US beverages firm banks on innovative strategies to enhance core categories

Large bottles of Coke, Sprite and Minute Maid are adorned with a floating paper dragon in vibrant red and gold hues at the Coca-Cola China headquarters in Shanghai.

Soon, such displays will be seen not only in urban supermarkets, but also at grocery stores in rural areas.

As the Year of the Dragon approaches, beverage players like Coca-Cola are going the whole distance to gain the upper hand during the pivotal yearly shopping battleground.

The company is adding a local twist to create better experiences for, and more engagement with, consumers, including products inside larger packaging suitable for sharing with friends and family, and digital red envelopes, said Gilles Leclerc, president of Coca-Cola Greater China and Mongolia.

Elevating the consumer experience aligned to catering and celebratory occasions matters to the 137-year-old US beverages company, Leclerc said.

"We still need to get deep into the science part of our products, which means understanding the consumers very well. Then we can incorporate a little bit more art."

Having been in charge of Coca-Cola's operations in China for nearly a year, Leclerc said he feels amazed at the marketplace's growth — most visible in catering, on-premise coffee chains and digitization.

"We need to remain open ... this marketplace is constantly evolving and is shaping. It's not 'one size fits all'," Leclerc said in an interview with China Daily last week.

He said it is crucial to make long-term investments, keeping in mind the categories to get into.

"If you look at it, we could play into 20 different categories. It's vast. We need to stay humble into what is our right to win. Businesses need to focus more on core categories."

Boosted by consumers' health and well-being needs, sparkling beverages, juice, RTD (ready-to-drink) coffee and tea are the four pillars that will drive future growth for Coca-Cola China, said the executive.

The company will also continue to invest in its star sparkling products — Coke, Sprite and Fanta.

"When you look at competition coming in the sparkling category, it means that category has a lot of legs that can stretch through generations. There is still a very low per capita consumption, which means more room to grow," Leclerc said.

To resonate better with local consumers, the company has made efforts to add more "fun and innovations" into its sparkling products through various flavors and packaging.

"The occasion and the brand connection are areas where we can innovate, and then the channel, the pack and the price architecture is something that also animates us a lot," Leclerc said.

Such efforts helped to encourage local communities to discover new ways to blend Coca-Cola drinks with local cuisine, such as the combination of Sprite with hotpot in Sichuan province.

According to the National Bureau of Statistics, in the first half, the retail sector in China grew 6.8 percent year-on-year to 20.3 trillion yuan ($2.84 trillion), with the catering sector up 21.4 percent to 2.4 trillion yuan.

Jason Yu, general manager of Kantar Worldpanel China, said, "It is critical for Coca-Cola to maintain its leadership within the carbonated soft drinks market while strengthening its position in those adjacent sectors."

Coca-Cola's juice brand — Minute Maid Pulpy — has further reached villages and counties in China, Leclerc said.

The company's third-quarter earnings results showed that juice, value-added dairy and plant-based beverages grew 2 percent globally, primarily driven by the growth of Minute Maid Pulpy in China and other brands.

The tea and coffee categories are also high on Coca-Cola's agenda." We enhanced our unsweetened tea, Authentic Tea House, using a special cold-brewing technology to elevate its flavor," Leclerc said.

To better execute marketing innovations, Coca-Cola China is enhancing ties with local bottling partners, COFCO Coca-Cola and Swire Coca-Cola.

Leclerc said: "We act as one team. We actually come up with a strategy jointly. It has to be the three of us looking at the holistic opportunities of the market."

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