Chapter 833 – Coca-Cola and Pepsi’s shock
Specialized counters are only a row of shelves selling only Chinese beverages.
Only Coca-Cola and Pepsi had such treatments in the past. Even Budweiser, a world-renowned beer, does not have this treatment.
Now, what Feng Yu wanted was the same as what Coca-Cola and Pepsi had, and this made them frown.
Coca-Cola and Pepsi were beverage giants, and Coca-Cola owns more than 40% of the world’s beverage market share. Their market share is still increasing because of their growth in Asia markets. Pepsi is close behind, with about 35% of the global market share and was also entering the Asia market.
In the North America market, Coca-Cola’s market share is about 45%, and Pepsi owns about 40%. Both cola companies own 85% of the whole market.
This is the reason why supermarket chains are willing to give them specialized counters. How can Feng Yu ask the same for his Chinese beverages? The drinks on the list were mostly unheard of and the only brand the supermarket chain’s higher management heard of is Jianlibao. However, Jianlibao owns only a few percentages of the market share!
“Mr. Feng, Mr. Fu, only Coca-Cola and Pepsi have specialized counters and no other brands can have their own shelves. At least this is for our supermarkets, and I am not sure about the rest.” Someone said.
The rest of the people there starts saying their supermarket also cannot give such treatments to Chinese beverages. Walmart is the biggest supermarket chain in North America, in some regions or areas, some of the local supermarkets are more popular than them.
The higher management felt Feng Yu should not ask for too much just because they had worked together before. Their supermarkets’ sales will not be affected if they were to pull out one or two brands. But without the supermarkets, all beverage brands’ sales will be affected. This includes Coca-Cola and Pepsi!
Powerful retail chains can suppress the earnings of their suppliers!
“Please consider this. We do not have only one product, but several Chinese products, like carbonated drinks, tea beverages, dairy products, mineral water and sports drinks. These products are all from the mysterious east! Think about this. Having a shelf full of products from the mysterious east, why can’t this work? We had conducted market research, and there are more people in North America drinking tea beverages now.” Fu Guangzheng said.
“Mr. Fu, there might be more people drinking tea, but that does not mean there are more people drinking tea beverages. All of your products are unknown brands and need our supermarkets to help market them. Other than tea beverages, what’s so special about the other drinks? Can your soft drinks compete with Coca-Cola and Pepsi? Dairy products can be found everywhere, and there is nothing special. We are also selling tea beverages from Japan and the sales are quite good too. The Sports drinks you are talking about are Jianlibao and Qili? How many people will buy them, and who is your target audience?”
“Everyone, I had mentioned that we are not selling on the taste or brands. We are selling the location. I only all of you to give us a chance and give us a specialized shelf to place our products. Our marketing campaign will be starting soon, and advertisements will be placed in various newspapers, TV stations and other media. Just look at Jianlibao. If we can increase Jianlibao’s brand awareness within 3 years, we will be able to increase the brand awareness of the other brands.”
Jianlibao could establish itself in the US within 3 years is considered a miracle! With the same marketing team and sufficient funds, the other Chinese brands will have no problem increasing their brand awareness.
The supermarket chains’ higher management looks at each other, but no one wants to say anything. ‘Products from China’ might be a selling point, but no one knows whether if it will be successful.
Another consideration is the charges for the specialized counters. How much should they charge Feng Yu? Base on the same rates as Coca-Cola or increase it slightly?
Fu Guangzheng and Feng Yu did not say anything about the rates, and the supermarket chains’ representatives did not ask too.
After talking for about 30 minutes, nothing had been agreed on, and the representatives left. Fu Guangzheng said excitedly to Feng Yu. “Success! They will come back to us to discuss the details before tomorrow night.”
“Why?” Feng Yu asked curiously.
“Because of what you said. Our beverages are from China, and it is the same as overseas beverage brands getting popular in Hong Kong and China. In the initial phase, many consumers will purchase those beverages out of curiosity, and they don’t even need to do much marketing. It is the same for the US and Americans are more open to new things. After our Chinese beverages are introduced into the market, there will be a surge in the supermarkets’ sales. But one thing to note. The supermarket chains will definitely add in some conditions like they have the right to pull our products off the shelves if the sales fall below a certain percentage.” Fu Guangzheng is much better than Feng Yu when it comes to retail sales.
“Pull off the shelves anytime? We will be at their mercy.” Feng Yu frowned. The supermarket chains will have the final say over the Chinese beverages fate!
“This is where we need to negotiate. Even if the sales are not good, we must ask for a buffer period. If not, we will be too passive.” Fu Guangzheng had thought of how to handle these supermarket chains. After all, the Fu family owns the biggest supermarket chain in Hong Kong.
“How long should the buffer period be?” Feng Yu asked.
“It will depend on our negotiations with them. But what I have in mind is at least a season. They will not agree if we ask for a longer period, but if the buffer period is too short, it will be disadvantageous to us. One season should be possible. My family has long term cooperation agreements with these few supermarket chains, and since these products are giving me 20% of their profits, I will do my best to help them.” Fu Guangzheng replied confidently.
“Thank you. I will leave everything to you.”
That evening, the supermarket chains’ higher management staff contacted Fu Guangzheng and expressed interest. The supermarket chains in the US were trying to increase the variety of their products, and if another supermarket chain has some products they do not have, they will lose out.
Also, all of them felt this is worth a try. If the sales are not good and they cannot make any profits, they can just pull the products off the shelves. They had done this to other products before.
After the first supermarket chain signed the cooperation contract, the rest of the supermarket chains quickly reached an agreement and signed the contract. Everyone does not want their rivals to get an advantage over them.
One week later, all the products from the Chinese Beverage Alliance entered more than 1,000 supermarket chains in North America and had their own specialized counters.
Coca-Cola and Pepsi got wind of it and were shocked!
