Chapter 858 – It’s the opposite
Zhong Qingxian and Li Jingwei informed Feng Yu about the progress of delaying the two cola companies, and the companies in the alliance did not betray the.
Actually, the companies in the alliance also want to stop these two companies from entering the Chinese market. The cake is only so big and there are already many beverage companies competing. If these two beverage giants enter the competition, they might lose their market share.
These two beverage giants had used this tactic to acquire domestic beverage companies in several countries.
The other Chinese companies have the same thoughts as Lehaha and Jianlibao. Everyone wants to keep the market for themselves and open up new markets!
Successful beverage companies like these two cola companies generate high profits annually, and the population in China is high. If the Chinese companies can maintain their market share, their profits will keep increasing.
Feng Yu felt they had missed out on something as the two cola companies should not be beaten so quickly using this simple tactic. China is a massive market and they will not give up so quickly.
Soon, Feng Yu knew what countermeasures the two cola companies used.
Products from the two cola companies start appearing in small towns and villages. These small retail stores are the blind spots of Lehaha, Jianlibao, and the rest of the companies.
When Feng Yu received this piece of news, he felt unbelievable. This is the opposite of what it should be. Shouldn’t it be the two cola companies forcing other brands to sell their products outside of major cities?!
Feng Yu frowned. Only the lowest tier distributors will supply goods to the towns and villages. The spending power of several towns and villages cannot even be compared to a major city, and the transportation and storage cost is much higher. This should not be what the two cola companies be doing!
This is the classic strategy of using the villages and towns to surround a city. In Feng Yu’s previous life, Lehaha and Fen Huang Cola used this strategy. Their products appeared in large quantities in the villages and used a lower pricing strategy to grab market share, and their marketing strategy is using TV commercials and putting up posters everywhere in the villages.
In Feng Yu’s previous life, the two cola giants had built up their reputation and secured the sales channels in major cities. No one could pull them off the throne, and the rest of the companies had to use other ways to compete with them. Although Lehaha and Fen Huang Cola supplied their products only to villages and towns, they also made a few hundred million annually.
But this strategy is used by smaller companies against more prominent companies. Why are the two beverage giants using this strategy? This will lower their brand’s position, putting their products on a level lower than the Chinese beverages.
Even if the cola companies decided to do this, how did they sell their products to the villages in such a short time? Feng Yu does not believe they had established their own distribution channels. No companies can set up their own network of distribution channels so fast!
Such things can be investigated easily, and the findings made Feng Yu frowned.
Pepsi is cooperating with Kang Shifu, and Coca-Cola is working with Tong Yi. These two Taiwanese companies had been focusing on the village and town markets this year because they can’t win against Lehaha in the cities.
But setting up these distribution channels requires high investment, and the spending power in the villages are not high. Until now, the Taiwanese companies are still making losses.
At this time, the two beverage giants approached them, seeking cooperation. These two Taiwanese companies were kicked out of the beverage alliance and were on bad terms with the companies in the alliance. All 4 companies have common enemies, and cooperation is not a problem.
Also, the two Taiwanese companies were slapped with hefty fines by the local authorities recently and they hate the Chinese beverage companies!
Feng Yu suddenly remembered that Pepsi and Kang Shifu had worked together in his previous life. In Feng Yu’s past life, Pepsi had sold their bottling factories to Kang Shifu and even sold a new Cola flavor formula to them, in exchange for Kang Shifu producing and selling Pepsi’s products for them.
Of course, Kang Shifu paid an astronomical amount to Pepsi in this deal.
After they cooperated, Pepsi managed to suppress Coca-Cola in China and Southeast Asia. Their products’ sales overtake Coca-Cola, and the Chinese market becomes the most profitable market for Pepsi.
Feng Yu never expect Pepsi to do the same in this life. But this time, Pepsi’s cooperation with Kang Shifu is different. Kang Shifu had not become the leader of the tea beverage industry and do not have a comprehensive distribution network. Their brand also did not become popular in China.
Kang Shifu had invested a lot into their own distribution channels and getting the distributing Pepsi’s products for them can help them lower their cost. More importantly, Pepsi will let Kang Shifu use their bottling factories to increase their production capacity and reduce its transportation cost.
This is a win-win situation for both companies.
Coca-Cola also noticed this and chose to work with Tong Yi. Their cooperation with Tong Yi is the same as Pepsi and Kang Shifu.
In conclusion, all of them have the common enemy, the Chinese beverage alliance, and this alliance controls the pricing of beverages in China market.
The products of the companies in the alliance are selling at similar prices and don’t engage in price wars against each other. All the companies in the partnerships are united against the two beverage giants and want to get them out of the Chinese market. At the same time, they also want to suppress the two Taiwanese companies and force them to pull out from the beverage industry.
The two beverage giants had no other choices but to do this. The villages will get wealthy in the future, and their spending power will increase eventually. Also, they are not giving up on the cities, as the two Taiwanese companies have connections there.
Although the two Taiwanese companies do not have beverage distributors in the cities, they are selling instant noodles. Their network of distributors might not be as strong as Lehaha, but they are on the same level as Jianlibao.
The cola companies want to make use of their connections to get back the cities’ market and at the same time, control the market of the surrounding villages. This way, they will maintain their brand awareness and will make a comeback to the cities within 2 years. By that time, they will have set up their own distribution networks.
So, the US cola companies formed an alliance with the two Taiwanese companies and solved their sales distribution channels woes.
This incident reminded Feng Yu and the other Chinese companies not to look down on other companies. They will always find a way around the barriers.
Zhong Qingxian and Li Jingwei were furious. It’s these two Taiwanese companies again. Without them, Pepsi and Coca-Cola’s losses this year will be much higher.
Hmph! You two started by selling instant noodles? Then Lehaha will also start selling instant noodles! In the past, Zhong Qingxian still has some hesitation about whether if they should sell instant noodles. But now, he is set on going against these Taiwanese companies.
You all are the ones who stick your hands into my pot. Don’t blame me for snatching everything from your plates!
