--- title: "Two Giants Built on Cola Dive into Premium Water: Are Consumers Turning Away from Carbonated Drinks?" description: "In recent years, competition in China's bottled water market, especially in the premium segment, has been intense. Now even PepsiCo, known for its carbonated drinks, has joined the fray, announcing a premium bottled water brand called LIFEWTR for February next year. PepsiCo CEO Indra Nooyi told investors that the company's singular focus on carbonated drinks is a thing of the past, and non-carbonated beverages will become the new growth engine for the beverage market." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-12-16" language: "en" canonical: "https://xinjignxiao.com/en/articles/two-giants-built-on-cola-dive-into-premium-water-are-consumers-turning-a-f5816ddf/" markdown: "https://xinjignxiao.com/en/articles/two-giants-built-on-cola-dive-into-premium-water-are-consumers-turning-a-f5816ddf.md" original_source: "https://mp.weixin.qq.com/s/GJaNcYsS_lYguqNCV1Xcuw" translation: "https://xinjignxiao.com/zh/articles/%E4%BB%A5%E5%8F%AF%E4%B9%90%E8%B5%B7%E5%AE%B6%E7%9A%84%E4%B8%A4%E5%A4%A7%E5%B7%A8%E5%A4%B4%E7%BA%B7%E7%BA%B7%E6%8A%95%E5%85%A5%E9%AB%98%E7%AB%AF%E6%B0%B4%E8%A1%8C%E5%88%97-%E6%B6%88%E8%B4%B9%E8%80%85%E4%B8%8D%E7%88%B1%E7%A2%B3%E9%85%B8%E9%A5%AE%E6%96%99%E4%BA%86-f5816ddf.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/two-giants-built-on-cola-dive-into-premium-water-are-consumers-turning-a-f5816ddf/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Two Giants Built on Cola Dive into Premium Water: Are Consumers Turning Away from Carbonated Drinks? > In recent years, competition in China's bottled water market, especially in the premium segment, has been intense. Now even PepsiCo, known for its carbonated drinks, has joined the fray, announcing a premium bottled water brand called LIFEWTR for February next year. PepsiCo CEO Indra Nooyi told investors that the company's singular focus on carbonated drinks is a thing of the past, and non-carbonated beverages will become the new growth engine for the beverage market. In recent years, competition in China's bottled water market, especially in the premium segment, has been intense. Now even PepsiCo, known for its carbonated drinks, has joined the fray. Recently, Pepsi announced that it will launch a bottled water brand called LIFEWTR in February next year, targeting the premium market. PepsiCo CEO Indra Nooyi even told investors, "PepsiCo's singular focus on carbonated drinks is a thing of the past," and non-carbonated beverages will become the "new force" driving the entire beverage market. Speaking of selling water, both PepsiCo and Coca-Cola have been quite active recently. In fact, these two giants started selling water years ago, and even once captured significant market share from major domestic water brands. You've probably drunk both of these waters! (See below) Coca-Cola's Ice Dew and PepsiCo's Aquafina However, their low-end waters had a lukewarm market response, and the two companies didn't invest much effort. Despite advantages in price and distribution, the profits were minimal. As consumer attitudes evolve and the market changes, the two giants are now ready to take water seriously. In 2017, the premium water battle is about to begin... **PepsiCo Launches New Premium Purified Water LIFEWTR** For years, PepsiCo's only bottled water brand was Aquafina. Now, PepsiCo has announced that next year it will launch a new premium water called LIFEWTR. Pepsi describes it as a bottled water that blends creativity and design, opening a new era, and hopes to build it into a billion-dollar brand. According to PepsiCo's official announcement, LIFEWTR will first launch in the U.S. in February next year. The product's selling point is pH balance, with added electrolytes to enhance taste. It will be available in 700ml and 1L sizes, with retail prices of $2.06 (about RMB 14.2) and $2.70 (about RMB 18.6) respectively. The most attractive aspect is the packaging. The first three LIFEWTR designs feature bottle labels created by emerging artists. These three designs are by: MOMO, known for large murals, with works famous in Jamaica, Italy, and the U.S.; Craig & Karl, one from New York and one from London, who convey simple messages in a thoughtful and humorous way; and Jason Woodside, who specializes in color, with designs visible in New York, Paris, Sydney, and elsewhere. PepsiCo's Global Beverage President Brad Jakeman said, "LIFEWTR is a huge priority for us and an exciting big global bet. We've worked hard to make this premium bottled water's pure taste and compelling packaging connect with consumers. Starting in the U.S., we can't wait to bring this brand to young consumers around the world." **How Will Coca-Cola Respond?** Coca-Cola's premium water series, Smartwater, is also one of the fastest-growing brands for the company. Fortune magazine noted that the U.S. premium water market is currently worth $2.8 billion, dominated by Coca-Cola's Smartwater. With Lifewtr, Pepsi not only aims to reclaim the U.S. market but also calls it "a big bet for the international market." Smartwater's success in the U.S. and U.K. is largely due to celebrity endorsements. Jennifer Aniston's ad campaign, "Smart women and smart water," became an iconic concept. The shift of carbonated beverage giants to premium drinking water is largely related to the shrinking carbonated drink market in recent years. In this trend, these two companies are rapidly responding by seeking products that better meet current consumer needs, with a focus on health. > **Why Are Coca-Cola and Pepsi Not Selling Well in China?** **1. Consumers Are More Health-Conscious** PepsiCo's CEO has said that carbonated drinks account for less than a quarter of PepsiCo's global sales, while healthy products, including bottled water and sugar-free drinks, already account for a quarter. In the future, non-carbonated beverages will become the new force driving the beverage market. Pepsi has already done a lot for this... 1) Potential Acquisition of U.S. Probiotic Drink Company KeVita Last month, according to Reuters citing sources, Pepsi was in investment talks with U.S. probiotic drink company KeVita. If negotiations go well, the acquisition could be finalized soon, with KeVita valued at over $500 million. If the acquisition is completed, it would be Pepsi's first public acquisition since establishing Naked Emerging Brands. Naked Emerging Brands' mission is to expand Pepsi's portfolio of sugary drinks and use emerging brands to meet the needs of health-conscious consumers. 