Coca-Cola Sees ‘Huge Opportunity’ to Spur Per-Capita China Sales
Coca-Cola Co. (KO), the world’s largest soft-drink maker, is investing in bottling plants and delivery trucks in China as it targets an increase in average per-person consumption from the current two drinks a month.
The maker of Sprite, China’s best-selling soft drink, has a “huge opportunity from a per capita point of view” in China, Martin Jansen, regional director of the company’s bottling business in China, Singapore and Malaysia, said in an interview on Sept. 3.
Coca-Cola plans to invest $4 billion with its Chinese bottling partners Swire Beverages Ltd. and COFCO Coca-Cola Beverage Co. in China over three years from 2012 to widen its lead over rival PepsiCo Inc. Most of that will be spent to build more bottling plants, buy trucks, expand distribution infrastructure and add coolers, said Jansen, who is responsible for 15 bottling facilities in China.
Sales will probably increase at a “high double-digit” rate in China this year and next, said Jansen. “If you compare the number of beverages we sell in China, it’s roughly just over two per month. If you take a country like Mexico, they also drink two, but per day.”
Jansen, a Dutch native, said the company will probably build factories in Sichuan province in southwestern China as well as expand capacity by adding more manufacturing lines. Plans to add bottling plants over the next three years are still being completed, he said.
The Coca-Cola system has more than 40 factories in China and employs more than 48,000 people, according to an Aug. 18 statement by the company.
Doubling Sales Volume
China sales surpassed 1 billion unit cases in the six months through June, double the rate of 2005, when it sold that amount for the whole year, the statement said. Each unit case has 24 eight-ounce servings.
Sales in the Pacific region increased 9 percent to $4.9 billion last year, according to Bloomberg data.
Coca-Cola, which said in June it was in talks with China’s government to sell shares in Shanghai, is the dominant soda maker in China with 61.5 percent of the market last year, followed by Pepsi with 29 percent, according to London-based researcher Euromonitor International.
For soft drinks, a category that includes fruit and vegetable juice, ready-to-drink tea and bottled water, Coca-Cola is also No. 1 in China with a 16.8 percent market share, according to Euromonitor’s data.
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