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"There is still a tens of billions of dollars between Coca-Cola's sales and its peak."
The source of this article is "AI Finance and Economics" (ID: aicjnews), which is reprinted by Tencent Venture with permission.
Text/Zhou Xiangyue
Editor/Fang Chen
Four days after spending $44 billion on Twitter, "Madman" Musk threw a surprising remark on Twitter's new territory.
On the morning of April 28, Musk tweeted, "Next I'm going to buy Coca-Cola and add cocaine back in." This remark is small in number of words but full of madness, and then superimposed musk's usual "net red" effect, instantly detonated the public opinion field at home and abroad.
Just over an hour later, the topic of "Musk said he would buy Coca-Cola next" quickly rushed to Weibo's hot search, and finally won more than 150 million views. Netizens who were thundered by Musk's wave of "riot operations" also began to export wildly, "God wants to make it perish, first let it go crazy" "Pepsi said, God opened his eyes" "Can you do whatever you want if you have money?" ”
Before the outside world could figure out whether Musk's remarks were "mouth hi" or really wanted to buy, the "Twitter influencer" sent two more tweets in a row, "Make Twitter the most fun place" "Listen, I can't create a miracle", and attached a screenshot of a tweet he previously said he wanted to buy McDonald's in the next tweet. Here's a screenshot of a tweet synthesized by a netizen that reads: "Now I'm going to buy McDonald's and fix all the ice cream machines." ”
It seems that the acquisition of Coca-Cola, like the acquisition of McDonald's, may be more inclined to Musk's "mouth hi". After all, even though Musk is already the world's richest man with a net worth of $253 billion, it will not be easy to buy Coca-Cola, which has a market capitalization of $284.2 billion.
In fact, the "cocaine" mentioned in Musk's tweet, more than a hundred years ago, did exist in the coca-cola that had just been invented, making smokers feel excited and excited, and later due to high questioning, the content of cocaine in Coca-Cola gradually decreased, and after 1929, it was completely free of this ingredient.
Although today's Coca-Cola does not contain cocaine, it is still synonymous with "happy fat house water", and recently it has become a hard currency in China and has become a must for many people to hoard goods.
1
"Hard currency" Coke
In the past month, the Coke market is re-emerging a consumer fever, and many people have added the "hoarding Coke" to their consumption lists.
The post-95s who live in Beijing are smiling and smiling, and they are a senior Coke lover, from childhood to adulthood, they have always loved the original flavor of Coca-Cola. But for health and anti-sugar considerations, about 10 years ago, she began to consciously control the frequency and amount of cola she took, and slowly corrected the previous consumption habit of "buying immediately if you want to drink" to "I really can't help but drink again".
Recently, however, this hard-won habit has been accidentally broken. On April 25, Xiaoxiao stockpiled a full box of 24 bottles of Coca-Cola in case he had to quarantine at home, but he couldn't drink Coke.
By 2 p.m., the Coca-Cola in the Tmall supermarket was already out of stock, so that she finally had to choose to buy it in the Taobao store with a longer delivery time.
Compared with laughter, Gao Yu is more arrogant, and ordered 9 mentions of Pepsi Cola in Jingdong in one breath, one mention of 12 bottles, 300 ml per bottle, and she felt solid at the moment of delivery, and she was not afraid of how long she was isolated at home.
Hangzhou's talent Qingyu decided to hoard Coke earlier. In mid-April, while qingyu was hoarding eggs, milk, dried vegetables, lemon slices and other healthy foods, it rarely hoarded three boxes of Coca-Cola that had never been bought before, in case it was used as a hard currency in exchange for supplies in extraordinary times.
In fact, the urgency and importance of the "hoarding Coke" thing originated in Shanghai. Due to the long-term home isolation, many Shanghainese demand for Coke, a "happy fat house water" that can relieve emotional stress, soared in early April.
Xu Ying, who quit carbonated drinks for a long time because she was afraid of getting fat, was re-stimulated in this wave of epidemics to consume Coca-Cola.
