Coca-Cola to set up bottling factory
By Dai Yan (China Daily)
Updated: 2004-03-04 09:55

The global beverage giant Coca-Cola yesterday signed an agreement to open a new bottling plant in Zhanjiang, South China's Guangdong Province.

As Coca-Cola's 27th bottling company in China, it is invested by COFCO Coca-Cola, a joint venture of Coca-Cola and the China National Cereals, Oil and Food Import & Export Corp, a State-owned company which is among the world's top 500 multinational firms.

The new bottling plant, which will involve a total investment of 46 million yuan (US$5.56 million), will cover an area of about 22.67 hectares and employ 200 workers. It will start operations at the end of this year.

It is the 11th bottling factory COFCO Coca-Cola Beverage Co Ltd has invested in, and is also the fifth in which COFCO Coca-Cola has a controlling stake. The other four are located in Hainan, Hunan and Jilin provinces and the municipality of Tianjin.

Previiously, the Zhanjiang company, COFCO-Coca Cola had said it would soon open four bottling plants in which the company would hold controlling stakes.

Coca-Cola usually opens its bottling plants in China through its local joint ventures. Besides COFCO, Coca-Cola has also teamed up with Kerry Beverage Co Ltd and Taikoo Group.

A Coca-Cola spokesman said it will continue to open more bottling plants in China, but he declined to identify the locations because they will be jointly decided by Coca-Cola and its partners.

Coca-Cola's establishment of bottling plants has shown a strong momentum over the last two months, as the company has announced plans to set up two new bottling outlets in China's western provinces to tap the market potential of the country's rural areas.

COFCO Coca-Cola announced in January that it will invest US$12 million to build a bottling factory in Lanzhou, capital city of Northwest China's Gansu Province.

Kerry Beverages Ltd also signed an agreement with the Chongqing Economic and Technological Development Zone in February to build a US$11 million bottling factory in Chongqing, the only municipality in western China.

The rapid expansion is expected to fuel Coca-Cola's strong presence in the Chinese market. The beverage giant now accounts for 50 per cent of China's carbonated drink sales. For the soft drink market, it holds more than 10 per cent.

Facing Coca-Cola's aggressive expansion, its global rival PepsiCo will also step up its pace.

PepsiCo announced in January it plans to invest US$10 million in Xi'an, capital of Northwest China's Shaanxi Province for its bottling company. Its bottling company in Jinan, Shandong Province also began operations in December.

Reports also said the company has chosen Shenyang and Dalian, both in Northeast China's Liaoning Province, as the next likely locations for setting up bottling factories.

PepsiCo is still embroiled in trouble with its local partner in Chengdu, Sichuan Province.

PepsiCo went to an international arbitration panel in Stockholm, and filed for a corporate divorce in a bid to scrap the joint venture company Sichuan Pepsi, and to terminate its union with Sichuan Yunlu, whose predecessor was the Sichuan Broadcasting and TV Industrial Development Corporation.

PepsiCo charged its partner with committing a series of contractual violations.

Its Sichuan partner dismissed the allegations.