Tag Archives: KFC

Yum’s new leadership change marks the start of a new period of sustained same-store sales growth for KFC in China, overview by former Reuters journalist Doug Young

Pepsi’s New China Shot Ignores Bigger Issues 百事联手康师傅抢占中国市场

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After years of playing perennial number-two to Coke (NYSE: KU), PepsiCo (NYSE: PEP) is gearing up for another shot at the China market through a new tie-up with instant noodle juggernaut Tingyi (HKEx: 322). The deal looks interesting on paper, though Pepsi will need to address the much more fundamental issue of its pathetic marketing in China if it really wants to improve its fortunes in what will soon become the world’s top beverage market. Let’s look at the deal first. Under the agreement, Pepsi will hand over its China bottling operations to Tingyi in exchange for a small stake in the company’s drinks joint venture with Japan’s Asahi (Tokyo: 2502). (English article). The deal not only gives over Pepsi’s money-losing bottling operation to a more seasoned operator, whose Masterkong brand is practically synonymous with instant noodles in China, but also gives Pepsi an important new local partner that better understands the market and whose highly developed sales channels will also be a valuable new resource. But rather than celebrate too much, Pepsi needs to address the much more fundamental issue of marketing. Despite its enviable position as sole soft drink supplier to KFC, easily China’s leading fast food operator, Pepsi’s name remains a relative unknown in China to date due to lack of effective marketing. Its main juice drink product, branded under the Tropicana name, is also a relative unknown. By comparison, Coke invented the word “cola” in China, and its Minute Maid Pulpy brand orange juice drink developed just for the market is the company’s first $1 billion brand developed outside its home US market. Pepsi needs to grasp the importance of marketing in China and use campaigns like those used by Coke, KFC and McDonalds (NYSE: MCD) to bring more excitement to its brands  in the market. Otherwise, this latest tie-up with Tingyi could end up as hollow as an empty bowl of noodles.

Bottom line: Pepsi’s new tie-up with China’s top noodle maker won’t help its lackluster performance unless it steps up its marketing efforts.

Related postings 相关文章:

◙ Coke’s China Formula: A Pulpy and a Smile 可口可乐入乡随俗显成效

◙ Growth-Hungry McDonalds Explores Risky Franchising Route

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

 

Little Sheep Left Waiting at Regulator’s Door 小肥羊仍在监管机构大门外苦等

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More than half a year after announcing its plan to purchase top Chinese hot pot chain Little Sheep (HKEx: 968), Yum Brands (NYSE: YUM), owner of the KFC and Pizza Hut chains, has learned it will have to wait just a bit longer for the anti-monopoly regulator’s decision on the deal — an potentially ominous sign for a regulator that has shown a past tendency to consider nationalistic elements alongside commercial ones in such deals. But at the end of the day, the fact that the regulator hasn’t vetoed this deal yet indicates some debate is probably taking place in the organization, and I still think the chances of an approval are greater than 50 percent, especially as China tries to show its commitment to fair trade in light of US Congress legislation that would punish Beijing for manipulating its currency. According to a new statement filed by Little Sheep to the Hong Kong Stock Exchange, the initial 30 day period for China’s Commerce Ministry to consider Yum’s purchase, worth some $500 million, ended on July 27. (company announcement) The ministry elected to extend that period by another 60 days, which again ended on September 27. Still lacking a final determination, the regulator again exercised its final option for another 60 day extension, meaning a final decision should come by late November. So what does all of this mean? Shareholders clearly don’t think it bodes well, bidding down Little Sheep stock by 12 percent to HK$5.39, or 17 percent below Yum’s offer price of HK$6.50 after the announcement. From a monopolistic standpoint, Yum is clearly China’s largest restaurant operator and would add to that position, but only slightly, by buying Little Sheep. But based on past behavior, I suspect nationalistic concerns are more at play here, as Little Sheep is China’s biggest hot pot chain and a promising home grown brand. Still, I think that at the end of the day fair trade advocates at the Commerce Ministry will win out to their nationalistic peers in this decision, as China seeks to show the world it is willing to play by global rules, and we should see an approval of this deal just before the late November deadline.

Bottom line: Delays in government clearance for Yum’s pending purchase of Little Sheep indicate internal debate at the anti-monopoly regulator, but the deal should finally get a green light next month as China tries to show its commitment to fair trade.

