Coca-Cola is on the wrong track selling a tin of water for US$9 - Tom Doctoroff

Tom Doctoroffr

Coca-Cola surprised many branding experts by launching a tin of sparkling water called 'Valser' to Chinese consumers for US$9. It is not impossible, says branding guru Tom Doctoroff to the South China Morning Post, but then they have to change their marketing dramatically. “Turn it into a social currency,” Doctoroff says.

The South China Morning Post:

“Turn it into a social currency.” 

That’s the advice being given by one China marketing expert to Coca-Cola, as the US drinks giant launches what it is being billed as an ultra-luxurious Swiss sparkling water brand, a bottle of which costs double what a Starbucks venti cappuccino might cost. 

Its “Valser” water first appeared in the US soft drinks giant’s store on Chinese online marketplace Tmall a few weeks ago, highlighting specifically that it is sourced from “Switzerland.” 

But what raised many eyebrows was its price tag: a 750ml Classic bottle costs 64 yuan (US$9.29)... 

“Theoretically, it is possible [to sell at that price], but you would have to make it not just about water, but also a social currency,” said Tom Doctoroff, senior partner with global marketing consultancy The Prophet, and author of book What Chinese Want: Culture and Communism... 

“Our water comes from The Alps, which was formed 200 million years ago,” the world’s largest beverage company said of Valser in its Chinese advertisement, adding that its source is fed from melted snow and rain that filters through glacial sand. 

But other than focusing on origin, Doctoroff insists Coke should be adopting a vastly different marketing approach from what the industry is simply accustomed to. 

So far Coca-Cola has opted for a group of heavyweight endorsers, among them Chinese heartthrob Lu Han, the Korean actor Park Bo-gum, even the billionaire investment tycoon Warren Buffett – but just how successful they could prove for an ultra-premium, ultra-pricey Swiss bottled water remains a mute point. 

“The Chinese who would buy Coca-Cola’s luxury bottled water are likely to be the same group of people who are connoisseurs of Louis Vuitton handbags,” he said. 

“So to help build its prestige, you need new partners, and right opinion leaders .”

More in the South China Morning Post.

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Warren Buffett sells better than sport heroes - Shaun Rein

Shaun Rein

Superinvestor Warren Buffett made a surprise appearance on CoCa-Cola's Cherry Coke's can during their China launch. A good move, says business analyst Shaun Rein to AP. Business leaders like him are more popular than sport starts.
AP:

The Atlanta company says it decided to feature a drawing of the billionaire investor on cans for the launch of Cherry Coke in the country. Buffett is a known fan of Cherry Coke, and his Berkshire Hathaway is Coke's largest single shareholder. 

Shaun Rein, founder of the China Market Research Group, said business leaders in China tend to have an "outsized" following, in some case more than sports stars. Buffett is also seen as "a non-corrupt, down-to-earth" person in the country, Rein said. 

Coke began selling Cherry Coke in China on March 10. The special edition Buffett cans will remain on shelves for a limited time.

More at AP.

 

  Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.  

Pepsi beats Coke at Shanghai Disney – Ben Cavender

+Benjamin Cavender 

PepsiCo has beaten Coca-Cola as the only coke supplier at the Shanghai Disney park, breaking a decades old alliance between Disney and Coca-Cola. The question is now whether Pepsi can leverage the tie-up outside the resort, says retail analyst Ben Cavender to Reuters.

Reuters:

The deal is only a tiny segment of China's 421 billion yuan ($68.74 billion) soft drink sector, but marks a blow for PepsiCo against Coke in the highly competitive market, where both brands are coming under increasing pressure from Chinese rivals and changing consumer tastes for local flavors. 

"I wonder what kind of message it sends to Coke globally. Even though the Disney park is only one small thing, China has massive room to grow for the Disney brand. Tying up this deal could mean good things going forward," said Ben Cavender, Shanghai-based principal at China Market Research Group... 

The key question for Pepsi is if it can leverage its tie-up with Disney outside the limits of the resort, said Cavender. 

"If they can do more Disney-themed adverts elsewhere I can see this benefiting them a lot, and the fact Disney switched from Coke to Pepsi here could mean big things for the years ahead in other markets too," he said.

More at Reuters.

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Can Nestle succeed where Coke failed? - Shaun Rein

Nestle's anticipated mega deal brings back the US$ 2.4 bn deal by Coke, rejected in 2009 by the Ministry of Commerce for fears the new company would dominate the market. While Nestle's deal is huge, it has not Coke's problems, tells Shaun Rein in Fortune.

Fortune:

Nestlé, the world's biggest food company known for brands such as Haagen-Dazs and Nescafe, is one of many big Western companies that have been looking to increase sales in emerging markets amid slower growth in the U.S. and Europe. The company's interest in Hsu Fu Chi, which is worth around $2.6 billion, could very well go in any direction. And admittedly, large-scale takeovers are complex and rarely easy to pull off.

But it makes little sense for skeptics to bring the memory of Coke's failed $2.4 billion bid into the picture, says Shaun Rein, managing director of China Market Research Group. Whatever issues killed the Coke deal likely won't happen with Nestlé's bid to buy China's biggest confectioner.

For one, Rein notes, there likely won't be a monopoly at issue because Hsu Fu Chi's dominance in China's confection market is not as big as Huiyan's control of the fruit juice market. When Coke pursued Huiyuan, the Chinese juice maker controlled about 42% of the country's pure juice market. By contrast, Hsu Fu Chi commands about a 5.5% share of China's confectionary market. That's still a sizable chunk given that the market is very fragmented, but local and foreign players have been doing well.

"I don't see it getting the same scrutiny and raising the same red flags," Rein says about Nestlé's interest in Hsu Fu Chi.

More in Fortune

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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