a microcosm; many versions exist, but most chose to leave. 'Pepsi is a home you can't return to; years pass, yet always in our hearts.'" author: "快消记者 李珂" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2018-08-26" language: "en" canonical: "https://xinjignxiao.com/en/articles/seven-years-after-marrying-down-to-master-kong-pepsi-no-longer-cola-old-2f11cd1b/" markdown: "https://xinjignxiao.com/en/articles/seven-years-after-marrying-down-to-master-kong-pepsi-no-longer-cola-old-2f11cd1b.md" original_source: "https://mp.weixin.qq.com/s/I5znw3Z2HomdiqVkOtFB_g" translation: "https://xinjignxiao.com/zh/articles/%E4%B8%8B%E5%AB%81-%E5%BA%B7%E5%B8%88%E5%82%85%E4%B8%83%E5%B9%B4-%E7%99%BE%E4%BA%8B-%E4%B8%8D%E5%86%8D-%E5%8F%AF%E4%B9%90-%E8%80%81%E5%91%98%E5%B7%A5-%E9%A2%A0%E6%B2%9B%E6%B5%81%E7%A6%BB-2f11cd1b.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/seven-years-after-marrying-down-to-master-kong-pepsi-no-longer-cola-old-2f11cd1b/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Seven Years After 'Marrying Down' to Master Kong: Pepsi No Longer 'Cola', Old Employees 'Displaced' > After selling its China beverage business to Master Kong, PepsiCo enjoys a 'carefree life' of earning money per syrup pack sold. However, former Pepsi employees, forced to leave under Master Kong's arrangements, face a 'displaced' career. 'A drop in the historical torrent'—Xiao Pan and A Wen represent just a microcosm; many versions exist, but most chose to leave. 'Pepsi is a home you can't return to; years pass, yet always in our hearts.' After selling its China beverage business to Master Kong, PepsiCo enjoys a "carefree life" of earning money per syrup pack sold. However, those former Pepsi employees who were forced to leave under Master Kong's arrangements now face a "displaced" career. **"A Drop in the Historical Torrent"** **Xiao Pan and A Wen may represent just a small facet of micro-reality; real-life stories naturally have many versions, but the common thread is that most of them chose to leave.** "Pepsi is a home you can't return to; years have passed, yet I still hold it dear." Xiao Pan, who worked at Harbin Pepsi for many years, expressed regret when talking about his former employer. In 2015, unable to accept the new salary system, Xiao Pan chose to leave the Pepsi he had served for years. The reason was simple and realistic: "The salary reform began; from the start of the year, the salary credited was only one to two thousand yuan, performance pay was repeatedly delayed, and reimbursement and various subsidies were long borne by individuals." In his view, after PepsiCo and Master Kong reached cooperation, Pepsi "seemed to become another company, not caring about employee interests or hardships." Now, Xiao Pan no longer works in the FMCG industry; in his words, "My sense of security has been exhausted; I don't want to repeat the same setbacks." Also choosing to leave Pepsi in 2015 was A Wen from Guangdong. At the time of resignation, he had served Pepsi for ten years; from a greenhorn, he gradually climbed to sales management positions, eventually becoming an internal trainer at Shenzhen Pepsi. Upon learning that Pepsi's bottling business was sold to Master Kong, Pepsi employees had strong resistance. "We disliked Master Kong's 'style' then, including their management of distributors, squeezing of delivery partners, and arrogance in market execution." "From 2011 (when the Kang-Pepsi alliance was formed) to 2015, Master Kong replaced almost all of Pepsi's senior management and continuously sent in personnel. Too many things changed: assessment methods, structure, titles, etc." The "last straw" that broke A Wen was Master Kong's "compensation" plan for old Pepsi employees. In 2011, when Pepsi exited, it promised a compensation payment to old employees. The plan generally had two aspects: one was to continue seniority without compensation; the other was to buy out seniority with "N" and then let employees decide whether to stay or leave. This fell far short of old employees' expectations. In labor law, "N" refers to the number of months of compensation salary, and "1" refers to one month's notice pay (usually monthly salary). The monthly salary for N is the average salary of the past 12 months before contract termination, and the monthly salary for 1 is the salary of the month before termination. Two years after the alliance, when Master Kong began to intervene in Pepsi's administrative management, it encountered heavy resistance. Disheartened old Pepsi employees began large-scale strikes, demanding "Let Master Kong fire us; within 10 years, N+4; within 15 years, N+6; over 15 years, N+8." "Finally, Master Kong Group Chairman Wei Yingchou waved his pen and allocated 500 million yuan in compensation, saying, 'Let them all go; I don't believe they'd choose work over money.' The