Recently, Nestlé and Coca-Cola announced that the two sides will re-adjust the geographical scope of the drink beverage tea joint venture, Global Beverage Partners (BPW). With the exception of Europe and Canada, all other countries and regions will be operated independently by the two companies.
Ten years of "strong alliances" did not achieve the desired results. At present, the intentions of the two giants in solo flying are obvious. On one side, Nestle, which previously only sold tea powder, was already filling the short board of liquid beverages. It acquired liquid milk production plants and channels through the acquisition of Yinlu in the Chinese market. On the other side, Coca-Cola is positioned as a full-service beverage company. The beverage category is also aspirations. After the breakup, local operations can be more flexible and responsive to the market.
Marriage Coca-Cola is mainly responsible for the production and distribution of products, Nestlé is responsible for product development, brand support and so on. However, things were counterproductive and the strong combination did not achieve the desired results.
BPW is a joint venture company that produces ready-to-drink tea products. Nestlé and Coca-Cola each have a 50% stake. The main product currently operating in the Chinese market is tea beverages. According to the statement of both parties, except for Europe and Canada, other markets, including China, will be handed over to the two companies for independent operation.
This joint venture company had high hopes. Nestle is a food giant with strong product development capabilities. Coca-Cola is also a brand company with strong market operations capabilities. Both sides expect to enter the tea beverage market through complementary strengths. “At that time, Nestle had sold tea powder for a decade or two in China, but it had done nothing in the liquid tea beverage market; Coca-Cola launched several generations of tea beverage products, such as heaven and earth, and sun-dried fruit tea, and did not win the market. In this case, the two sides chose to join forces," said Tan Changchun, general manager of China Coca-Cola and Huaxia Cornerstone Marketing Consulting. In the cooperation between the two parties, Coca-Cola is mainly responsible for the production and distribution of products, and Nestlé is responsible for product development and brand support.
However, things were counterproductive and the strong combination did not achieve the desired results. According to market research company Eurocore, in 2010, the share of ready-to-drink tea in Mainland China (including herbal tea drinks), Master Kong, Uniform, and Wang Laoji occupied the top three positions, and their market share exceeded 50%. However, the market share of "Nestle Icy Tea" and "Nestle Tea" was only 1.9%, and it has been declining for the past year. Coca-Cola's market share of original leaf tea is only 2.8%.
The unsatisfactory market has caused both sides to retreat.
According to a report by the China Business News (blog, Weibo), as early as in 2006, the two parties issued a statement to reduce their business. In 2007, BPW will focus on the ready-to-drink black tea market, including previously-accomplished ready-to-drink coffee and green tea. Business areas will operate separately. From the end of 2008, Nestlé has removed ready-to-drink coffee from Coca-Cola's sales channels and sold it with its own instant coffee. However, in 2008, the two parties jointly launched the original leaf tea series, but they did not exclude green tea, but the original leaf tea market performed generally.
“BPW is headquartered in Switzerland. It is mainly responsible for research and development and formulation of strategies. However, the global market is so big. It knows little about the local markets, and it is difficult to respond quickly and closely to the market.†said a Coca-Cola insider after the breakup. The operating efficiency of the local market will be higher.
It is understood that the main products currently operated by BPW in the Chinese market are Nestlé Icy Tea and Original Leaf Tea. He Wei, the head of Nestlé’s China Public Relations Department, told reporters that after the break, Nestle Icy Tea will be returned to Nestle for operation, and original leaf tea will be handed over to Coca-Cola, and the adjustment transition period will end at the end of 2012.
Each of them intends that the future Nestlé will independently operate tea beverages in the Chinese market and become a competitor with Coca-Cola from its partners.
When ten years of marriage became a constraint, Nestle and Coca-Cola had already had their own plans.
In this split, Nestlé was considered more active. Li Zhiqi, chairman of Beijing Zhiqi Future Marketing Consulting Group, believes that after successive acquisitions of Yinlu and Xufuji, coffee, dairy products, wafers and confectionery, as well as liquid beverages and condiments, have become five important areas for the future business development of Nestlé China. . "That is to say that Nestle wants to make a liquid drink, and the previous cooperation will be binding its hands and feet, because Nestle can not let the channel control in other people's hands for a long time, so Nestle should do it alone."
The previous acquisition of Yinlu has demonstrated Nestle’s determination to operate liquid beverages independently. Di Kewei, president and CEO of Nestle Greater China, bluntly stated that “I hope to enter the liquid beverage industry†when acquiring Yinlu, and Yinlu is a leader in peanut milk and eight-treasure porridge. "Through the acquisition, Nestle has acquired Yinlu liquid beverage production plant and channel, complementing its own short board in the liquid beverage field. At the same time, it can open up its own liquid and solid beverage products. After Nestlé had been selling powdered Nestle lemon tea, Icy tea, etc."
“In China, we have been committed to developing non-alcoholic beverages with our customers. Tea beverages are an important part of our product portfolio,†said He Wei. In other words, in the future Nestlé will independently operate tea beverages in the Chinese market and become a competitor with Coca-Cola from its partners.
For Coca-Cola, breaking up is not a bad thing either. “Tea drinks are part of Coca-Cola's full-service beverage company's strategy. We cannot give up. Although we are not yet a leading product, we hope to do better in the future.†Zhao Yanhong, Director of Public Affairs and Communications Department of Coca-Cola China, told reporters and broke up. The market is handed over to local operations to better get closer to the market.
An industry source said that this may be a relief for both parties. Before the two companies cooperated to promote tea beverages, their input was not strong, and the terminal distribution rate was not high, especially in the cities under the second line. "Coca-Cola has its own flagship product, so it may be more inclined to own the brand on the terminal distribution, which to a certain extent affected the sales of the BPW joint venture product."
However, for the two giants of Nestle and Coca-Cola, it is not easy to win a large share of the Chinese tea beverage market. Master Kong and unity have now occupied half of the country, and there are companies such as Wahaha behind. Leaf tea or the development of Nestle Icy tea have a lot of variables.
Ten years of "strong alliances" did not achieve the desired results. At present, the intentions of the two giants in solo flying are obvious. On one side, Nestle, which previously only sold tea powder, was already filling the short board of liquid beverages. It acquired liquid milk production plants and channels through the acquisition of Yinlu in the Chinese market. On the other side, Coca-Cola is positioned as a full-service beverage company. The beverage category is also aspirations. After the breakup, local operations can be more flexible and responsive to the market.
Marriage Coca-Cola is mainly responsible for the production and distribution of products, Nestlé is responsible for product development, brand support and so on. However, things were counterproductive and the strong combination did not achieve the desired results.
BPW is a joint venture company that produces ready-to-drink tea products. Nestlé and Coca-Cola each have a 50% stake. The main product currently operating in the Chinese market is tea beverages. According to the statement of both parties, except for Europe and Canada, other markets, including China, will be handed over to the two companies for independent operation.
This joint venture company had high hopes. Nestle is a food giant with strong product development capabilities. Coca-Cola is also a brand company with strong market operations capabilities. Both sides expect to enter the tea beverage market through complementary strengths. “At that time, Nestle had sold tea powder for a decade or two in China, but it had done nothing in the liquid tea beverage market; Coca-Cola launched several generations of tea beverage products, such as heaven and earth, and sun-dried fruit tea, and did not win the market. In this case, the two sides chose to join forces," said Tan Changchun, general manager of China Coca-Cola and Huaxia Cornerstone Marketing Consulting. In the cooperation between the two parties, Coca-Cola is mainly responsible for the production and distribution of products, and Nestlé is responsible for product development and brand support.
However, things were counterproductive and the strong combination did not achieve the desired results. According to market research company Eurocore, in 2010, the share of ready-to-drink tea in Mainland China (including herbal tea drinks), Master Kong, Uniform, and Wang Laoji occupied the top three positions, and their market share exceeded 50%. However, the market share of "Nestle Icy Tea" and "Nestle Tea" was only 1.9%, and it has been declining for the past year. Coca-Cola's market share of original leaf tea is only 2.8%.