According to Xu Ying's recollection, although she has not drunk carbonated drinks for a long time, because her husband likes to drink Coke very much, the family has been regularly purchasing Coke, and before Shanghai officially notified the closure of Puxi on April 1, she also went to Hemado to buy some Coke and hoard it. "There were probably more than ten listens, and at that time I thought it was only four days, which must be enough."
But what she did not expect was that the time to unseal was far from coming as quickly as she thought, and after a few days of staying at home by herself, she began to feel depressed. In this case, Xu Ying tried to drink a few sips of Coke, and the result was out of control.
"It is indeed happy water, and now I don't drink Coke every day, and I feel uncomfortable." Xu Ying told the "Finance and Economics" weekly that since that day, every time she eats, she will drink a few sips of Coke, "really only drink a few sips, a bottle can not be drunk, but it is these few bites, can make me feel very comfortable." 」
However, this also led to the dozens of Cokes she hoarded were quickly consumed, and Xu Ying had to start frequently wandering around Dingdong to buy vegetables, hema and other "grab vegetables" APP. However, considering that the community group buying is basically some basic living necessities, it is not too good to bother volunteers to help move the whole cola that is heavy and not a necessity, so Xu Ying only has a few bottles on the cluster at a time.
"Each order is not heavy, so far, I have grabbed 2 times in Dingdong to buy vegetables and box horses, about 36 listens, and I have spent a high price to buy things in the middle, including Coke, and the errand fee has been increased until 200 yuan before someone took the order." Xu Ying said.
With surging demand and limited purchase channels, Coke's "value" has increased rapidly, and even once became a "hard currency" existence.
In a rather out-of-the-loop example, on the evening of April 11, an owner of a residential area in Pudong, Shanghai, took the initiative to put 12 cans of "Galaxy Walk" Coca-Cola that had been poisoned and placed them in the lobby on the first floor for free use, and instead directly saved up a mini supermarket containing various fruit drinks. In addition to this, hot memes such as "a box of Coke for 3 packs of Chinese" and "Coca-Cola stands at the top of the pyramid of 'Isolation Demand Hierarchy Theory'" are widely circulated on the Internet.
With word of mouth and online stalking, the importance of hoarding Coke began to spread to more cities, especially those with the latest epidemic dynamics.
Sun Yan, who works in Beijing, resolutely gave up a variety of fresh vegetables under the recent wave of "hoarding fever" and went straight to the drink area to buy two large barrels of Coke in case of emergency. Mao Mao, who also works in Beijing, also hoarded Coke at the first time of the latest round of the epidemic in Beijing, and as of now, he has hoarded two large plus two large boxes, totaling about 40 listening to Coke.
"I've loved drinking Coke since I was a kid, thinking it's something that makes food more delicious, and although I grew up to be free, I didn't think Coke was that delicious, but I've always maintained a habit of having to eat something delicious with Coke." Mao Mao told the "Finance world" weekly that this is also the reason why she hoarded so much coke this time, in addition to hoping to make herself happy, but also to make the fast food she eats more delicious.
(Source: Courtesy of the interviewee)
Although Li Lei is not a loyal consumer of Coke like Sun Yan and Mao Mao, she also hoarded four boxes of Coke under the advice of her Friends in Shanghai that "once the city is locked down, this thing is like ancient shells and contemporary gold, belonging to hard currency", although it was unanimously opposed by her family, they felt unnecessary and unhealthy, but she still firmly placed a single order.
One fact is that Coke has indeed regained a lot of popularity in recent times.
The WeChat index shows that since April, Coke Search has seen a significant increase, from less than 20 million on April 1 to a peak of 138 million on April 23. On the Xiaohongshu platform, the amount of notes related to hoarding Coke has also increased significantly in the past one or two months, and as of now, there have been more than 10,000 notes related to "Hoarding Coke".
2
It's hard to change your spending habits
How much impact can this sudden wave of Coke hoarding have on the Coke market?
Xu Ying told caijing tianxia weekly that although the epidemic has made her break the habit of not drinking cola for a long time, and may even be after the epidemic has passed, she will no longer hoard a small amount of coke every day as before, but will buy it in boxes and go home, but it will still not change her consumption habits of drinking Coke in the future.
