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.
