How Local Brands Challenge Coca Cola’s Dominance in China

Undoubtedly, Coca Cola is the top-selling soft drink globally. Introduced in 1886, it has become a household name in over 200 countries. However, its immense popularity has also made it the most imitated drink worldwide. We’re all familiar with the rivalry between Coca Cola and Pepsi.

Introduction to China

Coca Cola arrived in China at a time when Chinese were eager to experience the delightful products of Western fast food imagination they had read about but yet to taste. KFC’s hot wings were an instant hit, but the introduction of Coca Cola in China didn’t go as smoothly. Initially, Chinese consumers found the taste reminiscent of medicine. Indeed, the typical cola flavour bears a resemblance to some traditional Chinese medicinal (TCM) potions. Interestingly, both colas were perceived as medicines from the late 19th century onwards. In fact, some Chinese food authorities were hesitant to make the beverage accessible to consumers of all ages, concerned about potential harm to children. However, these initial obstacles soon vanished, and Coca Cola gained immense popularity in China, just like anywhere else.

Imitations

It was only a matter of time before the Chinese imitation industry began churning out one local cola after another. Most of these attempts failed and were short-lived, while a few managed to gain traction and survive for some time. The leading imitation is Future Cola by Wahaha Group, a prominent beverage manufacturer headquartered in Hangzhou, Zhejiang. Wahaha began producing its own cola in 1998. Feichang Kele (literally ‘Extraordinary Cola,’ translated into English as Future Cola) closely replicated the colors and other features of Coca Cola. Leveraging Wahaha’s extensive distribution network, Future Cola dominates rural China and its second- and third-tier cities. In 2003, its sales amounted to a staggering 620 million liters.

Wahaha’s advertisements adopt a nationalistic tone. For instance, their copy promotes Future Cola as “Chinese people’s own cola,” encouraging consumers to choose it over Coke or Pepsi. This aligns perfectly with the nationalist trend (guochao) of the 2020s. Future Cola’s focus on rural areas contributed to its high penetration at lower costs. Additionally, it leveraged celebrity advertising to enhance its brand image. Its penetration pricing made it an affordable alternative to its rivals, especially in more price-sensitive rural regions.

A major brand is Tianfu Cola, produced in Chongqing, has gained a new herbal flavour thanks to the cooperation of a domestic time-honoured brand. Tianfu Cola has a history of over 40 years and is a taste memory for several generations of Chinese people. Because of the herbal ingredients in the drink, some consumers even used to consider the cola as a ‘remedy’ for colds back in the day. Its secret lay in a special formula, which drew on traditional Chinese medicine and added several herbs, such as white peony root and Chinese angelica. Upon its launch in 1981, Tianfu Cola quickly won the favour of consumers, with annual sales reaching over 200,000 metric tons, accounting for about 75% of China’s cola consumption.

In 2021, Tianfu Cola upgraded its packaging design, brand positioning and marketing strategies, and added more healthy herbal plants to create a unique Chinese cola.

In the remainder of this post, I aim to analyse various local cola brands across different categories.

Fruit: To address the medicinal taste issue, several manufacturers introduced fruity flavours to their colas. Examples include orange cola, blackcurrant cola, and purple plum cola.

Orange Cola
Blackcurrant Cola
Purple Plum Cola

Medicine: Other producers capitalised on the medicinal aspect and incorporated TCM herbs into their colas, positioning them as health beverages. For instance, Lingzhi Cola (lingzhireishi – the ganoderma fungus), gingko cola, and maifanshi cola (maifanshi is a stone rich in minerals) are among these products.

Lingzhi Cola
Gingko Cola
Maifanshi Cola

Nobility: Adding a touch of nobility to your drink can elevate its perceived high-end appeal. Brands like Empress Cola, High Fortune Cola, High Heaven Cola, and of course, the top-tier Future Cola exemplify this concept.

Empress Cola
High Heaven Cola
High Fortune Cola

Famous location: Some cola brands associate themselves with specific locations, adding a sense of place and identity to their products. Qingdao, a prominent port city in Shandong, is renowned for its Tsingtao Beer and Laoshan Mineral Water, which is also used to produce Tsingtao Beer. The region once produced its own Qingdao Cola and Laoshan Cola, but Qingdao Cola was not produced by the brewery but rather used that name to entice consumers.

