Coca Cola and BOP Strategies

Coke recently successfully implemented what might be considered a base of the pyramid strategy. Traditionally Coke has sold the exact same product it sells everywhere else in the world at the exact same price in China. Often that meant that Coke's products were more expensive then the average person's dinner in a non-coastal chinese city. "Fruit Pulp Orange" represents an interesting departure.

To quote from the economist:

Orange Gold; Softdrinks in Asia.

Coca Cola strikes it rich in Asia with a new drink

A DRINKS company must be able to depend on a powerful brand; but it also needs to come up with sought-after novelties. The odds against such a thing are staggering. Every year thousands of new drinks are created; a few go on the market; none may survive. The selection in many vending machines has barely changed, if it has changed at all, in a generation. So the success of Coca Cola's new orange-juice drink, developed in China, is a rare triumph.

In most parts of the world Coke's sales are driven by the famous fizz, with richer countries, where calories are all too abundant, leaning increasingly towards Diet Coke, developed in 1982, and poorer countries leaning towards the original sugary stuff dating back to the 19th century. The southern belt of China, which is rich by local standards, but not by global ones, conforms to this model. Not so China's poorer interior, where the dark colour of colas is associated with the dark tea traditionally used to mask the sediment in the local water. Here consumers prefer the clear, citrus-flavoured Sprite, developed in 1961.

After much consumer and product research at a new laboratory in Shanghai, Coke came up with a drink that combines the ingredients of plain old orange juice—including some juice and real pulp, accounting for about one-fifth of the liquid—with calcium, vitamins and lots of water. The diluted drink costs about $0.30 for a 500ml container, or about a quarter as much as pure orange juice. Following a small test-marketing project in 2003, "fruit pulp orange" has steadily been rolled out across China and has recently become available throughout the country.

The results have been staggering, particularly in poor regions, where the usual orange juice sold by Coca Cola's Minute Maid subsidiary would be unaffordable. The new drink quickly became the most popular or second-most popular juice in every region of the country.

As a result, Coca-Cola's overall volume of sales in China surpassed those in Japan in 2006, making it the company's fourth-largest market, behind Brazil, Mexico and America. Following orange-pulp's success in China, Coke launched it in Thailand in 2005, where it has been a huge hit, and on February 19th the company began rolling out the new drink in India, too. This enthusiastic welcome is in sharp contrast to Coca Cola's fate in developed markets: single-digit growth in Europe and none at all in America. For mass-market drinks firms, the opportunities, such as they are, lie in the developing world.