COFCO Calls on Partner Coca-Cola to Tap the Bottled Water Market as Carbonated Beverage Sales Fall
Xu Wei
DATE:  Sep 05 2017
/ SOURCE:  Yicai
COFCO Calls on Partner Coca-Cola to Tap the Bottled Water Market as Carbonated Beverage Sales Fall COFCO Calls on Partner Coca-Cola to Tap the Bottled Water Market as Carbonated Beverage Sales Fall

(Yicai Global) Sept. 5 -- State-owned China National Cereals, Oils and Foodstuffs Corp., better known as COFCO, hopes its partner, drinks giant Coca-Cola Co. [NYSE:KO] will shift its focus to water products in the country as the carbonated beverage sector remains in a slump, Beijing Business Today quoted Zhao Shuanglian, COFCO's chairman, as saying.

Zhao is exerting pressure on the beverage giant to develop water products in order to lay the ground for the company's de-carbonation drive, insiders say.

Weak consumption in China has become a major concern for Coca-Cola, with juice sales seeing a double-digit decline in last year's second quarter alone. China's slowdown in demand has weighed heavily on sales and is forcing it to reduce inventories,  the report quoted Coca-Cola as saying.

The US firm has seen falling sales in the Chinese and South Korean markets since last year. COFCO, as Coca-Cola's largest partner in China, hopes it will strengthen collaborative efforts to expand in the bottled water sector to offset the fall in carbonated beverage sales.

COFCO is upbeat about China's water market, which it believes will experience a period of consolidation soon, said marketing expert Lu Shengzhen. It hopes to play a leading role in the market shake-up and Coca-Cola is its biggest partner, he added.

Zhao's point of view is not unfounded. Packaged drinking water products grow at 7.9 percent a year and are one of the fastest growing among all types of beverages, according to China Beverage Industry Association data.

Sales in the domestic bottled water market rose by 117 percent from CNY47 billion (USD7.1 billion) in 2010 to CNY102 billion in 2015, and are expected to increase another 76.5 percent to CNY180 billion by 2020, data show.

COFCO and Coca-Cola run a joint venture in China, holding 65 percent and 35 percent stakes, respectively.

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Keywords:   Coca Cola,COFCO,FOOD AND BEVERAGE,Drinks,Bottled Water