Coca-Cola Enters China with Topo Chico Hard Seltzer

The Coca-Cola Company (NYSE: KO) has announced its launch of Topo Chico Hard Seltzer in certain markets of China, the company’s first ever introduction of a beverage alcohol product there. Products were available as of yesterday for purchase from its Tmall online store, with broad distribution planned via bottling partners.

Coca-Cola is one of the most well-known international brands in China. With 20 brands and more than 100 beverage options, consumers in China “enjoy 150 million servings across the country every single day” according to a statement by the company.

Emerging from a pandemic slowdown, Coca-Cola China and its two bottling partners, COFCO Beverages Limited (CBL) and Swire, have increased production capacity and improved supply chain efficiency to meet consumer demand. A new plant under construction in Guizhou Province is expected to come online in December, 2021, making it CBL’s 20th bottling plant.

Coke launched Topo Chico itself in Latin American and European countries, but partnered with Molson Coors Beverage Company (NYSE: TAP) for US production and distribution, carefully navigating the 3-tier system of alcohol sales in this country.

Topo Chico in China is available in three flavor varieties of Tangy Lemon Lime, Strawberry Guava, and Pineapple Twist, each coming in at 4.7% ABV.

Hard Seltzer in China

Hard seltzer is an emerging beverage in China, with great potential for growth. “As an entry-level alcoholic beverage, its low-sugar, zero-fat, and low-alcohol content elements cater to the younger generation’s pursuit of a “lighter” lifestyle, and are attracting more and more consumers,” Coca-Cola said in a statement.

LingYA hard seltzer was the first known and publicized independent producer of a hard seltzer in China. Founded by Eric Hoang, the vodka-based seltzer was recently rebranded as Zeya. That product has 4.5% ABV and comes in white peach, grapefruit, cucumber, and passion fruit.

According to Academia Sinica’s “Market Prospects and Status Quo Analysis of Low-alcohol Drink Industry 2020”, the size of China’s domestic “fruit wine” industry in 2019 was approximately 231.5 billion yuan (US$36.28 billion). Since then, the growth rate of consumption amount in China’s low-alcohol wine market increased by more than 50%, and just last year saw sales growth exceed nearly 80%, year over year.

Will Anheuser-Busch Expand Hard Seltzer in China?

Anheuser-Busch InBev (NYSE: BUD) last fall launched hard seltzer in Chinese e-commerce markets, under the Mike’s brand. The company has invested in brewing footprint and capabilities with a new smart green brewery in Wenzhou.

And incoming CEO knows China very well. Michel Doukeris takes over as chief executive on July 1, filling the shoes of Carlos Brito, who occupied that chair for 15 years. Doukeris is former President of AB China, and implemented the “High End” division in China, an innovative and transformational “route-to-market” initiative.

In his four years at the helm of AB’s Asia Pacific division, from 2012-2016, Doukeris delivered EBITDA growth of about 400%.

Coke’s Beverage for Life Strategy

The launch of Topo Chico marks Coca-Cola’s official foray in the Chinese alcoholic beverage market, and it also marks another important achievement of the company’s comprehensive promotion of its “Beverages for Life” strategy. President & CEO James Quincy announced the positioning to investors in Atlanta in 2017.

Quincy said of the launch of direct-to-consumer commerce in places like China, “…in the end I think the majority is going to – large majority is going to go through the customer platforms and we’re going to create value with them that way.

“The clear destination, the beverages for life, fantastic foundation, real growth industry, yes with challenges but with lots of opportunities,” said Quincey.