The First Alcoholic Drink launched on the market in Japan,Why Coca-Cola Breaks the "Wine commandment”

 The First Alcoholic Drink launched on the market in Japan,Why Coca-Cola Breaks the "Wine commandment”

 

 

On the 28th, with the world’s first lemon-flavored sparkling wine appear and sold in Fukuoka, Japan, Coca-Cola officially broke the 132-year history of “drinking without alcohol”. The alcoholic name of this “Lemon-Dō”. Alcohol concentration is 3%, 5%, and 7%, all of which do not contain any cola ingredients.

 

The Coca-Cola break of the "Wine Discipline" was considered as one of the company's transformation measures. Coca-Cola, which has never been involved in alcoholic beverages, tried to meet the market demand. It is understood that since 2011, the market for mild alcoholic beverages represented by sparkling wine in Japan has expanded by nearly 40%. However, the Japanese alcoholic beverage market is highly fragmented and the competition is fierce. Old Japanese companies such as Suntory, Kirin, and Asahi have already dominated the shelves of sparkling wines in supermarkets and convenience stores. It is still difficult to predict the future of “Lemon-Dō” to enter Japan. At present, this beverage is only launched in Kyushu, Japan, and not yet for other Japanese and international markets.

 

Behind the test of alcoholic beverage, there is the development crisis of Coca-Cola which caused by the shrinking market of carbonated beverage. As consumers place more emphasis on a healthy and safe diet, according to the US Beverage Industry News “Beverage Digest” report, since 2005, sales of carbonated beverages in the United States have dropped for 11 consecutive years. In 2015, the per capita consumption of carbonated beverages in the world fell to its lowest level in 30 years. According to Coca-Cola's 2017 earnings report, Coca-Cola's net income last year was 35.41 billion U.S. dollars, a year-on-year drop of 15%, and net profit dropped by 81%. This is already the fifth consecutive year of decline in Coca-Cola’s performance.

 

Not only alcoholic beverages, Coca-Cola has continuously introduced new products in recent years to meet market demand, and has released more than 500 new products in the Asia Pacific region in the past three years alone. For carbonated beverages, Coca-Cola has also developed a number of sugar-reduction programs. In the UK, Coca-Cola has launched Sprite and Fanta, which reduce sugar by 30%. This year, the company will also sell new types of stevia "sugar-free" cola in markets outside the United States.

James Quincy, Coca-Cola’s chief executive, said that the company is currently accelerating the transition to a full-blown beverage company and will develop new businesses such as drinking water, juice, and coffee and tea. At the end of April, Coca-Cola also invested in the brand “Le pur”, a major brand of yoghurt.

 

In addition, Coca-Cola has made major adjustments to its management team and corporate structure. In April of last year, Coca-Cola announced that it would cut 1,200 employees in the second half of the year to reduce costs by streamlining the company's structure. At the same time, Coca-Cola also plans to sell more low-margin bottling business. In November 2016, Coca-Cola has sold its bottling business in China to COFCO and Swire.

However, the concept of "Coke is sweet" has been deeply ingrained in the consumer's impression, and the changing formula of carbonated beverages has been difficult to be accepted for a while. Coca-Cola's successive sales of low-sugar or sugar-free cola did not meet Coca-Cola's expectations. On the other hand, in addition to the flanking of the rival Pepsi Cola, the net red drink brought by internet marketing also quickly seized the beverage market. Coca-Cola’s 2017 financial report showed that the company’s sales growth in functional beverages, tea and coffee was only 1%-2%, which did not bring much improvement to Coca-Cola’s business performance. Analysts believe that Coca-Cola may have to go through a relatively difficult transition period before opening the “full drink” era.

 

On Monday, Coca-Cola Japan launched Lemon-Dō, a canned sparkling alcoholic beverage. This is Coca-Cola's first sale of alcoholic beverages for 132 years.

