Snapple To Shake Up China Drink Market? 斯奈普将撼动中国饮料市场？
China’s beverage market could get an interesting new shot of competition with the announcement by a major US player that it could soon bring its premium Snapple brand to Asia. This move, if it happens, could provide a welcome shake-up for a market that has become dominated by a small group of both domestic and international firms, including global brands like Coke (NYSE: KU) and Pepsi (NYSE: PEP), and local giants including Wahaha and Huiyuan (HKEx: 1886). Snapple enjoys a relatively premium image in its home US market, which could provide it with an interesting boost in brand-conscious China if it enters the market and positions itself as a high-end drink.
The latest news is relatively brief, with Dr Pepper Snapple Group (NYSE: DPS) announcing it has re-acquired the rights to sell its Snapple brand of juice-flavored drinks in Asia. (company announcement) The company said its deal with Mondelez International will allow it to re-acquire the rights to sell Snapple-brand drinks in Australia, Malaysia, Singapore, China, Hong Kong, Japan and South Korea.
I’m not familiar with Mondelez, which is affiliated with US food giant Kraft (Nasdaq: KRFT); but the company clearly wasn’t doing much to develop Snapple in China, since I have yet to see any Snapple drinks on the shelves of Chinese grocery and convenience stores. The announcement doesn’t give any more details, except to state the obvious that the agreement will allow Dr Pepper Snapple to explore new opportunities in the Asia Pacific region.
It’s impossible to say what Dr Pepper Snapple is thinking or which markets it will choose to explore first, but I wouldn’t be surprised if we see an announcement within the next year saying Snapple will enter China. While the market is indeed already quite crowded with a wide selection of drinks from major players, I do think Snapple could find a nice and profitable niche if it markets itself similarly to its position in its home US market. That image has Snapple marketing itself as a relatively high-end brand of fruit flavored drinks targeted at image-conscious white-collar consumers.
That formula looks well suited to China, where consumers have shown a strong preference for fruit flavored drinks. Coke announced in 2011 that its Minute Maid Pulpy brand of orange-flavored drinks, made specifically for the China market, had become its first drink developed outside the US to top the $1 billion sales mark. (previous post) The strong Chinese preference for fruit-flavored beverages also led Coke try and purchase Huiyuan, China’s biggest juice maker, in 2009, although that bid ultimately was vetoed by the country’s anti-monopoly regulator.
Snapple would also do well in China due to its premium image, as evidenced by the huge success of Starbucks (Nasdaq: SBUX) in the market. While Starbucks is mostly a mainstream brand in the west, the company has found a huge audience in China by positioning itself as a premium brand to attract the country’s millions of upwardly mobile young white-collar workers. (previous post) Starbucks’ success is even more remarkable when one considers that its core coffee product is largely alien to most Chinese, who grew up in a traditional tea drinking culture.
All that said, this latest move by Dr Pepper Snapple looks like a prelude to an upcoming China gamble that should have a strong chance of success. The key factors will be whether the company can copy its US image in China, and also whether it chooses a strong partner with good local connections and business sense. If it does all that, look for Snapple to shake up the China drinks market in the next 5 years by appealing to fruit-loving, brand conscious young Chinese.
Bottom line: The US Snapple brand of drinks could enter China within the next year, with a strong chance of success by positioning itself as a premium product.
Related postings 相关文章:
