Recently, a reporter from Beijing Business Daily found during a visit that Coca Cola's brand, Rubeile, has launched reconstituted milk. A year ago, Coca Cola and Mengniu collaborated to launch the ultrafiltration milk "fairlife", which has entered a state of production and sales suspension. When sales will resume will need to be notified separately by the company. After a year, before Xianfeile could be resold, it was Coca Cola that launched its milk and milk products, continuing to explore the "high nutrition milk" market.
In the view of industry insiders, Coca Cola's transformation into a full category beverage company and targeting the high-end dairy beverage market is an accelerated strategic layout towards a full category beverage company. However, unlike beverages, dairy products have barriers in terms of milk sources, policies, technology, and other aspects. Whether they can be paid for by the market still needs time to be tested.
"High magnification nutritional milk" track, one retreat and one entry
During a visit by a Beijing Business Daily reporter, it was found that the newly launched Rubeile reconstituted milk is 256ml per bottle, priced at 8 yuan per bottle, and is divided into banana and chocolate flavors. The bottle is prominently labeled with words such as "high nutrient milk" and "more than 12g of protein per bottle".
This is not the first time Coca Cola has put its dairy products on the shelves. The previous product, Xianfeile, which focused on "high nutrient milk," has been discontinued. In April 2023, Xianfeile's official WeChat mini program and JD flagship store issued a notice suspending product sales services, stating that "the store will be upgraded from April 1, 2023, and the completion time of the store upgrade will be notified separately.". Subsequently, some media reported that "Xianfeile" was temporarily discontinued, and both online and offline channels have been taken down for sale. When sales will resume will need to be notified separately by the company.
On April 14th, a reporter from Beijing Business Daily still couldn't find relevant product information on shopping platforms such as JD.com and Taobao. The Xianfeile mini program still shows "System update and maintenance in progress".
Xianfeile's listing in China can be traced back to 2020, when Coca Cola and Mengniu established a joint venture called "Keniule". At that time, officials from Mengniu and Coca Cola told Beijing Business Daily reporters that "Coca Cola and Mengniu jointly invested in the establishment of Ke Niu Le Dairy Products Co., Ltd., which has completed the industrial and commercial registration procedures and obtained a business license. The newly established joint venture will fully utilize the advantages of both investors in dairy product research and development, dairy processing technology, brand influence, and distribution channels, bringing a new low-temperature milk brand to Chinese consumers and promoting the upgrading of Chinese dairy consumption.".
In 2021, "Keniu" announced the launch of the native high magnification nutritional milk brand Xianfeile. Xianfeile is "ultrafiltration milk" produced using UF purification ultrafiltration technology, which has the characteristics of high protein, calcium, zero lactose, and relatively long shelf life. This is Coca Cola's first entry into the low-temperature milk market in China, and China is Xianfeile's first overseas market outside of North America.
After only one year of listing, it was discontinued, and some consumers lamented that Xianfeile was a pity. However, some industry insiders speculate that Rubeile or Xianfeile may be a substitute.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, said, "If Rubeile is similar or identical to Xianfeile in product positioning, target markets, and consumer groups, and provides similar nutritional value, taste, or other characteristics to Xianfeile, then it is likely to be seen as a substitute for Xianfeile. In addition, Coca Cola's marketing strategy also provides some clues. If the company emphasizes its characteristics as a substitute for Xianfeile when promoting Rubeile, then this further proves the alternative position of Rubeile.".
However, in the analysis of strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, although also focusing on "high magnification nutritional milk", Rubeile may not be a substitute for Xianfeile. "Each brand has its unique brand positioning and market positioning, and Rubeile is just a new product launched by Coca Cola to fill the gap in the high-end dairy market.".
According to the product information, the commissioning party for the milk beverage products is COFCO Coca Cola Supply Chain (Tianjin) Co., Ltd., and there is no longer a presence of Mengniu, which seems to mean that Coca Cola will be more independent in laying out the milk beverage market.
Transforming into a full category beverage company
"The launch of 'Xianfeile' in China is another important measure for Coca Cola China to accelerate its transformation into a 'full range beverage' company to meet the diverse needs of Chinese consumers," said Vamsi Mohan Thati, who was then the President of Coca Cola's Greater China and Mongolia region.
The consecutive launch of Xianfeile and Rubeile is driven by Coca Cola's accelerated transformation into a full range beverage company. As early as 2016, Coca Cola proposed to become a "full range beverage company". In 2017, James Quincey, Chairman and CEO of Coca Cola, officially announced the implementation of Coca Cola's "All Category Beverages" strategy.
With the implementation of the "all category beverage" strategy, Coca Cola has increased its layout towards coffee, dairy, and alcoholic beverages. In 2017, Coca Cola announced its entry into the Chu-Hi sparkling wine market in Japan. In August 2018, Coca Cola acquired COSTA Coffee Limited for $5.1 billion, acquiring COSTA Coffee's business platform covering Europe, Asia Pacific, the Middle East, and Africa. In January 2020, Coca Cola announced the acquisition of the remaining 57.5% stake in American dairy brand fairlife from its joint venture partner Select Milk Producers.
In recent years, Coca Cola's product matrix has also been continuously enriched. In 2022 alone, Coca Cola China launched over 20 products, covering various categories such as flavored soda, fruit juice, coffee, and tea.
Zhan Junhao said, "This indicates that Coca Cola has a strong interest in the high-end dairy beverage market. However, whether it can build the next billion dollar brand depends on various factors such as market strategy, brand positioning, product innovation, etc. Fairlife has achieved good results in the US market, which provides valuable experience and resources for Coca Cola. However, there are differences in consumer needs, cultural backgrounds, etc. in different markets, so Coca Cola needs to fully consider these factors and develop strategies and plans suitable for the local market.".
Coca Cola has been unable to put down its milk drinks or has seen the potential of this market. According to the "2024-2029 Global and Chinese Dairy Industry Deep Research Report" released by the China Academy of Commerce, the market size of China's dairy beverage industry increased from 92.96 billion yuan to 136.17 billion yuan from 2017 to 2022, with a compound annual growth rate of 7.9%. Analysts from the China Academy of Commerce predict that the size of China's dairy beverage market will grow to 149.76 billion yuan in 2024.
"However, there are certain barriers between the beverage and dairy industries, with the most obvious being the source of milk. Dairy companies need stable milk supply, large fixed asset investment, and a long supply chain system. In contrast, beverages need to bear less risk," said Song Liang, an independent dairy analyst.
Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, believes that with the improvement of people's living standards, consumer demand for dairy products is also constantly upgrading, so there is still significant development space for the dairy beverage product market. The high-end dairy beverage market has high growth potential, and Coca Cola has advantages in brand influence, channels, and other aspects. However, challenges cannot be ignored, such as how to cope with competition from competitors, how to maintain consistency in product quality and taste, and how to effectively promote and sell new products.
Regarding issues such as Coca Cola's future development plan, a reporter from Beijing Business Daily contacted Coca Cola for an interview. As of the time of publication, the other party has not responded.
Beijing Business Daily reporter Bai Yang