Related postings 相关文章:

◙ Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

◙ China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊

Wal-Mart Pork Brouhaha Spotlights Food Risk 沃尔玛“标签门”表明中国严打决心

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A new flurry of reports about mislabeled products at some of Wal-Mart’s (NYSE: WMT) China stores would be almost comical if they weren’t true, spotlighting just how sensitive the issue of food safety and false advertising has become in the country. The latest media reports say some Wal-Mart store managers have been detained and more than a dozen stores temporarily closed in this new crisis. And the reason for all the brouhaha? Believe it or not, it’s all because someone discovered that some pork products were falsely labeled as “organic” when in fact they weren’t. (English article) Don’t misunderstand me, I’m quite against the mislabeling of products, especially when such practices could result in health hazards to consumers. But in this case, there doesn’t appear to be any immediate health hazard, and the detention of employees over this kind of minor misdeed seems like a bit of an overreaction. All of this is no doubt part of Beijing’s desire to show it is taking false advertising and food safety very seriously, following a steady stream of much bigger scandals in the last 3 years that have sickened and even killed victims who ate unsafe and tainted food products. This kind of high-profile campaign carries big risk for companies like Wal-Mart, which will now face backlash from Chinese consumers. Hong Kong-listed Japanese noodle chain Ajisen (HKEx: 538) has experienced first-hand this kind of backlash, as its business has dropped dramatically since Chinese media recently exposed that its soups were made using packaged powder rather than fresh ingredients as the company had advertised. Its shares have lost about half their value since the scandal erupted in July. Wal-Mart, which is China’s second biggest supermarket operator, now faces similar fall-out, and other major chains like recently listed Sunart (HKEx: 6808) and Carrefour (Paris: CARR), China’s largest and third-largest supermarket operators, will also be exposed to similar risk. Restaurant operators like KFC parent Yum Brands (NYSE: YUM) and McDonalds (NYSE: MCD) will also be vulnerable, as Beijing looks for more high-profile targets to chase to ease broader public concerns over food safety and false advertising.

Bottom line: Major food-related firms will be highly vulnerable to negative publicity campaigns in the next 2-3 years, as China tries to ease public concerns over food safety and false advertising.

Related postings 相关文章:

◙ Coke’s China Formula: A Pulpy and a Smile 可口可乐入乡随俗显成效

◙ Investors Feast on Sun Art 高鑫零售首日挂牌表现抢眼

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

Coke’s China Formula: A Pulpy and a Smile 可口可乐入乡随俗显成效

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Coca Cola (NYSE: KO) has made global headlines with its announcement that it will invest $4 billion in China over the next 3 years, as it soaks up more business in the nation’s smaller cites with its popular and affordable drinks. (company announcement) The figure certainly accomplished its mission as an attention grabber, and it’s easy to see why. While sales in most major global markets sputter as the world economy struggles out of recession, Coke notched 21 percent growth in China in the first half of the year with unit sales surpassing 1 billion — equal to its annual sales for the market just 5 years ago. Clearly there’s plenty of room for growth, as Coke, despite its position as China’s largest software seller, still only has a relatively modest 17 percent of the market. What’s most interesting to me in this story is the fact that earlier this year Coke scored an unusual first in China with Minute Maid Pulpy, which claimed the honor of becoming the company’s first billion-dollar drink developed outside the US. (company announcement) I’ll admit to being a fan of Pulpy myself, frequently consuming this drink that at least superficially seems a bit healthier than Coke and no doubt is attractive to consumers in the country that gave the world mandarin oranges. Coke is clearly moving in step with other major consumer brands like fast food operators KFC (NYSE: YUM) and McDonalds (NYSE: MCD), which have developed a strong stable of products suited to local tastes, often providing stronger platforms for growth than their traditional offerings created in Western markets. Its latest mega investment testifies to Coke’s realization that such innovations are key to keeping its growth alive, and I wouldn’t be surprised to see it maintain the 20-plus percent growth rates in China into at least the next 2-3 years.

Bottom line: Coke’s $4 billion commitment to China underscores the huge success it has had in the market, and the enormous potential remaining for future growth.

