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Coca-Cola Moves Into China’s Bottled Tea Market
The Chinese have enjoyed tea for millennia, but they have only been bottling the cold version for five years.

In that time, though, a tea revolution has been simmering, with millions of Chinese taking a liking to the cold version of their old staple beverage.

The total sales volume for bottled tea last year reached 1.9 million tons, a small portion of the total bottled beverage market, which stood at 15 million tons in 2000. Sixty percent of those sales were soda and water products.

Still, experts see the iced tea market heating up in coming years as competition heightens.

Until now, competition has been rare because it was controlled by a few brands such as Kangshifu, President, Suntory, Kirin and Asahi. Xurisheng, the first domestic bottled-tea brand, sold 2.3 billion yuan (US$277 million) worth of iced black tea last year.

Now big beverage makers from home and abroad are pushing their way into the market.

US-based Coca-Cola Co introduced Lanfeng honey green tea in April, a new product first launched in Hong Kong and now sold in Shanghai, Hangzhou and other domestic markets.

With its publicity campaign, the international beverage magnate is positioning itself as a diversifying company.

Almost overnight, Coca-Cola offered a whole range of tea products, from the initial honey green tea to other varieties, such as Oolong tea, jasmine tea and ice lemonade tea.

"They have charged into China's tea market mainly because of the slump of the soda drink market worldwide in recent years and the huge potential of China's bottled-tea market,'' said Liu Qinjin, a tea expert.

Tea beverages, with their low-calorie, low-fat and low-sugar content, are considered both healthy and thirst-quenching. In addition, ready-made bottled tea, compared with traditional hot tea, is more convenient.

The international tea-beverage market has grown at an annual rate of 17 percent in recent years. In Japan, there are 200 varieties of tea, with an annual consumption totaling 3.6 million tons. In the United States, tea beverages are a US$2 billion-a-year industry.

China has seen dramatic growth, too. Tea-beverage output is expected to reach 3 million tons this year.

This has made the Chinese tea market a draw for major beverage makers.

"The domestic bottled tea market will experience the same hot competition that soda drinks and bottled water see,'' Liu said.

Some domestic bottlers are fighting back. A month after Coca-Cola's green tea debut in Shanghai and Hangzhou, the Hangzhou-based Wahaha Group, China's largest beverage maker, announced that it would also enter the tea market with its Future line of bottled teas. The Future product is being aggressively promoted.

"As the country's largest beverage enterprise, we naturally won't give up the tea-beverage market,'' said Wahaha spokeswoman He Mingli.

She predicted that the market will endure fierce competition among different brands, followed by a shake-out.

(China Daily 07/16/2001)

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