All soft drinks companies operating in China are facing a slow-growing economy which is affecting sales of soft drinks. Personalised marketing and added-value products demonstrate that brand owners need to engage consumers and need to be innovative to stand out from the competition. Manufacturers should capture Chinese middle-class consumers who are now looking for natural and healthy products.
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Chinese companies have experienced an economic boom over the past two decades and now they are facing slowdown. Collectively, Chinese companies are weak in carbonates and TCCC’s dominance in this category deters Chinese entry. In the overall soft drinks market, major Chinese players and small players jointly take a much larger share than international companies.
Local flavours and RTD tea heritage are the key strengths of Chinese players. They are also expanding in natural mineral water to boost value sales. Competition is no longer focusing on selling large volumes at low prices, adding value is increasingly important. The market is undergoing a "transformation" towards more value-added products which puts pressure on companies that fail to innovate. Local, TCM (traditional Chinese medicine) and health are key factors.
All players face the same regulatory challenges. Change in definitions for bottled water may affect labelling and sales of some brands, particularly brands labelled “mineral water”. The rules on labelling of energy drinks may affect potential entrants such as Monster.
Chinese players essentially rely on an organic growth strategy. Foreign companies are both competitors and collaborators for the Chinese. Chinese companies are now more open-minded and are actively seeking cooperation with foreigners. Meanwhile, they are also tentatively looking overseas for deals.