Coca-Cola launches alcoholic drinks eyeing Gen Z

Global beverage giant Coca-Cola is banking on its newly launched Topo Chico Hard Seltzer to make further inroads into the alcoholic drinks segment in China, especially Gen Z consumers looking for trendier lifestyle, company executives said.

The company said Topo Chico, which is made from a gluten-free alcohol base and infused with sparkling water, has 4.7 percent of alcohol, sugar, zero fat and natural fruity flavors. It also marked the company's latest attempt to diversify offerings for customers wanting a "lighter lifestyle".

Topo Chico is currently available in Tangy Lemon Lime, Strawberry Guava, and Pineapple Twist flavors at various e-commerce and retail channels. The product is inspired by Topo Chico mineral water from Mexico, which was launched in 1895 and acquired by the United States firm in 2017.

The product's rapid launch in multiple markets over a short period of time is also part of the firm's "disciplined innovation" product strategy.

In recent years, Coca-Cola, which has more than 20 brands of over 100 kinds of beverages in China, has rolled out several soft drinks specific to the Chinese market, including Coca-Cola Ginger Plus and Schweppes Peach Soda Water.

As one of the subcategories of low-alcohol beverages, hard seltzer is still in an emerging stage in China and has great potential for further expansion, said Zhu Danpeng, a food and beverage analyst.

"Low-alcohol beverages, a crossover category between alcoholic and carbonated drinks, have gradually eaten up the market shares of non-alcoholic drinks," he said. "It has a better taste and is attracting a growing number of female consumers.

"From the Gen Z point of view, it is strategically important to add alcoholic drinks to Coca-Cola's product portfolio, as they have growth potential and the capability to increase revenue and profits," he said.

According to a report issued by Academia Sinica, China's domestic fruit wine industry was valued at approximately 231.5 billion yuan ($36.2 billion) in 2019. Over the past two years, consumption of such products rose by more than 50 percent in China, while it soared to 80 percent during last year's June 18 promotion gala.

Data from Euromonitor International show that cider and perry (fermented pear juice) sales grew to 790,000 liters last year from 787,300 liters in 2019, with revenue growing from 46.2 million yuan to 47 million yuan in that period.

Soda water or sparkling water saw rapid growth in recent years, with sales rising 43.9 percent in 2019 compared to that of a year earlier, according to Kantar Worldpanel.

Despite the interest shown by younger consumers for low-alcohol and sparkling water drinks, according to Euromonitor International, alcoholic drinks category in China has seen continuous decline in recent years, both in volume and in market value.

For example, sales of non or low alcohol beer declined to 53.4 million liters in 2020 from 59.9 million liters a year before, according to Euromonitor International, "largely due to a drop in low-end beer sales", said Zhu.