Coca-Cola to pop the top on 3 new factories in 2010
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Beverage behemoth Coca-Cola has set organic growth as its key expansion strategy in China, with three new factories planned for this year.
"We have seen so many organic growth opportunities in China, and, right now, we are focusing on them," Coca-Cola's Chief Executive Officer Muhtar Kent said on Tuesday.
The soft-drink maker will also set up three new factories in China's Guangdong province, Hohhot, Inner Mongolia autonomous region, and Henan province in 2010. The Henan site will be one of Coca-Cola's largest manufacturing facilities in China.
Though Kent declined to reveal the amount of the investment in the new factories, he did say it is part of Coca-Cola's three-year $2 billion China investment plan announced last March. The Atlanta-based company has invested $1.6 billion since it returned to the mainland in 1979.
The $2 billion injection was slated to be invested in new bottling plants, distribution infrastructure, marketing, branding and innovation. Kent said that investment plan is now "well on track".
Coke had sought to purchase Hong Kong-listed China Huiyuan Juice Group Ltd in September 2008, but the $2.3 billion bid for the country's largest juice maker was blocked by the government last March, citing monopoly concerns.
Kent indicated that the company welcomes competition and "no mergers or acquisitions (of local companies) are under consideration now".
Coca-Cola opened three factories in China last year.
They are located in Wuhan of Hubei province, Xinjiang Uygur autonomous region and Jiangxi province. Its existing manufacturing facilities are also increasing production capabilities.
Last March, Coca-Cola established a $90 million global innovation and technology center in Shanghai. Kent said the facility is developing new products for both local and world markets.
One new beverage out of the center last November was Minute Maid Pulpy Super Milky, which combines fruit juice, milk powder, whey protein and coconut bits to create a creamy fruit-flavored dairy drink.
Coca-Cola's current strategy seems to be working as the company has achieved double-digital growth for 38 consecutive quarters in China.
The nation is now the third largest and the fastest-growing market for Coca-Cola.
"China will be the largest in a fairly short period of time and will top growth results for the next 10 years," said Kent.
The world's largest soft drink company and its rival PepsiCo, have both adopted the same tactic in China - organic growth.
In November 2008, Chairman and CEO of PepsiCo Indra Nooyi announced a three-year investment of $1 billion in the Chinese market, which will be used to add plants, develop agriculture bases, sales capability, branding and marketing.
Market research company Euromonitor's report shows Coca-Cola controlled 52.5 percent of China's soda market by volume in 2008, compared with PepsiCo's 33 percent.
This year, China's demand for beverages such as soda and bottled water may grow 9.8 percent to 60.4 billion liters, it said.
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