China Joins Cola Wars

Posted on | September 12, 2007 | Comments Off on China Joins Cola Wars

Obesity Just Around the Corner?

One thing is pretty clear if you’re a developing nation, and that is that multi-national marketers have you in their cross-hairs. And for China or India — with huge populations — that goes double.

China, of course, is a special case. Whether it be tobacco consumption, an electrical grid fired by dirty coal, a marred food and product safety chain, or infrastructure expansion at rates that make it difficult to manage quality — in all of these cases, success (translation: economic growth) in the present is being mortgaged with the health of future populations.

And as we know, disease burdens in a mobile global society tend not to be geographically contained but spread porously across borders. The securing of the 2008 Olympics just upped the ante. One small measure of growth in the wrong direction is the increased ingestion by Chinese citizens of “liquid corn” — that is, carbonated beverages whose major additive, beyond water, is high fructose corn syrup. The two combatants fighting for the hearts and minds and pocketbooks of the Chinese are familiar to all — Coca-Cola and PepsiCo. Coca-Cola has the advantage with 51% market share against Pepsi’s 30%. But Pepsi is on the rise. Coke sold 4.33 billion liters in 2006, up from 2.5 billion liters in 2000 (a 70% rise). Pepsi sold 2.93 liters in 2006, up from 1.5 billion liters in 2000 (a 93% rise). Both are playing the Olympics for all its worth. Coke got to the starting line first by securing its spot as an official sponsor of the 2008 Beijing Olympics, as well as securing contracts with some of the athletes whose images are displayed on its red (think China National) cans. But Pepsi didn’t simply fade away. It signed on as a sponsor of Team China with visible presence at this year’s Asian Games, and it has “gone red” with its cans, adding Chinese athletes’ images, as well.

The red cans seem to have “crossed the line” for the competitors. Since 1996, Pepsi’s cans have been blue. This year, it rolled out a series of new images worldwide, again all in shades of blue. In the past the company has “gone national” — with yellow and green packaging in Brazil, for example — but Pepsi fans are used to choosing blue, not red, and its “action video” TV advertising features blue, not read.

Marketers are split on whether this will increase sales or not, though all agree that a Pepsi can that is red (a slightly darker red than Coke) with its red, white and blue globe logo embedded, is a bold move. Coke’s trying to laugh it off (spokesperson Kelly Brooks said, “Red? Great idea. Why didn’t we think of that?”). But in the Cola Wars, these things are not taken lightly. There’s a lot at stake here: 8 to 10 billion liters in sales by the time the Olympics roll around. And while it remains to be seen how many medals the Chinese win, they’ve already assured that they’ll be more than competitive with the United States by the time the Obesity Olympics roll around in 2012.