result was that 99% of people left, and nearly 1 billion yuan was paid in total," A Wen said. In his view, the essence of the so-called compensation was a "great purge." Another reason A Wen left was that the South China region head, regional director, and regional manager had already left or were about to leave, leaving ordinary employees with no sense of belonging to Pepsi. In the following years, A Wen moved through several foreign FMCG companies and supply chain enterprises, but left due to unstable performance or "factional struggles." Only this year did he settle down at a Hong Kong-funded FMCG company. "Displaced," A Wen described his career after leaving Pepsi. In his view, most FMCG companies lack a tradition of "parachuting" outsiders, making newcomers vulnerable to exclusion. Moreover, Pepsi's original setup was so complete that many found it hard to adapt after leaving. When asked, "Do you resent Pepsi?" A Wen smiled wryly, "We are just a drop in the historical torrent." According to incomplete statistics, nearly 15,000 employees, like Xiao Pan and A Wen, followed Pepsi to "marry" Master Kong, and nearly 10,000 chose to leave. **Pepsi "Wins Without Losing"** All this seems destined from the day Pepsi entered China. Over thirty years ago, old rivals Coca-Cola and Pepsi returned to the Chinese market one after another. Coca-Cola, which entered China earlier, adopted a "political-economic route," choosing to cooperate with Kerry and Swire, which had deep government ties, as well as China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO), a subsidiary of the former Ministry of Foreign Trade and Economic Cooperation. However, these partners did not participate in the company's specific operations. Coca-Cola not only successfully established bottling plants but also gained sufficient operational rights and voice over the following decades, laying a solid foundation for long-term stable development. In contrast, when Pepsi entered China, it chose a "blind men and the elephant" path—its bottling plant cooperation forms were diverse, including joint ventures, cooperative ventures, and franchised canning. Even, "Whoever could get a production license, we would cooperate with them." Due to the complex corporate structure, although Pepsi successfully established 24 bottling plants in China, each plant "served its own master." A vivid metaphor is: "Coca-Cola operates with centralization, while Pepsi operates with feudal decentralization." The difference is that once problems arise, it is reasonable for Pepsi to shed these bottling plants. In fact, before the "Kang-Pepsi Alliance" agreement, the rift between Pepsi and its Chinese partners had become increasingly serious. During this period, Chinese partners such as Huamin Group, Beijing Yiqing Holding Co., Ltd., Shenzhen Shenbao Industrial Co., Ltd., and China Light Industry Foreign Economic and Technical Cooperation Fujian Company successively sold their shares in various Pepsi China subsidiaries. The reason was that only a few of Pepsi's Chinese joint ventures were profitable; most suffered losses year after year. Pepsi's response was to transfer all its bottling assets in China to Master Kong Beverage Holdings, in exchange for a 9.5% equity interest in Master Kong Beverage, the holding company of Master Kong Beverage Holdings in China, equivalent to Pepsi indirectly holding a 5% stake in Master Kong Beverage Holdings, the parent of Master Kong Beverage. By selling its bottling business in China, Pepsi successfully resolved the crisis of joint venture partners selling their shares. Although public opinion at the time mostly believed that Master Kong "got a great bargain," in fact, industry insiders generally believed that the bigger beneficiary was Pepsi. "What lost money was not Pepsi itself, but the bottling plant business. After all, the concentrate has always been in Pepsi's hands; no matter how the partnership changes, Pepsi is 'sitting firmly in the fishing boat'... Even with Master Kong, it's the same," said a former Pepsi employee. He also revealed, "In the carbonated beverage industry chain, upstream concentrate accounts for over 50% of gross profit, other segments account for 40%, and bottling business gross profit is only around 10%." **Master Kong "Killing the Goose That Lays Golden Eggs"?