"I'm afraid of being fat, and if I want to drink after the epidemic, I will occasionally taste a few bites when I am hungry." Xu Ying added.
People who like to drink Coke will not easily change their habits of drinking Coke because of health and other factors, and those consumers who have "no feeling" for Coke themselves will be more difficult to change their concepts because of a sudden rise of Coke hoarding fever.
Recently, some netizens said on social platforms that they also went to the supermarket to buy a coke under the temptation of many people who hoarded Coke, and found that they still did not like to drink this carbonated drink. In the view of the netizens, cola is "too high in sugar and unhealthy", does not quench thirst when there is gas, and "feels more difficult to drink after waiting for the gas to slowly let go".
How much can this wave of Coke hoarding be able to pull sales in the Coke market? It depends on how well supply matches surging consumer demand.
In fact, from the perspective of the Shanghai market, although many consumers' consumer demand for Coke has increased significantly in the recent past, it is difficult for the volume to soar like demand due to the lack of smooth purchase channels.
According to Xu Ying, in the past, he never cared how much Coke his husband drank, "He drank Coke as normal as eating every day." But more recently, she has begun to take stock regularly every day, keep a note of the amount of Coke left, and limit her husband to one can a day. "Sometimes he sneaks to the refrigerator to get it and gets it and I catch it. But no way, because it's too hard to buy. Xu Ying said.
Xu Ying once tried to hoard some Coke on Hungry Mo, but the usual price is only about 50 yuan a box of 24 listening to 330ml specifications of Pepsi Cola, now the cheapest is about 90 yuan a box, and more importantly, at least 2 boxes to buy, "too difficult volunteers, because too heavy, we do not want to buy, can only be in the box horse, Dingdong to buy vegetables, Meituan these apps every day to grab, try their luck."
Ah Huan, who is also in Shanghai, also feels the difficulty of hoarding Coke. The night before the sealing, she stockpiled 8 bottles of sugar-free Coke, thinking that she could drink it for a long time, but now there are only 3 bottles left, and she is reluctant to drink. "I usually like to drink, but for the sake of health, I am very restrained, and recently the epidemic wants to let go and drink, and it is out of stock." Ah Huan sighed.
Therefore, she has actually always wanted to stock up on some Coke, but considering the weight of Coke, volunteers will be more difficult to deliver, and has not been able to put this idea into practice, until recently heard that Pinduoduo has a paid service delivered by couriers, and only ordered a box of 64 yuan worth of 24 cans and 330ml specifications of Coke, but it has not yet been a group.
(Source: Visual China)
Coca-Cola's quarterly report also reflects this situation to some extent.
According to the financial report, in the first quarter of 2022, Coca-Cola's single-box sales in the Asia-Pacific region increased by 4%, and the revenue increased by only 1%, far lower than the 34% in Latin America, 22% in North America, and the 13% year-on-year revenue growth in Europe, the Middle East and Africa. This increase was also largely driven by India and the Philippines, but "offset by pressure from China to reduce consumer mobility due to the resurgence of the pandemic."
According to Coca-Cola CEO James Quincy, driven by the Market Activity of the Coca-Cola brand during the Spring Festival, Coca-Cola made a good start in the Chinese market in January 2022, but by February and March, it quickly declined due to the decline in consumer liquidity caused by the epidemic, and it is expected that the situation in early April will not be much different from the end of March.
Li Xingmin, an expert in brand and industrial strategy, told Caijing Tianxia Weekly that carbonated beverage products like Coke are not a product that meets just needs, and it will indeed be at some stages, in some circles, because of certain cultural phenomena, communications or events, and make consumers suddenly have a continuous good feeling for certain categories, thus forming a trendy purchase in the short term, but how long this boom can be, it is difficult to judge.
3
There is still a $10 billion gap with the peak
The history of Coke's development in China is several decades.
In 1979, a photo of a little boy drinking Coke on the Great Wall was successfully frozen and widely circulated, and this little boy was also known as "the first person to drink Coke in China", and once became the envy of many people. In the same year, Coca-Cola once again entered the Chinese mainland market after 30 years and began to stir up the pattern of China's beverage market. Two years later, PepsiCo also built a factory in Shenzhen, quickly attacking cities in Various Chinese cities.
