Coke tightens grip on drinks market

The deepening of the Coca-Cola and Nestle partnership will open up the life science strengths of the Swiss food group to Coke in its drive to become a total beverage company. Mr Scott Price, Coca-Cola China director and country manager for Hong Kong and Macau, said the recent boost to the two companies' coffee and tea joint-venture, would accelerate development of Coke's growing portfolio in the lucrative non-carbonated soft drinks segment. Pending regulatory approval, the 50:50 joint-venture will replace the present decade-old Coca-Cola & Nestle Refreshments (CCNR) partnership with the renamed Beverage Partners Worldwide (BPW) operation. On top of CCNR's existing Nestea and Nescafe brands, Coca-Cola will add its Tian Yu Di and Yang Guang tea businesses, while Nestle will bring its Belte tea operations to the BPW venture. According to Mr Price, BPW will function as an entrepreneurial unit and will be dedicated to tapping the growth potential of emerging beverage segments. These include ready-to-drink coffee, teas and beverages with a healthy positioning such as herbal teas. "BPW is certainly meant to assist in countries where they have not achieved a high level of portfolio diversification since teas and coffee is certainly one of the biggest non-CSD (carbonated soft drinks) beverage that people consume," said Mr Price. The BPW deal is one of several initiatives that Coke is implementing to increase shareholder value and close the door on what had been the most difficult three years in its history. "In a market and industry where shareholders are always looking for incremental value, by leveraging our distribution and marketing expertise to beverages outside CSD, we believe it certainly represents low-risk, high return strategic alignment," said Mr Price. With regulators now combing through the BPW deal, it is still unclear how the new operation will pan out in Hong Kong, one of the larger CCNR operations worldwide in profit and volume terms. Coke has a portfolio of about 14 brands in Hong Kong, with last year's launch of Nagomi green tea and energy beverage Powerade. Two new brand launches and several product extensions are in the pipeline this year, which will also see the company use Powerade for the first time as the official beverage in place of Coca-Cola for next month's Rugby Sevens in Hong Kong.

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