2) Pepsi Announces Significant Sugar Reduction On October 17, PepsiCo announced plans to reduce sugar in products including Pepsi-Cola, and also lower calories in its main products. 3) Launch of 2025 Sustainability Agenda Recently, Pepsi has set numerous 2025 product goals, including: two-thirds of its 12-ounce sugary drinks will have 100 calories or less per serving, with a focus on zero- or low-calorie drinks; at least three-quarters of its food portfolio will have no more than 1.1 grams of saturated fat per 100 calories; and at least three-quarters of its food portfolio will have no more than 1.3 milligrams of sodium per calorie. 4) Launch of Emoji Bottles In addition to these strategies, Pepsi is also making every effort in marketing to increase consumer contact with the brand, expand brand promotion, and extend brand life. For example, this year's launch of emoji bottles not only included a micro-film to build a positive brand image but also sponsored the online variety show "The Game of Dinner" for promotion. However, its role in addressing long-term brand decline may be limited. How to attract young people and face the future is an important topic for many brands. **2. Consumption Upgrade** According to Coca-Cola's financial reports, in the first half of 2016, Coca-Cola's total revenue was $21.821 billion, down 4.6% year-on-year. The decline was mainly due to the Asia-Pacific region, especially China; poor sales in China dragged down Coca-Cola's performance across Asia. According to CNBC's interview with Coca-Cola COO James Quincey, Coca-Cola will take measures to save its China market: it plans to channel下沉, launch cheap mid-to-low-end products for rural markets; provide more incentives for distributors; and launch premium products in first- and second-tier cities with strong purchasing power. Coca-Cola has also divested its bottling business to "reduce the burden" on its China operations. According to media reports, Coca-Cola estimated earlier that after disposing of assets in North America, China, Germany, and South Africa, its direct employees would drop from 123,000 to 39,000, net revenue would fall from $44.3 billion to $28.5 billion, but capital expenditure would also halve to $1.3 billion. Besides Coca-Cola, PepsiCo had already sensed the shift in the Chinese market and, on November 4, 2011, transferred all its bottling plant shares in China to Tingyi Holding. Tingyi Beverage also became Pepsi's franchise bottler in China, responsible for producing, selling, and distributing Pepsi's carbonated drinks and Gatorade brand products. Tingyi, which got Pepsi, is also in trouble this year. In the first half of this year, Tingyi's (00322.HK) beverage business, which accounts for the largest share (60%) of revenue, earned $2.53 billion, down 14.4% year-on-year, with net profit of $39.43 million, down 71.2%. Due to poor beverage performance, Tingyi's net profit fell sharply by 66.49% in the first half. Coca-Cola claims its poor performance in China is due to economic slowdown, and the sluggish packaged beverage market is also an important factor. Besides the beverage giants, domestic beverage listed companies also performed poorly. Shenzhen Shenbao A, whose main revenue comes from tea drinks, expects a loss of RMB 13-18 million in the first half. Weiwei Group's total revenue fell over 10% in the first quarter, with net profit plunging nearly 50%. Hainan Yedao expects a loss of RMB 45 million in the first half, with declining beverage revenue listed as one of the reasons. These companies' situations are a microcosm of the entire Chinese beverage industry entering a winter. The speed of consumption upgrade is fast, and the traditional FMCG market is inevitably squeezed and declining. The significant decline in beverage consumption proves that China's consumption transformation and upgrade are accelerating, not that consumption momentum is weakening. In China's current beverage industry, the channel dividend and demographic dividend periods have passed, and the chance of copying a beverage and becoming famous overnight almost no longer exists. As a result, the survival rate of new products in the industry is getting lower. Facing the "winter" of 2016, only by improving marketing management processes and gradually developing brand thinking can companies survive in segmented markets. Coca-Cola's COO has said that Coca-Cola will continue to expand its market share in China and prepare for another consumption acceleration. As China's beverage industry growth slows overall, beverage companies need to reassess their category scope and market channels to prepare for future quality growth and success. Some traditional Chinese market channel models no longer work, and market entry models should be repositioned to adapt to a future higher-cost channel environment. At the same time, customizing personalized products for specific "high-growth" consumer segments is crucial. In the future, M&A will play a more important leveraging role in seizing new growth opportunities. The beverage industry has entered winter; will the next spring really come soon? **This article is compiled and published by ** -END- China's best FMCG distributor learning platform Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly **The most professional and practical knowledge base in the FMCG industry** Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | **001** Excellent article selection | **002** Distributor market operations | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales improvement techniques | **006** Channel expansion | **007** Managing distributors | **008** Distributor development | **009** Distributor internal operations management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's 18 skills | **013** KA operation methods and strategies | **014** First lesson for new salespeople | **015** Internet, brands | **016** Distributor B2B transformation | [Long press QR code to follow] --- ## Copyright and AI use This article is sourced from New Distribution. 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