Analysis - Coca-Cola Co, PepsiCo promotions race shakes China market
Coca-Cola's margins in China are already tight
CLSA analyst, Caroline Levy, said on Friday (31 May) that a “win a free bottle” offer from PepsiCo's Chinese partner Tingyi has been quickly matched by a similar promotion from Coca-Cola. Coca-Cola has also “selectively” matched Tingyi's 20% package-size increase, Levy said.
“We believe the long-term outlook for China’s growth is bullish, but intense competition across all drink categories will provide headwinds for the foreseeable future,” she said.
The promotions could further erode already tight margins for Coca-Cola in China, which, according to Levy, accounts for 8-9% of its volumes, but just 2-3% of profits.
However, the note added: “(Coca-Cola) continues to have superior share gains, pricing power and brand building. We consider execution in the Coke system to be among the best we’ve seen in 20 years.”
Meanwhile, Levy said bottler restructuring moves in the US, announced in April, will not come into effect for at least another two years.
Under the plan, five independent bottlers - Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Co United, Swire Coca-Cola USA, Coca-Cola Bottling Co High Country and Corinth Coca-Cola Bottling Works - will have the option to take distribution territory from Coca-Cola's in-house network.
The Coca-Cola Co (TCCC) is the leading player in both soft drinks and in HW soft drinks. The company’s strength is based on its diversity of category presence from HW carbonates to RTD tea and bottled...
In 2012, Cía de Bebidas Pepsico continued to adapt to the gloomy economic climate by holding back prices, offering its core carbonates brands at lower retail prices than its main competitor Cía Servic...
Returning from Mexico, Tom Vierhile from Datamonitor shares his thoughts on what plastic packaging has to offer, going forward....
Ranked sixth in hot drinks in 2012, the company has a strong presence in other hot drinks, in particular in chocolate-based flavoured powder drinks under the Toddy brand. Competing for the same target...
PepsiCo China Ltd is seeking sustainable growth by enhancing brand awareness around the world and bringing innovative products to the marketplace....
- Is A-B InBev/SABMiller 'Mega-Merger' Off?
- Comment - 'Craft' and the Danger of 'Romance Copy'
- Sustainability: What Craft Teaches Multi-Nationals
- Pernod takes positives from China Cognac bounce
- Ethiopia competition to remain "intense" - Diageo
- Bacardi bags a Bourbon with Angel's Envy buy
- SPI Group 'disappointed' over Stolichnaya ruling
- Anheuser-Busch InBev lines up new chairman
- Bacardi Brown-Forman here to stay
- Carlsberg takes on Stella Artois in new campaign
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- ALDI 2015: Radically transforming Anglo Saxon grocery markets
- Champagne: Less Than Bubbly
- Beer Market Insights Africa 2014