Business / Industries

China brands beat rivals with tea toothpaste & pickled plums

(Agencies) Updated: 2014-07-30 09:51

China brands beat rivals with tea toothpaste & pickled plums

A boy sitting in a toy tricycle is pushed past shelves of bottled beverages at a supermarket in Nanjing, East China's Jiangsu province in this April 10, 2006 file photo. [Photo/Agencies]

With green-tea flavored toothpaste and pickled plum juice, an army of Chinese retailers is tapping local tastes to whittle away market share from global rivals that are banking their future growth on the world's second-largest consumer market.

Senior executives at companies such as The Coca-Cola Co, Procter & Gamble Co and Colgate-Palmolive Co are being forced to adapt as the challenge posed by local firms intensifies in a slowing economy.

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Last year, China's 1.15 billion yuan ($185.31 million) consumer goods market grew at 7.4 percent annually, half the rate of three years ago, according to a report this month from Bain & Company and Kantar World Panel.

In this tougher market, both local and foreign brands are targeting the same customers, and increasingly, the domestic firms are winning: nearly two-thirds of foreign brands surveyed lost market share in China last year, according to the report.

"The good domestic brands are closing the gap really quickly and are able to play off the idea that they know how to develop something that a Chinese person is going to want," said Ben Cavender, a principal at China Market Research Group.

Understanding the needs of Chinese consumers has given local companies an edge. Privately owned Jiaduobao Group (JDB) makes canned herbal tea which it says can put out internal "fires", playing on a concept in traditional Chinese medicine. The firm also sponsors a popular TV talent show, "The China Voice".

"Our campaign around 'fearing internal fire' has helped JDB herbal tea become the highest selling canned drink in China...," said Wang Yuegui, a senior executive at the firm.

JDB accounted for 6.1 percent of the soft drinks market in 2013 by value, up from 4.2 in 2009, according to data from consumer consultancy Euromonitor. Coca-Cola had 13.1 percent, while Pepsi had 3.9 percent.

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