The unsatisfactory market has caused both sides to retreat.
According to a report by the China Business News (blog, Weibo), as early as in 2006, the two parties issued a statement to reduce their business. In 2007, BPW will focus on the ready-to-drink black tea market, including previously-accomplished ready-to-drink coffee and green tea. Business areas will operate separately. From the end of 2008, Nestlé has removed ready-to-drink coffee from Coca-Cola's sales channels and sold it with its own instant coffee. However, in 2008, the two parties jointly launched the original leaf tea series, but they did not exclude green tea, but the original leaf tea market performed generally.
“BPW is headquartered in Switzerland. It is mainly responsible for research and development and formulation of strategies. However, the global market is so big. It knows little about the local markets, and it is difficult to respond quickly and closely to the market.†said a Coca-Cola insider after the breakup. The operating efficiency of the local market will be higher.
It is understood that the main products currently operated by BPW in the Chinese market are Nestlé Icy Tea and Original Leaf Tea. He Wei, the head of Nestlé’s China Public Relations Department, told reporters that after the break, Nestle Icy Tea will be returned to Nestle for operation, and original leaf tea will be handed over to Coca-Cola, and the adjustment transition period will end at the end of 2012.
Each of them intends that the future Nestlé will independently operate tea beverages in the Chinese market and become a competitor with Coca-Cola from its partners.
When ten years of marriage became a constraint, Nestle and Coca-Cola had already had their own plans.
In this split, Nestlé was considered more active. Li Zhiqi, chairman of Beijing Zhiqi Future Marketing Consulting Group, believes that after successive acquisitions of Yinlu and Xufuji, coffee, dairy products, wafers and confectionery, as well as liquid beverages and condiments, have become five important areas for the future business development of Nestlé China. . "That is to say that Nestle wants to make a liquid drink, and the previous cooperation will be binding its hands and feet, because Nestle can not let the channel control in other people's hands for a long time, so Nestle should do it alone."
The previous acquisition of Yinlu has demonstrated Nestle’s determination to operate liquid beverages independently. Di Kewei, president and CEO of Nestle Greater China, bluntly stated that “I hope to enter the liquid beverage industry†when acquiring Yinlu, and Yinlu is a leader in peanut milk and eight-treasure porridge. "Through the acquisition, Nestle has acquired Yinlu liquid beverage production plant and channel, complementing its own short board in the liquid beverage field. At the same time, it can open up its own liquid and solid beverage products. After Nestlé had been selling powdered Nestle lemon tea, Icy tea, etc."
“In China, we have been committed to developing non-alcoholic beverages with our customers. Tea beverages are an important part of our product portfolio,†said He Wei. In other words, in the future Nestlé will independently operate tea beverages in the Chinese market and become a competitor with Coca-Cola from its partners.
For Coca-Cola, breaking up is not a bad thing either. “Tea drinks are part of Coca-Cola's full-service beverage company's strategy. We cannot give up. Although we are not yet a leading product, we hope to do better in the future.†Zhao Yanhong, Director of Public Affairs and Communications Department of Coca-Cola China, told reporters and broke up. The market is handed over to local operations to better get closer to the market.
An industry source said that this may be a relief for both parties. Before the two companies cooperated to promote tea beverages, their input was not strong, and the terminal distribution rate was not high, especially in the cities under the second line. "Coca-Cola has its own flagship product, so it may be more inclined to own the brand on the terminal distribution, which to a certain extent affected the sales of the BPW joint venture product."
However, for the two giants of Nestle and Coca-Cola, it is not easy to win a large share of the Chinese tea beverage market. Master Kong and unity have now occupied half of the country, and there are companies such as Wahaha behind. Leaf tea or the development of Nestle Icy tea have a lot of variables.
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