By the 1990s, with the strong expansion of the "two pleasures" in China, except for Shaolin Coke, none of the seven major domestic soda factories were spared from being surrounded and suppressed by the "two pleasures", either selling themselves to Coca-Cola or selling themselves to Pepsi Cola, and staged a "two music flooding seven army" incident. The hegemony of the "two pleasures" was thus established.
For a long time after that, it has been the golden age of "two pleasures". Many consumers grew up drinking Coke and have a natural affinity for them.
Sun Yan is one of them, the habit of drinking Coke that she has cultivated since childhood, so that she will go to buy a bottle of Coke with her roommate almost every time she runs 800 meters in college, "make up for the energy and happiness", even now, she has always maintained the habit of drinking Coke every week, often ordering a McDonald's package, and drinking Coke together.
The days of the "two pleasures" lying and winning did not change until around 2012. At that time, with the rise of health awareness brought about by the upgrading of consumption levels, and the impression of carbonated drinks "junk food" gradually penetrated the hearts of the people, carbonated drinks represented by Coke gradually "fell out of favor".
The data shows that from 2013 to 2019, the average annual compound growth rate of China's carbonated beverage market was -1.65%, and the national carbonated beverage sales fell from 18.1 million tons in 2014 to 17.44 million tons in 2018.
It was during this time that Xiaoxiao began to consciously control her Coke intake, and the "quitting" Coke for a long time was in October 2015, and she successfully achieved the goal of not drinking Coke in a month, for which she also sent a Weibo update as a celebration.
Coincidentally, considering that drinking too much Coke is easy to gain weight, and it is not good for the skin, Mao Mao has gradually reduced the frequency of drinking Coke in recent years. "Take control of a degree and only drink it once on the occasional weekend." Mao Mao said that the scene of drinking Coke by himself generally occurs when there are too many overtime hours a week, ordering fried chicken with Coke to indulge, or inviting good friends to come to the house to cook a meal together during the holidays.
According to the "2016 Beverage Industry Satisfaction" report released by the User Committee of the China Association for Quality after launching a survey of more than 10,000 consumers, as early as 2016, consumer-preferred beverages have become packaged water, while carbonated beverage preferences are low, only 7%, but rely on consumers' recognition of taste and personal habits to maintain a certain user stickiness. Its main consumer group after 80 and 90, many are still habits developed in adolescence, and more post-90s are most favored for functional drinks, packaged water and protein drinks.
"The rise of several tens of billions of products such as Wang Laoji, Nutrition Express, and Six Walnuts actually confirms the crisis encountered by Coke in those years." Li Xingmin told Caijing Tianxia Weekly that on the one hand, these three products with the concept of "nutrition and health" are sought after, which to a certain extent implies that consumers are moving from the "two pleasures" that are regarded as unhealthy to healthier products. On the other hand, these brands have also done a very bold thing, that is, to surpass Coca-Cola and Pepsi in terms of price, so that "two music" becomes a relatively low-end product, rather than being a representative of cool and trendy as in the 90s.
In fact, not only in china, but also in the global market, carbonated beverages represented by cola have been "cold" for many years, and finally manifested in the performance of the two global cola giants.
According to the data, in 2012, Coca-Cola successfully reached the peak of revenue of $48.017 billion, but since then it has turned from prosperity to decline, and revenue has declined for many years, all the way down to $31.9 billion in 2018, even if the performance in 2021 has recovered to a certain extent, rising to $38.726 billion, and there is still a gap of $10 billion from the peak in 2012.
PepsiCo is no exception, revenue has been hovering around $600 to 70 billion for many years, and in its business composition, the business contribution of non-colas such as convenience foods is constantly increasing, and it has also spent a lot of money to collect 100 grass flavors.
(Source: Visual China)
4
The two giants are vying for change
Faced with the crisis of shrinking carbonated beverage market and continued sluggish performance, the two Coke giants have begun to carry out drastic reforms and adjustments in the past few years.