There are three flavors of Lemon-Dō, they are "檸檬堂 定番レモン" flavor, which contains 5% alcohol and 10% lemon juice; "檸檬堂 塩レモン" flavor, contains 7% alcohol and 7% lemon juice; "檸檬堂 はちみつレモン" flavor, Contains 3% alcohol and 7% lemon juice, with honey, slightly sweet taste, mainly for female consumers. All three flavors are sold in 350 ml cans and the recommended price is 162 yen (about 9.4 yuan, including tax).

Hundreds of people lining up for tastings at a tasting meeting held in Fukuoka on Saturday. Some of them did not expect this American company to try Japanese-style wine. this lemon-Dō alcoholic beverage targets the Japanese 「酎ハイ」( Chu-Hai  canned beverage, which is a cocktail-style beverage that is usually made from grain distilled spirits (burned wolfberry) plus fruit-flavored carbonated water to make. For many years, Japanese wineries including Kirin, Asahi, and Suntory have continued research and development. To date, hundreds of different Chu-Hai products have been accumulated in the market.

Chu-Hai beverage alcohol content is between 3% and 8%, which is a direct competitive product of beer. In recent years, despite the overall decline in Japan’s demand for alcoholic beverages due to a decrease in population, the demand for canned liquor has been increasing, partly because its tax rate is lower than that of beer and its price is cheaper. The price of most Chu-hai beverages ranges from 100 to 200 yen (about 6-11.5 RMB) per can.

 

Coca-Cola Japan stated that Japan's non-alcoholic beverage market is saturated, and for the company to continue its development, they are focusing on the Chu-Hai market with a value of more than US$10 and the low-alcoholic beverage market. Economic news website Shogyokai Online reported that sales of low-alcohol beverages reached nearly 2.3 billion U.S. dollars in the ten months between January and October 2017. Coca-Cola Japan hopes to get a slice of it.

 

The Japanese alcoholic beverage market is highly segmented and highly competitive. It is dominated by three companies: Suntory, Kirin Beer, and Asahi Beer. The 檸檬堂 is currently only launched in Kyushu, and plans to promote it to other regions and countries have not yet been determined.

 

Jorge Garduo, president of Coca-Cola Japan, said that due to the “unique quality” of the Japanese market, Coca-Cola may only sell alcoholic beverages here. He said: "On a global scale, it is not uncommon to sell non-alcoholic beverages in the same system as alcoholic beverages." "Trying on our market makes sense. But I don't think people around the world should expect to see this product from Coca-Cola. Although many markets are becoming more and more like Japan, I think the culture here is still very unique, so many products born here will stay here."

 

In the recent Tokyo Advertising Week, Khalil Younes, Coca-Cola Japan’s senior vice president of marketing, also said “Japan is a very special market for Coca-Cola globally”. The Coca-Cola Japan market accounted for only 3.45% of its global revenue (North America is 20 %, China is 9.89%), but among the 21 brands of Coca-Cola with global revenues exceeding US$1 billion, 4 of them are developed for the Japanese market, namely Georgia Coffee, AQUARIUS Sports Drinks, Fruit Flavor Water I LOHAS and Green Tea Brands. eagle.

Coca-Cola spokespersons in Japan also tend to choose local stars. The spokesperson for this lemon church is Abe Kuan. On May 25th, he starred as a lemon juice store owner in an advertising film.

 

As consumers increasingly focus on health and reduce sugar intake, soda sales worldwide are declining. Coca-Cola has expanded its business to bottled water, coffee and tea to make up for the sales gap.

 

However, Coca-Cola's performance in the first quarter of this year was not bad, thanks to the new taste of sugar-free Diet Coke. Sales fell 16% to $7.6 billion due to the peel-off filling business. However, net profit rose by 13%. In addition, sales of Coke have grown by 3% globally because of the good sales of Coke. The sales of soft drinks in the Chinese and Indian markets have grown to double digits.