可口可乐(KO.N)宣布未来三年将在中国增加投资40亿美元，因其在中小城市业务迅速扩张。这则消息使得可口可乐成为媒体焦点，它这麽做其实也很容易理解。全球经济迟滞之际，可口可乐在全球多数主要市场的销售业绩欠佳，但今年上半年在中国的销售则增长了21%，销量超过了10亿瓶，五年前这是在中国市场的全年销量。显然，可口可乐在中国还有很大的发展空间，虽然是在中国的软饮销售冠军，但市占率也才17%。而我最关注的是，可口可乐在中国推出的品牌“美汁源”，跻身其销售额过10亿美元的品牌行列，是可口可乐在美国以外地区开发的品牌首次销售达到10亿美元级别。我本人也常常喜欢喝“美汁源”，至少从表面上看，这比可乐要健康一些吧，这也无疑受到了中国消费者的欢迎。象肯德基(YUM.N)和麦当劳(MCD.N)这些全球知名品牌那样，可口可乐也试图迎合当地消费者口味、开发独特产品，开辟成长机遇，而非单调沿用在西方市场创立的产品系列。可口可乐此次在中国的大手笔投资，表明它已经意识到，创新是保持成长的关键。未来两三年，若可口可乐在中国能保持20%以上的增长率，我不会感到奇怪。

一句话：可口可乐在中国大手笔40亿美元投资计划，印证其在中国市场的成功，并预示其未来发展潜力。

Related postings 相关文章:

◙ Investors Feast on Sun Art 高鑫零售首日挂牌表现抢眼

◙ Philips Taps Electric Rice Bowl With Shanghai Deal 飞利浦收购奔腾 进军中国电饭煲市场

◙  Unilever Helps China See the Light Behind Free Markets 联合利华帮助中国向市场经济迈进

Starbucks Wide Open for China Business with New JV 星巴克在云南建合资厂

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Less than a year after announcing its first major initiative to nurture China’s domestic coffee-growing sector, Starbucks (Nasdaq: SBUX) has come back with announcement of a more substative joint venture to buy coffee beans from the country for use both at home and abroad. (company announcement) This move is clearly as much about public relations as it is about coffee from southwest China’s Yunnan province, which undoubtedly has potential to compete with some of the world’s other top growing regions but is more significant because it carries the “made in China” label. Let’s take a look at the numbers: even with its current aggressive expansion plans, Starbucks, a relative latecomer to China, will  have a relatively modest 1,500 stores in the country by 2015, less than a tenth of its current global store count. By comparison, Yum Brands (NYSE: YUM), parent of the KFC and Pizza Hut chains, now derives a full one-third of its global revenue from China and counts the country as its second largest market after the US. (previous post) Anyone who does the math will see that obviously Starbucks sees lots of room for growth in China, especially if it can take a cue from Yum and McDonald’s (NYSE: MCD) and localize its products to better suit China’s tea-drinking culture and develop more products at a middle price range to meet demand from less affluent smaller cities. Having a coffee-buying base in Yunnan could help to lower prices by buying a more local product, and would also be a strong selling point to Chinese eager to see their higher-end products like home-grown coffee compete on the global stage. On the whole, this joint venture looks like a good, cost effective way for Starbucks to tell China it’s committed to the country for the long run, as it seeks to replicate the success of Yum and McDonald’s in this fast growing market.

Bottom line: Starbucks’ new China joint venture underscores its commitment to the country, which could easily become its second largest global market over the next decade.

星巴克<SBUX.O>最近宣布，将成立合资厂，从中国购买咖啡豆，供应国内外。毫无疑问，云南有与其他咖啡豆种植区竞争的潜力，这一举动不仅仅是公关需要，更重要的是，在云南购买咖啡豆意味着“中国制造”。让我们看看这组数字：虽然星巴克的扩张计划野心勃勃，但在2015年前，星巴克在中国的店铺也将总共只有约1,500家，这还不及其在全球店铺数量的十分之一。相比之下，肯德基和必胜客的母公司百胜<YUM.N>收入的三分之一来自中国，并将中国视为其仅次于美国的第二大市场。任何明眼人都能看出来，星巴克在中国看到了很大的增长潜力，尤其是如果借鉴百胜和麦当劳的经验，将其产品本土化，以适应中国的饮茶文化，并开发更多中端价位的产品，满足不那麽富裕的较小城市的需求，发展潜力更是很大。在云南成立合资公司，购买当地产品，有助於降低其产品价格，对於那些希望看到本土咖啡进军全球市场的中国人来说，这也是一个有力的卖点。总的来说，对於想复制百胜和麦当劳在中国市场成功的星巴克来说，这个合资公司看似是星巴克向中国承诺致力於长期开辟该国市场的经济又有效的途径。

一句话：星巴克在中国成立新合资公司，意味着星巴克承诺要长期开辟中国市场，这可能让中国在未来十年成为其在全球的第二大市场。

Related postings 相关文章:

◙ Starbucks, Maxim’s Divorce: Bitter Ending or Sweet Times Ahead? 星巴克与美心闹“离婚”

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

◙ Starbucks China Expansion: New Brew Needed to Serve Up Success