In 2016, Coca-Cola made a big decision to spin off its bottling plant and sell its bottling business in North America and around the world to franchise partners. Since Coca-Cola's stake in the bottling plant in the Chinese market was sold to Swire for $3.012 billion in November 2016, and the other part was sold to COFCO for $2.9 billion, each of which has Chinese mainland half of Coca-Cola's consumption.
Earlier in 2011, PepsiCo handed over the exclusive distribution rights of 24 bottling factories and some brands in China to Master Kang, and reached an alliance with Master Kang. This means that the two major Coke companies only need to provide Cola concentrate pulp to the bottling plant, which greatly reduces the cost of standardization, transportation, distribution and so on.
At the same time as the divestiture of the bottling plant, Coca-Cola also proposed the strategic goal of becoming an "all-category beverage company" in 2016, and in May 2017, it officially announced the implementation of the "all-category strategy", and Coca-Cola CEO James Quincy also said that it would take Coca-Cola out of its comfort zone.
Judging from the many actions of Coca-Cola in recent years, it has indeed taken many actions in the realization of the "whole category", not only with strong financial strength, but also launched a number of brand mergers and acquisitions in many fields across sports drinks, soy milk drinks, dairy products, coffee and other fields, and many brands such as Monster Mo claw, Honest Tea organic tea, ZICO coconut water are included in the bag, and even enter the sparkling wine category.
On the product push, Coca-Cola has also made a lot of efforts, launching a variety of "novel" flavors and products. Among them, it is especially focused on sugar-free and healthy beverages, including "Coke Zero", which advertises no calories, ginger Coca-Cola, which can be "hot to drink", as well as sugar-free lemon mint flavored Sprite with upgraded formula, and the newly launched "AH!HA! Small Universe" sugar-free sparkling water brand...
PepsiCo is no exception, and has successively launched PepsiCo sugar-free series raspberry flavor, 7 hi low sugar and other products with "sugar-free" and "low sugar" as the main products.
The "two pleasures" have indeed achieved good results in sugar-free. In the recent financial reports of China Food, the major shareholder of COFCO Coca-Cola, there have been many times that "sugar-free soda has become one of the company's high-growth subdivisions, with a year-on-year growth rate of more than 50%", and the new brand of sugar-free sparkling water AH!HA! The small universe reached the level of 100 million yuan within a few months of launch, becoming a blockbuster product. PepsiCo's sugar-free products were also reported as early as May 2021, with a growth rate of nearly three digits.
"In the past two years, the gas and water category has actually been brought up by the Yuanqi Forest." Li Xingmin told the "Finance and Economics" Weekly that in the past few years, whether it is the backdoor listing of the Arctic Ocean, or the IPO of Bingfeng, or the "Hankou Second Factory" has completed two rounds of financing of more than 100 million yuan in a row, with the help of capital, the category boom has rebounded in a large area. As the hegemon, Coca-Cola and Pepsi Cola are undoubtedly the biggest beneficiaries of the expansion of the sugar-free soda market.
In addition, "Two Music" has also approached young people in marketing in recent years. In order to seize the Z generation, Coca-Cola not only made articles on the bottle copywriting of the beverage, but also launched packaging such as "name bottle", "lyric bottle" and "line bottle", looking for Wang Junkai and other new generation idol stars contemporary speakers, and various co-branded products are even more slippery.
In the view of Zhu Danpeng, an analyst in china's food industry, these measures of "two pleasures" have actually paid off. Taking Coca-Cola as an example, due to its initiatives in innovation, upgrading and iteration, the continuous increase of the entire new generation population base, and the retaliatory consumption of some new generation consumers who have been restricted from childhood after having the ability to consume, Coca-Cola's performance has actually shown a warming trend in the past two years.
Zhu Danpeng believes that in the future, with the continuous superposition of the demographic dividend of the new generation of consumers, the plate of the entire carbonated beverage category will become larger and larger. For the new generation, value management, weight management, health management, nutrition management have run through their daily consumption, and low-calorie and low-fat products will become an important development trend in the future.
(At the request of the interviewees, XiaoXiao, Gao Yu, Qingyu, Xu Ying, Sun Yan, Li Lei, Mao Mao, and Ah Huan are pseudonyms)
END
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