1. CHINA Kathryn Braun Doug Farrell Tricia Felice Michael McCluskey Peter Vaccaro

2. Economic Overview  GNP 2004 will be $1.3 trillion Increasing average of 8% each year  Age distribution: 70% between 15-64  December 2001 China joined the WTO Major shift in focus for government Opening economy to other countries for the first time Reducing tariff and non tariff barriers to trade  Highly concentrated population density 10 most populous provinces have almost 60% of total population

3. TARGET MARKETS  RURAL 62% population Lower living standards Average per capita expenditure on food/ drink in 2002: $31 (256.7 RMB)  URBAN 38% population Average per capita expenditure on food/ drink in 2002: $346 (2859 RMB) Incomes rising at almost twice the rate of rural consumers

4. PRODUCT  Content Natural/ Organic focus Diets based around five tree fruits peaches, plums, apricots, chestnuts, dates  Size Dependant on mode of transportation Popularity of bicycles and motorbikes Practicality of cars and taxis Comparable to competitors’ average of 250 mL.

5. PRODUCT  Type of Bottle On-the-go consumers Durability Effect on lid as well as material used China maintains a significant foreign trade in plastic products Majority of RTD beverage competitors use aluminum cans.  Brand Not member of Trademark Association Must abide by their own trademark laws within China No strict enforcement of these rules

6. PRODUCT  Label Mandarin Chinese is official language Should test names with consumers in cities with different dialects (Beijing, Shanghai, Guangzhou) Consumers are fact driven at point of purchase State the benefits of the product. Red and gold are the most motivating colors in Chinese culture

7. PRICE  HOW MUCH SHOULD IT COST Price sensitive for food/beverages Competitors prices – $.25 for a aluminum container. Economy status – on the rise which means they have more disposable income. Taxes, markup in channels Production cost

8. PLACE  Manufacturing Low education level leads to high number of industrial workers Cheap labor Technology China has been lagging behind the rest of the industrial world  Over protective regulations  Low level of education in the Chinese workforce

9. PLACE  Distribution Three Available types of distribution there Pepsi  Partner with their pre-established distribution centers and distribution system Unilever  Set up our own distribution system The Third Party Distributor  Outsource distribution  Possible companies: Emerge logistics, Elee China Type of transportation Railways, Ports, Airplanes, Highways

10. PLACE  Inadequate in terms of delivery, sales, merchandising, promotion and collection Not likely to change due to government restrictions on foreign investment.  Current distribution trends 78% cargo carried by trucks Into 2001, length of road constructed increased by 30% Total road passenger volume increased 120% Road cargo volume increased 46%

11. Retailers  Supermarkets Adjusting food to nonfood ratio (increasing nonfood) In 2001, 63.2% supermarket sales were FOOD Top 4 retail chains in China are all supermarket Most popular outlet for brand name food/beverage items Most frequently located in urban areas

12. Retailers  Hypermarkets In 2001, 63% hypermarket sales were FOOD Mainly deal with medium quality goods (electrical appliances, clothing, daily necessities) as well as food products Being built close to large living quarters, on immediate outskirts of city- serves both city and out-of-town residents Retail sales growth = 1000%

13. Retailers  Conveniences Stores In 2001, 62% sales were FOOD Have tried to increase competitiveness by offering more non-food products Located close to consumers so food should stay high on priority list Especially important are impulse purchases such as confectionary items and soft drinks Retail sales growth = 97%

14. Retailers  Independent Grocers In 2001, 70% sales were FOOD Mainly focused on daily necessities Store is known to consumers for food  Discounters In 2001, 67% sales were FOOD Current trend toward non-food sales

15. PROMOTIONS  Not well developed ads  Beverages are 6 th ranked most advertised product  Must abide by National Advertising Law

16. PROMOTIONS  Positioning Tea is extremely popular in China Ingrained in culture Tea Per Capita volume 2002= 33.3 liters Already begun the transition from hot to iced RTD Tea Per Capita volume 2002 =33.03 liters Competitors President Iced Tea (26% market share) Mr. Kon (30% market share)

17. Media Television 94% population has TV coverage 22% of total advertising went to TV Radio Reaches 93% of China’s population Despite belief that its role as key source of information has been eroded by other media sources, spending on radio advertising is increasing. Internet 45.8 million users in 2002 Increasing rapidly

18. Media Newspaper Most are locally based so advertising can be location specific Use national newspapers to establish brand identity and image 2007 newspapers Facing intense competition Newspaper advertising spending grew almost 20% in 2001 Magazine Almost 9,000 magazines Smallest advertising revenue (1.49%)

19. Thank You Any Questions?