Cola wars break out in China

ASIA'S ECONOMIC woes may have taken the fizz out of China's retail spending this year, but a new high street battle has been bubbling away during the long hot summer. Cola wars have broken out in China, pitching "The Chinese People's Own Cola" against the might of Coca-Cola and Pepsi.

An advertising campaign launched Feichang Cola - or Future Cola - during the World Cup, and the company claims to have sold 24 million half-litre bottles in the past two months. "I think maybe the Chinese would like to see their own companies produce cola and take some market share," said Lu Dong, head of the Peking office for Wahaha Group, the Hangzhou-based parent company. So is this the world's first patriotic cola? "If one has a patriotic feeling, maybe one drinks Future Cola. But if one does not drink Future Cola, it does not mean one is not patriotic," said Ms Lu.

For the time being it is a Chinese David against the multinational Goliaths. But the attempt by a domestic company to challenge the might of foreign brands follows a trend already seen with other consumer products, such as Lucky camera film (pitched against Kodak) and Li Ning sportswear (the nearest thing to a local Nike or Adidas).

According to figures from the Chinese Beverage Industry Association, the sales volume of Coca-Cola and Pepsi in China has jumped five fold since 1992, with 1.36 million tonnes of the two drinks sold last year. This makes Future Cola but a teaspoon in the ocean of cola drinks, with maximum production around a 20th of its combined two big rivals' sales. But Wahaha is not the only Chinese soft drinks company that is trying to compete with the multinationals. Fenhuang Cola and Lechen Cola are two other Chinese cola products being promoted this summer.

While Wahaha's Future Cola is the one trying to sell itself on patriotism, advertisements conveniently ignore the fact that the company is 51 per cent owned by the French company Danone and a Hong Kong investment company. But Ms Lu claims it also caters to Chinese palates: "We make the taste more suitable for Chinese. We made a market survey. Coca-Cola is a bit too strong in taste, so we make Future Cola a bit more gentle." A "tiny" amount of Chinese medicine was included for its taste but, just like Coca- Cola, the recipe is "secret," she added. Still, the most relevant weapon is probably the 5 mao (4p) saving Wahaha promises against Coca-Cola and Pepsi.

Wahaha's total sales reached 2.1bn yuan (pounds 161m) last year, and it has a network that should be able to reach large parts of China, although distribution so far has been patchy.

A spokesman for Coca-Cola has said that the drinks giant was not worried about the new competition, and fittingly enough, it has a plan to beat the Chinese at their own game. On Friday the US company announced the launch of "ready-to-drink teas", the version sold in cans and bottles. Coals to Newcastle? The new products, which will compete with China's domestic brands, feature Oolong and jasmine teas - from China's Fujian province.

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