Qingdao Cola
Laoshan Cola

A hint of Heineken

Kexi Cola

My favourite imitation cola has never achieved significant success, but the makers certainly put in their best effort. The brand name was Kexi Kele, which literally translates to ‘Happy Cola.’ However, this name subtly hints at Xili Beer, the Chinese name for Heineken Beer. A mere glance at the label reveals the striking resemblance. Kexi Kele was produced by a small brewery in Harbin, the capital of Heilongjiang. In today’s China, that combination of brand name and label would likely face challenges, but I can appreciate the initiative.

Vinegar Cola – a healthy choice (?)

This is a special type of Chinese Cola. It is produced in Shanxi province, where I found during a trip through that province in November 2024. Shanxi is famous for its vinegar, so it is no surprise to find this version of Cola there. Moreover, vinegar beverages like apple vinegar have been in vogue in China since around 2022 as health beverages.

This post does not encompass all Chinese imitation colas. I have compiled a list of 21 different labels, and I don’t exclude the possibility of adding more in the future. So, please keep an eye on this post for any future updates.

Peter Peverelli has been actively involved in and with China since 1975 and frequently travels to the most remote regions of that vast nation. He is a co-author of a significant book that delves into the cultural factors driving China’s economic success. Peter has been involved in the Chinese food and beverage industries since 1985.

2024 Catering Industry Innovation Report

In recent years, China’s catering industry has been growing continuously. In 2023, the recovery speed of catering far exceeded that of other commodity retail sectors, and the momentum will continue in 2024. According to the data of the National Bureau of Statistics, the national catering revenue was about RMB 3.5 trillion yuan, an increase of 6.6% year-on-year.

The scale of catering brands is increasing day by day, and the pace of chain-isation is accelerating. The proportion of brands with more than 100 stores is increasing year by year. Moreover, the scale of the takeaway market is about RMB 1.2 trillion, which has become an important growth engine of the catering market.

Background of innovation

  • Consumption upgrade: quality demand has improved, consumers pay attention to catering quality, experience needs are also diversified, and special theme restaurants are becoming more and more popular.
  • Intensification of competition: The competition in the industry is fierce, and cross-industry competition is also under pressure, which promotes the continuous innovation of catering enterprises.
  • Technological progress: The Internet and the application of intelligent devices bring new opportunities to the catering industry.
  • Cultural integration: Different cultural exchanges provide materials for catering innovation.
  • Popularisation of healthy eating: Consumers’ requirements for catering health are increasing.

Direction of Innovation and achievements

Diners enjoy healthy and colourful food at Fengxiyuan
  • Product innovation: integrating multiculturalism, combining scientific and technological elements, paying attention to healthy nutrition, and exploring special ingredients. There are excellent innovative restaurants such as Coucou Hot Pot, Taishan Food Festival, Fengxiyuan Restaurant, Western fast food brands, etc.
  • Service innovation: personalised services and intelligent services. The children’s meal service of Xibei Noodle Village, the convenience and innovation of hometown chicken, the diversified service of Naixue‘s tea, and the intelligent service of Haidilao and Hefu Noodles are all excellent.
  • Marketing innovation: social media marketing, experience marketing, cross-border cooperation. Tastin’s social marketing, the experience activities of hometown chicken and Xibei noodle village, and cross-border cooperation such as Laowang and Link are all very eye-catching.
  • Business model innovation: popularisation of dining + drinking mode, omni-channel model, new retail + catering model, special store model, introduction of catering in home stores, etc.

Future development trends and prospects

  • Business model and category development: the degree of chain-isation and branding has been improved, and the category has been subdivided and characterised by operation.
  • Consumption experience and service: omni-channel operation has become the norm, and scenario-oriented and immersive experience are favoured.
  • Product innovation and supply chain: healthy dish innovation, intelligent and digital supply chain management.
  • Market competition and industry pattern: the potential of market failure is huge, and the brand’s overseas exit is accelerating.

Conclusion: China’s catering industry is booming and continues to innovate. Catering brands actively seek change and constantly open up new paths. In the future, catering enterprises should keep pace with the times, continue to innovate, and meet the diversified needs of consumers. Super brand strategic consulting will also contribute to the prosperity and development of China’s catering industry.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success. Peter has been involved with the Chinese food and beverage industries since 1985.