Behind the Delay on Coke's Juicy China Deal

On a recent winter's afternoon, Xin Wen popped into his neighborhood WuMart supermarket to buy groceries for his family. He walked pass the shelves stacked with Coca-Cola (KO), iced tea, and sports drinks to grab two 2.5-liter jugs of Huiyuan pear and peach nectar fruit juices. "I don't buy Coke much. I don't like carbonated drinks because my body doesn't feel well after I drink it. I like to drink fruit juices," says Xin, a 19-year-old student.

Chinese consumers like Xin are why on Sept. 3 Coke offered to buy China Huiyuan Juice—No.62 on 's annual Hot Growth Asia list—for $2.4 billion (BusinessWeek.com, 9/3/08). Although Coke dominates China's carbonated beverage market and its Minute Maid brand juice ranks No.2 in China's diluted juice market, Coke has zero presence in the fast-growing 100% fruit and vegetable juice segment. As Chinese consumers grow wealthier, they are increasingly willing to shell out the extra yuan to buy more expensive, but healthier drinks. Huiyuan has leveraged its early-mover advantage and strong brand to become the No.1 100% juice and nectar beverage company in China. For its part, Huiyuan wants to grow bigger but lacks the distribution network, financial resources, and management to do so as an independent beverage company.