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Coca-Cola on a rosy perch in China as sales soar
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09:56, July 23, 2009

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Coca-Cola, the world's largest soft drink maker, registered double-digit sales growth in China market during the second quarter, the company's 23rd quarterly double-digit growth in a row here, helping offset the slowdown in its home turf of the United States.

Company executives said the growth has been buoyed by the nation's stimulus package, and Coca-Cola would continue to implement its investment plan for China, its third largest market worldwide next to the US and Mexico, as previously promised, to cash in on opportunities in the world's rapidly growing market.

For the second quarter Coca-Cola China posted a sales growth of 14 percent compared with a negative growth of 4 percent globally - mainly due to lower sales in US and some European markets where consumers are cutting their daily expenditure budgets.

The growth rate is four percentage points higher than the previous quarter, and it also marks the company's 23rd quarterly double-digit increase. In the first quarter, Coca-Cola's China business increased by 10 percent, whereas the global business grew just 2 percent.

Last year, Coca-Cola registered growth of 19 percent by sales in China, despite the economic slowdown in the nation.

"Our investments in key growth markets contributed to the good performance in markets, including China, Mexico, India and Brazil," said Muhtar Kent, chairman and CEO of Coca-Cola.

Zhai Mei, public relations manager of Coca-Cola North China, agreed. "We are upbeat about the growth ahead, supported by our continuous injection of investment here."

Late last year, a few days after the government announcement its stimulus package, Coca-Cola said it would roll out its three-year investment strategy in China, also the largest ever by volume in the past 30 years.

"We are on the right track to spend $2 billion on the right things," said Zhai.

The huge investment is likely to be utilized for setting up new factories, launching innovative products and strengthening the marketing network.

The move shows the company's unprecedented determination in the market. In the past three decades, Coca-Cola has an accumulated investment of only $1.6 billion in China.

After having opened the $90-million Innovation and Technology Center in Shanghai in March, Coca-Cola also opened two bottling plants in Nanchang in Jiangxi province and Urumqi in Xinjiang Uygur autonomous region, with an investment of around 210 million yuan. The company is also building a $19-million bottling plant in Inner Mongolia autonomous region, which is expected to open next year.

Coca-Cola holds about 50 percent of the carbonated beverage market in China, but in recent years, it began to expand into the faster-growing juice sector, a sector favored by the youth in China. Coca-Cola recently failed in its $2.4-billion bid for Huiyuan Juice, China's largest player in the sector. Juice sector contributed 10 to 20 percent of its China sales.

Source:China Daily

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