Collaborations, new packaging to help Coca-Cola expand presence in China

Coca-Cola is expanding its market presence in China by prioritizing its carbonated drinks with strategic collaborations and new product package launches to get closer to younger consumers.

The beverage giant has partnered with Oreo, a popular snack brand, to launch a limited-edition drink called Coca-Cola Oreo Zero Sugar.

This collaboration, inspired by the theme of "besties", aims to celebrate friendships "with a unique beverage offering and accompanying digital experiences", said the company.

The new drink will be available in major stores and McDonald's outlets across China next month. It features a design with Oreo cookie and Coca-Cola bottles, offering a taste of Coca-Cola infused with subtle Oreo flavors.

This collaboration underscores a growing trend in the food and beverage industry, where iconic brands join forces to reach new consumers and expand market presence.

In June, Coca-Cola further strengthened its market strategy by introducing pocket-size packaging for its flagship products — Coca-Cola, Sprite and Fanta.

These 248-ml bottles are designed to cater to the growing "on-the-go" and "City Walk" trends among younger consumers in China, offering convenience and portability.

Despite mixed performance in the Asia-Pacific region during the second quarter — with volumes up 3 percent but price and mix down 3 percent — James Quincey, Coca-Cola's chairman and CEO, emphasized the company's strategic focus in China.

He said that Coca-Cola is prioritizing its investments in sparkling drinks, juices and teas, while scaling down emphasis on water products where profitability is lower.

The overall volumes were negative in China, but that is entirely driven by reduced emphasis on water products. In fact, sparkling beverages' volumes were slightly positive in China in the fourth quarter, Quincey said in the earnings call.

According to Carbonated Beverage China 2023, a report from market research firm Mintel, total sales volume of carbonated beverages in China reached 20.6 billion liters in 2023, reflecting a 6.7 percent growth compared to 2022.

Mintel forecast a compound annual growth rate of 4.2 percent for carbonated beverages from 2023 to 2028, with volumes expected to reach 25.3 billion liters by 2028.

Marta Zhang, senior analyst at Mintel, said that leading brands are focusing on health-oriented product innovation and launching limited edition products to maintain market momentum.

The rapid recovery of the catering sector is also anticipated to contribute to the growth of carbonated beverage consumption, she said.

"Coca-Cola and PepsiCo continue to hold a strong position in the market, actively launching new products, including eye-catching limited editions linked to gaming, aimed at attracting younger consumers," said Zhang. Brands are also refreshing their product logos and packaging, she said.

She further said these brands are also innovating flavors and taste to appeal to consumers who enjoy trying new things.

Domestic brands such as Arctic Ocean, she said, are demonstrating strong growth potential with a mix of classic and innovative products.

They are leveraging strong partnerships with catering service channels, such as pairing with local cuisine providers, to gain a competitive advantage, the Mintel report said.

wangzhuoqiong@chinadaily.com.cn