Comment - China Huiyuan Juice Shows there is Life Beyond Coca-Cola Co and PepsiCo
China Huiyuan Juice Group currently leads the country's juice market with a 19.9% share
Huiyuan Juice Group said last week that it swung to back to profits for the six months to the end of June, reaching CNY149.1m (US$23.2m) in the black. In the first half of 2010, the juice maker reported net losses of CNY72.2m.
The firm accounts for around 50% of sales of 100% juice in China, according to its own figures. Group Chairman Zhu Xinli said that he is confident that Huiyuan can maintain its market lead in China's juice sector, as well as expand its volume market share.
And, why not? Since the failed acquisition attempt by The Coca-Cola Co, Huiyuan Juice has continued to build. New brand launches will account for around one-fifth of group net sales sales by the end of 2012, the firm has said.
As The Coca-Cola Co and PepsiCo ramp up their investment in China's promising soft drinks market, Huiyuan's buoancy is a timely reminder of the stern domestic competition that overseas companies face.
Last year, Huiyuan said it would plough around CNY5bn into the production of its Juizee Pop juice drink over a three-year period, in an effort to compete more directly with Coca-Cola and PepsiCo.
With Coca-Cola and PepsiCo ploughing billions of dollars into China as they seek to reduce their reliance on sluggish western markets, competition on China's soft drinks market looks set to be intense for several years to come.
In the second quarter of 2011, figures published by China's National Bureau of Statistics show that the country's GDP rose by 9.5%.
Datamonitor soft drinks analyst, Michael Hughes, told just-drinks today that China's emerging middle-class is looking to "purchase juices that are given a healthy and premium positioning, as highlighted by the success of Coca-Cola’s Minute Maid Pulpy brand".
According to Datamonitor's report, 'Juices in China', juice sales in the country reached US$3.5bn in 2010, representing a compound annual growth rate (CAGR) of 7.6% since 2006. Market growth is forecast to accelerate, with an anticipated CAGR of 8.6% up to 2015. By then, the market is expected to be worth $5.3bn, Datamonitor said.
China Huiyuan Juice Group currently leads the country's overall juice market with a 19.9% share. But, Tingyi (Cayman Islands) Holding Corp and Coca-Cola are snapping at its heels with 14.4% and 14.3% shares respectively. With PepsiCo also pumping in money and Kirin Holdings having this year formed a non-alcoholic drinks joint-venture with China Resources Enterprise, we are set for a tight race for podium places on the country's soft drinks sector.
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