Coca-Cola, the carbonated soft drink manufacturer, has recorded net revenue of $10 billion in Q3 2021, a 16% year-on-year increase. It exceeded the market expectations of $9.75 billion, as according to the company’s release on 27 October. This “continued momentum” of growth is mostly fuelled by the performance of the company’s key market in the Asia Pacific – China.
While its trademark beverage Coca-Cola and sparkling soft drinks have generated a global increase in consumer metrics, fresh choices such as low-alcohol, plant-based beverages and chilled milk are gaining ground in China due to their health value. This ability to move with the market and consumer values is a key reason Coca-Cola has been so successful and exceeded revenue numbers.
Earlier in September this year, Coca-Cola China launched a low-alcohol drink called Lemon-Dou, after the company’s introduction of its first alcoholic drink Topo-Chico Hard Seltzer in China in June. The Japanese distilled beverage (Lemon-Dou) has three flavours – Honey Lemon, Classic Lemon and Salt Lemon, with alcohol concentrations ranging from 3.4 to 7.5 percent. The launch of Lemon Dou is deemed as a manifestation of Coca-Cola’s insight into a new consumer trend in China, towards those low-alcohol and environmentally friendly alternatives.
The Chinese post-90s and 95s generations have been showing a growing interest in consuming alcohol, as according to the 2020 Youth Alcohol Consumption Insights Report produced by CBNData. However, most of these young generations are also advocating “moderate and healthy drinking” and pursuing a “non-social” drinking atmosphere, cultivating the trend of “light hangover”. By targeting these consumer values, Coca-Cola is able to add new products, serving more potential customers, and gain new opportunities for income.
Along with the launch of Lemon-Dou, the beverage giant has set up a joint venture with Chinese dairy brand Mengniu, unveiling a new low-temperature milk product called Fairlife to its consumers in China, furthering this product diversification strategy. In addition, the company has also tapped into one of the heated markets of plant-based drinks, bringing an Oat Milk drink in the same month, allowing them to sell to demographics that would not have purchased their products before due to their diets.
These new launches reflect Coca-Cola’s “all-category beverage” strategy, which helps the company to adapt to the fast-changing consumer trends in China. As a result, Coca-Cola took the trophy in the rapidest-growing brand in the Chinese market in 2020. With a penetration rate across this country of 51.5%, and the company’s Chinese products have helped them to reach more than 269 million consumers in the past year.
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As an enthusiast deeply immersed in the world of beverage industry trends, I can confidently speak to the developments discussed in the article about Coca-Cola's Q3 2021 performance, particularly in the context of the Asia Pacific region, notably China. My extensive knowledge in this field allows me to shed light on the various concepts mentioned in the article and provide a comprehensive understanding.
Coca-Cola's Q3 2021 Performance:
Coca-Cola, the carbonated soft drink giant, has demonstrated remarkable financial success in Q3 2021, boasting a net revenue of $10 billion. This represents a significant 16% year-on-year increase, surpassing market expectations set at $9.75 billion. The key driver of this "continued momentum" is attributed to the company's robust performance in the Asia Pacific region, particularly in China.
Diversification Strategies:
One of the key reasons behind Coca-Cola's sustained success is its ability to adapt to changing consumer values and market trends. While its flagship beverage Coca-Cola and sparkling soft drinks continue to show global popularity, the company is strategically venturing into diverse product categories that align with evolving consumer preferences.
Shift towards Healthier Alternatives in China:
In response to the growing demand for healthier options, Coca-Cola is expanding its product portfolio in China. Fresh choices such as low-alcohol beverages, plant-based drinks, and chilled milk are gaining traction due to their perceived health benefits. The company's introduction of a low-alcohol drink called Lemon-Dou and its collaboration with Chinese dairy brand Mengniu for a new low-temperature milk product called Fairlife exemplify this strategic diversification.
Understanding Consumer Trends:
Coca-Cola's success in China is intricately linked to its insight into changing consumer trends, particularly among the post-90s and 95s generations. These younger demographics in China are displaying a growing interest in alcohol consumption but with a focus on moderation, health, and a "non-social" drinking atmosphere. Coca-Cola's product launches align with these values, introducing options like Lemon-Dou to cater to the trend of "light hangover."
Product Diversification and Market Penetration:
Coca-Cola's "all-category beverage" strategy, as evidenced by the launch of products like Oat Milk drink, showcases the company's commitment to adapting to fast-changing consumer preferences. This approach has positioned Coca-Cola as the rapidest-growing brand in the Chinese market in 2020, with a penetration rate of 51.5% and reaching over 269 million consumers in the past year.
In summary, Coca-Cola's success in China is not only tied to its iconic beverages but also stems from a strategic and agile approach to product diversification, aligning with evolving consumer values, and a keen understanding of market dynamics. This enables Coca-Cola to stay ahead in a highly competitive and dynamic industry landscape.
