Coca-Cola reportedly scaled back its bottled water expansion in China

Coca-Cola reportedly scaled back its bottled water expansion in China

The Coca-Cola Co has “stubbed its toe” in China's bottled water market and lost ground to PepsiCo so far this year, an analyst has warned.

The lag has come after Coca-Cola lost money in the category and scaled back expansion, CLSA's Caroline Levy said, citing recent comments from Tingyi CFO Frank Lin. PepsiCo, through its China JV with Tingyi, has grown its volumes in the first six months of this year by 9% “on a very large base”, Levy said.

Lin, who was speaking at a CLSA investors forum, also said that PepsiCo and Tingyi plan to expand the Tropicana 100% juice in the country despite a volumes increase of just 1.5% in China's juice category in H1. Total CSD volumes in the country were up by 2.5% in the period, Levy said.

Last year, PepsiCo took a 5% stake in Tingyi while selling its bottling operations to the Chinese firm.

Levy said that, while Tingyi is unlikely to be a major contributor in the near-term to PepsiCo's bottom line, the partnership remains “an intelligent move”. She also said it is a “net-negative” for Coca-Cola as the JV is 1.4-times the size of the Atlanta-based company's Chinese presence, giving it a scale and product-diversity advantage.

Expert analysis

Bottled Water in China

Bottled Water in China

Bottled water still saw a stable growth in 2012. This is mainly due to improving health consciousness and growing urbanisation. With their enhanced health awareness, more consumers, especially those l...read more