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| Subject: |
CHINA BUSINESS
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| Period: |
December 1, 2018 to August 1, 2019
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| Geographies: |
Worldwide
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Comment & Opinion or Companies, Organizations or Consumers or Controversies & Disputes or Deals, M&A, JVs, Licensing or Earnings Release or Finance, Economics, Tax or Innovation & New Ideas or Legal, Legislation, Regulation, Policy or Market News or Marketing & Advertising or Other or People & Personalities or Press Release or Products & Brands or Research, Studies, Advice or Supply Chain or Trends
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Contents
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 Japan’s Suntory Holdings will delay further investment in China because of the uncertainties stemming from the U.S.-China trade war. CEO Takeshi Niinami said the company prefers to be in Southeast Asia rather than in China, and is bullish on India, the world’s largest whisky market by volume. The company is also adjusting strategies to sell to Millennials, who are drinking less alcohol than previous generations. To help sell alcohol to Millennials, Suntory is marketing more premium alcohol types. It is also trying to attract beer drinkers to consume more premium products. Although Suntory is still operating in China, Niinami said the company needs further clarity on the U.S.-China trade dispute before further investment decisions can be made.
"Japanese brewer Suntory will hold off investing in China amid the trade war", CNBC.com, July 02, 2019
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 According to sources, Suntory Holdings, which already sells whisky and soft drinks in China, has entered into a joint venture with Chinese government-affiliated conglomerate Citic to launch a health food business targeting affluent consumers. Suntory reportedly contributed 65 percent of the capital of (about $14 million), and sent an executive as its chief. Suntory will sell energy drinks online, and drip coffee through vending machines. Health supplements may be sold later.
"Suntory targets China's health-conscious consumers", NHK , July 14, 2019
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 Flush with cash after raising $645 million through a U.S. IPO in May, Chinese coffee company Luckin Coffee is partnering with Kuwait-based Americana Group, which runs 1,900 franchises across the Middle East for several fast food brands, to set up a coffee retail business in the Middle East and India. Luckin and Americana signed a memorandum of understanding in Beijing; they will run the new coffee business as a joint venture. Luckin Coffee is a major competitor of Starbucks in China, opening thousands of stores in the past two years and relying on technology for orders, deliveries and payments to give it an edge. The company has about 3,000 stores in 40 Chinese cities and plans to increase that number to 4,500 by the end of this year. Starbucks has a little under 3,800 stores in China. Starbucks has 202 stores in Dubai, 191 in Saudi Arabia, and 151 in Kuwait, as well as 146 stores in India, where it has partnered with conglomerate Tata.
"China's Luckin Coffee is taking on Starbucks in more big markets", CNN Business, July 22, 2019
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Swedish oat drink manufacturer Oatly hopes to build a foothold in the Chinese beverage market, where studies show most Chinese consumers are at least a little lactose intolerant. There are no official statistics, but research has shown that lactose intolerance affects around 30 percent of Chinese children, and 92 percent of adults. The brand launched in Hong Kong in 2016, where it is sold in supermarkets, Starbucks, Pacific Coffee outlets, and independent cafes. It has opened an office in China to prepare for a launch there. The Chinese government strongly supports the dairy industry and encourages milk production, but dairy alternatives have been growing. Oatly wants to make a splash in the nondairy milk category, but first has to tackle its branding and the low awareness of dairy alternatives. Ninety-six percent of consumers in Hong Kong, for example, only think of cow's milk when they see the Chinese character for milk. Only two percent think of plant-based milk.
"Oatly has sights set on great march into China", Dairy Reporter, May 29, 2019
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China’s Nongfu Spring is going head-to-head with Coca-Cola with an RTD bottled sparkling coffee beverage in the country. The mineral water company’s carbonated coffee product will be first sold in the 1st and 2nd tier cities in China, with e-commerce, schools, and new retail as the main sales channels. The retail price of the RTD carbonated coffee is set at $0.70 to $0.90 a bottle. Two years in development, the new product is made with coffee beans sourced from Ethiopia and Brazil. Coca-Cola announced earlier this year that it was planning to launch Coca-Cola Coffee in 25 markets, including China, by the end of this year. Coca-Cola’s coffee unit Costa has been operating in China since 2007. Instant coffee remains the most commonly consumed format in China, with more than 70 percent of the market share, followed by coffee beans, coffee capsules, and RTD coffee.
"New horizons: China water giant Nongfu Spring moves into carbonated coffee market", Food Navigator Asia, May 31, 2019
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Coca-Cola Company in June launched a coconut-flavored Sprite variant in China that contains 2.5 percent coconut water and zero sugar. The launch of Sprite Coconut involved all channels across most of the provinces in the country at a recommended retail price of $0.87 in convenience stores and $0.70 in other retail outlets. A Coca-Cola spokesman said the new launch would bring “new brand touchpoints to consumers through product innovations.” Recent Coke innovations in China included Sprite Fiber+, launched last year. The soft drink contains 7.5 g of dietary fiber, or 30 percent of the suggested daily fiber amount.
"Sprite Coconut: Coca-Cola bringing ‘new brand touchpoints’ to the China", Food Navigator Asia, July 04, 2019
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