** However, Master Kong would not do a losing deal. In the following years, Master Kong massively laid off former Pepsi employees and reduced related market expenses, showing a tendency of "killing the goose that lays golden eggs." More seriously, Pepsi's non-carbonated SKUs, which were never strong, became increasingly weak in the market. In the non-carbonated field, Pepsi undoubtedly had a first-mover advantage. Around 2000, PepsiCo successively acquired Tropicana, Quaker Oats, South Beach Beverage, and SoBe tea drinks. However, Pepsi, which was thriving internationally, did not quickly bring its non-carbonated business to China. In the subsequent "non-carbonated whirlwind," various teas, fruit and vegetable drinks, and functional drinks gradually became mainstream. At this time, Coca-Cola's Minute Maid Pulpy and Qoo, and Nestea were popular in the market. Pepsi belatedly launched Fruit & Fun and Dole, but these two products did not suit Chinese tastes well. After "marrying down" to Master Kong, Pepsi's non-carbonated SKUs were almost "sent to the cold palace." Take Gatorade, for example; to this day, Pepsi still assesses sales representatives on Gatorade sales, but sales basically rely on distributors stocking up, and volume mainly comes from sales points at sports venues. The reason is simple: Master Kong has a rich variety of its own beverages; what it lacks is only carbonated drinks, so there is no need for "internal friction." In Xiao Pan's view, "Since Master Kong bought a low-margin business, it naturally will 'squeeze the old capital.'" A Wen, still working in the FMCG industry, feels deeply about the "gradual disappearance" of Pepsi SKUs. "Walking in the market, seeing many Pepsi freezers stocked with other manufacturers' products, I feel mixed emotions. Rarely see new Pepsi colleagues in stores... No investment means death. Although now Pepsi earns money per syrup pack sold, it certainly won't lose." Through the "Kang-Pepsi Alliance," Pepsi gained a larger market (especially the northwest), stable concentrate sales, ongoing returns from Master Kong equity, and transformation under the "big health" strategy; Master Kong successfully entered the carbonated market and got "a hen that can be killed for eggs." Behind the "win-win" for Pepsi and Master Kong are the "displacement" of thousands of old employees and a Pepsi that is no longer "Cola." **Pepsi Alliances, More Than Once or Twice** In fact, not only Pepsi's China bottling business was sold; globally, a vigorous "bottle-shedding campaign" by Pepsi has been staged in multiple countries. In 2012, PepsiCo (Pepsi's parent) sold 51% of its Vietnam beverage business to Japan's Suntory. The new joint venture became the bottler for both companies in Vietnam. In the same year, New Zealand beverage company Frucor announced it would take over PepsiCo's production and distribution operations in New Zealand. Notably, Frucor had been fully acquired by Suntory in 2009. In 2015, PepsiCo partnered with Nordic consumer goods giant Orkla, which would be responsible for selling PepsiCo's carbonated drinks, as well as Tropicana, Quaker, and Lay's products in Norway, Sweden, and Finland. In 2017, Suntory and PepsiCo jointly established Suntory-Pepsi Beverage Company in Thailand to jointly operate PepsiCo's beverage business in Thailand, with Pepsi holding 49% of the joint venture. Earlier, PepsiCo also entered countries like India and Venezuela through partnerships with local companies. A Wen said that PepsiCo has completed alliances with local enterprises in many countries, including South America, Asia, and parts of Europe; specifically, it sells bottling plant businesses and maximizes profits through concentrate. However, in these countries' markets, PepsiCo's various products are still developing relatively well. The difference can be seen in the attitudes of Suntory and Master Kong toward Pepsi. Whether in Japan's domestic market, New Zealand, Thailand, or Vietnam, "continuing to expand its beverage portfolio to meet consumers' more diverse needs" is Suntory's consistent strategic direction. Even in markets where it holds only 49% equity, Pepsi still has sufficient independent operational rights and decision-making power. In foreign media reports, information about Pepsi employee strikes or brand weakening in the aforementioned countries is extremely rare. In contrast, when you search "Pepsi Strike" on Google or YouTube, you get overwhelming text and images about Chinese employees. Seven years ago, Coca-Cola's acquisition of Huiyuan failed; three years later, Pepsi's lawsuit over "embezzling" Tianfu Cola is still ongoing. When news of Master Kong "drinking up" Pepsi broke, domestic public opinion was in an uproar, with cheers of "domestic enterprises swallowing international giants" ringing out. Seven years later, when the "Kang-Pepsi Alliance" is mentioned again, ordinary consumers wonder, "Why has Pepsi's presence become weaker in recent years?" Industry insiders lament, "A good international FMCG brand has come to such a pass in China." And those "displaced" old employees mostly avoid mentioning it, only silently commenting when they see Pepsi in the news: "One general's success costs ten thousand bones." (Xiao Pan and A Wen are pseudonyms.) Source: FMCG (ID: fbc180) -END- --- ## 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