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Coca-Cola to 'keep investing' in Chinese market

By WANG ZHUOQIONG | CHINA DAILY | Updated: 2024-02-21 09:30
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An employee works on a Coca-Cola production line in Shenyang, Liaoning province. CHINA DAILY

The Coca-Cola Company said it is committed to investing in China, highlighting key occasions and the sparkling sectors, as the nation drove the US beverage giant's global unit case volume growth in the fourth quarter of 2023, with strong momentum seen in the juices and coffee sector.

Coca-Cola said last week it posted a 7 percent year-on-year increase in revenue to $10.85 billion in the fourth quarter, and a 10 percent rise in operating income to $2.27 billion.

In terms of sales, global unit case volume grew 2 percent, with Asia-Pacific unit case volume expanding 2 percent, primarily led by China and India.

For 2023, the company's revenue climbed by 6 percent to $45.75 billion, with operating income up 4 percent to $11.31 billion.

In terms of categories, sparkling soft drinks grew 2 percent for both the quarter as well as the full year, primarily driven by growth in Latin America and Asia-Pacific.

In China, robust growth in Minute Maid Pulpy boosted the performance of the company's juice sector, which, along with value-added dairy and plant-based beverages, grew 6 percent for the quarter and 2 percent for the full year.

Coffee grew 3 percent for the year, fueled by strong performance of Costa Coffee in China and the United Kingdom.

"The year 2023 started very strongly in China; we had invested very heavily behind Chinese New Year," said James Quincey, chief executive officer of Coca-Cola, on an earnings call. "We had a very strong first quarter last year in China ... We are going to keep investing behind not just on key moments in the year but restoring more momentum to sparkling and really focusing on revenue growth management and execution opportunities."

In 2023, the beverage maker made strides in iconic brands through product innovation, brand building and interactive marketing in the Chinese market.

To celebrate the Spring Festival that launches the Year of the Dragon, Coca-Cola partnered with paper cut artist Chen Fenwan on a Chinese New Year packaging design.

To better resonate with younger consumers, Coca-Cola Creations launched Coca-Cola Ultimate, inspired by games, and Coca-Cola Y3000 co-created with artificial intelligence technology last year.

Sprite also launched a limited-edition lemonade "Sprite 1982" in China last July, tapping the meme culture of young people to enhance interaction with consumers.

To keep pace with changing consumer demand, the company diversified its product portfolio with a focus on nutrition and health improvement initiatives, including Coke Zero, orange flavor Fanta, the sugar-free Authentic Tea House, and the plant-based ready-to-drink Costa Coffee.

Zhu Danpeng, a food and beverages analyst, said Coca-Cola's performance was impressive, attributing it to the company's robust brand-building efforts targeting Gen-Z consumers. He said he is optimistic about the company's prospects for 2024.

"In 2024, they will continue to bank on their strengths in portfolio diversity, brand recognition and penetrated distribution channels."

According to Euromonitor International, a market research institute, the carbonates and ready-to-drink coffee sectors in China have experienced growth in recent years, with carbonates increasing from 89.7 billion yuan ($12.5 billion) in 2020 to 125.7 billion yuan in 2023 and forecast to reach 183.2 billion yuan in 2028.

Ready-to-drink coffee has grown from 9.9 billion yuan in 2020 to 10.7 billion yuan in 2023 and is forecast to grow to 13.7 billion yuan in 2028.

However, the juice sector saw a decline from 75.8 billion yuan in 2020 to 74.4 billion yuan in 2023 and will likely continue to drop to 71.6 billion yuan in 2028.

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