As reported to Bloomberg, beverage maker
The Coca-Cola Company
) has plans to invest more than $4 billion in China from 2015 to
2017 to combat the rising competition in the soft drinks market.
The company has also introduced new products and intends to build
new plants to meet the growing demand of Chinese consumers.
The cola giant is ramping up its investment in China as the
company and its bottlers seek to double global revenues to $200
billion in 10 years ending 2020. This investment of $4 billion is
in addition to the previous investment plan of $4 billion for
China for the year 2012-2014.
Coca-Cola is also interested in acquisition deals in China and
may add healthier drinks in its portfolio such as juice making
companies or plant-protein drinks like almond milk. Chinese
consumers are increasingly opting for healthier alternatives in
food and drink, which has also attracted fast food chains such as
) and KFC-parent
Yum Brands Inc.
Coca-Cola believes that the beverage market in China is still
untapped and therefore has wide scope for expansion. Henceforth,
Coca-Cola plans to open two facilities each year in China over
the next decade. We note that the beverage industry is very
competitive and sales are typically driven by promotions.
The company faces intense competition from another beverage
). PepsiCo is also seeking to expand in the most populated
nation. PepsiCo has collaborated with Tingyi Cayman Islands
Holding Corp. and opened new factories and expanded its
distribution network in China.
Coca-Cola still leads the soft drinks market in China and
holds a 16% market share by total volume in 2012, according to
data from market research firm Euromonitor. Though volumes have
been declining in China for the past few quarters due to an
economic slowdown, the company continues to be confident about
the long-term prospects in this region. Coca-Cola holds a Zacks
Rank #3 (Hold).
COCA COLA CO (KO): Free Stock Analysis Report
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