Cola Wars in China

Cola Wars in ChinaCase Study Analysis

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Group MembersTushar Jalan (1282118)Pranay Mukherjee (1282065)Vishwarup Acharyya (1282120)Vivek Chattopadhyay (1282121)Purnendu Chatterjee (1282071) II

Soft Drinks - Introduction

Any kind of beverage that doesnt contain alcohol can be considered as a soft drink.Some Examples Fruit Juice Energy Drinks Carbonated Drinks Packaged Water

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Players in ChinaChinas soft drink market has some major players :-

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Company IntroductionsV

Chinas soft-drink industry 1980s multinational enter into the Chinese marketAnnual growth 21% for last 20 yearsAnnual output increased from 0.288 million tons (261 million liters) in 1980 to 16.69 million tons(15.141 billion liters) in 2001 Per capital consumption increased from 0.3 liter per annum in 1982 to 8 liters per annum in 2001Total revenues exceeded RMB 40 billion in 2000Soft drink become a regularly consumed product Soft drink industry developed from carbonated drinks in 1980s to packaged water in 1990s to tea in 2000s

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Wahaha - History Founded in 1987 by Zong Qinghou, selling bottled soda water, Ice cream and stationery in Hangzhou, Zhejiang Province. Focused primarily on children with the marketing of its products (Wahaha means to make children happy). It eventually launched other children-oriented products too, like fruit- flavoured milk and fruit juices. In 1996, the company launched its own range of purified bottled water and became the market leader. In the same year, it entered into a joint venture with French company Danone.In 1998 it launched Future Cola, competing directly with the multinational giants.

Wahaha

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Future ColaA Preservative free carbonated drink similar to Coke.First started in 1998 Promoted as a national brand to compete against the leaders, Coca-cola and PepsiThe flavor is modified according to the Chinese tasteTypes of Future Cola: 1. Regular Future Cola 2. Kids Cola (caffeine free) 3. Future Coffee Cola

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SWOT MatrixIX

Strength Analysis Excellent Reputation

Relationship with rural distributors

Joint venture with

Research and development team

Diversity in products

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Weakness AnalysisWell known competitors.

Strategy of distribution in products.

Concentrates it sales in rural areas.

Profit margin too low.

Sales force isnt as strong as competitors.

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OpportunitiesIncrease in sales

Urban markets in China (large cities)

Markets in nearby countries with similar culture and tastes

Rapid growth in the soft-drink industry

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Threat AnalysisPresence of multinational corporations in the market (PepsiCo. and Coca-Cola).

Risk of turning into another cheap Chinese company (reputation)

Other local competitors like Fenhuang Cola, Alishan Zhonghua Cola, Yanjing Cola and Jianlibaos Huating Cola

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Marketing Mix (4Ps)

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PRODUCTPRICEPLACEPROMOTIONCoca-Cola Classic Diet Sprite FantaSame basic price as PepsiMaximum presence in large cities, very weak in rural areas.Heavy use of TV advertising Changed pack design to celebrate Beijing hosting the 2008 Olympics

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PRODUCTPRICEPLACEPROMOTIONPepsi Cola Classic Diet Dew 7Up MirindaSame price as Coca-Cola

Maximum focus on the major cities. Not even presentin the rural areas.

Done in a lesser amount compared to Coca-Cola. Use of TV advertisements and print media

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PRODUCTPRICEPLACEPROMOTIONFuture Cola Regular Kids CoffeeLow price compared to competitors

High presence in the smaller, rural, areas Strong relationship with local distributorsMarketed as Chinas Own Cola. National celebrities are used in TV and print advertisements

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Future Action PlanWahaha should try its best in maintaining its current market position and look for any kind of growth opportunities available

More emphasis should be given to the brand value. The Chinas Own Cola concept should be marketed heavily to create an emotional impact with the consumers

More variations of Future Cola can be introduced in order to put more pressure on the multinationalsThe youth segment should be targeted more through advertisements and stylish packaging.

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ConclusionWahaha has progressed incredibly well in the soft drink sector. All it needs to do is to maintain its current form and at the same time, try for growth.

If it continues with its success, it might end up being on the same level as Coca-Cola or PepsiCo, which would really make the Cola Wars even more interesting.

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Thank you! Have a good day!

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