Consumer Series III: non-alcoholic drinks

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I am aware Chinese are drinking more milks, juice and soda these days. Some notable names include: MengNiu (2319.HK), Yi Li (600887.SS), both are diary makers, MengNiu is NBA sponsor, Yi Li is Beijing 2008 Olympics sponsor, and Huiyuan Juice (1886.HK).


One interesting thing in my Lan’xi trip is: I found people are giving a carton of MengNiu or Yi Li diary products as gifts. Can you imagine that happen in the US? Even if we can get the milk in boxes? Probably not. Because milk or other diary products are considered as necessity, not luxury products. While in China, these are considered as affordable luxury. I mean, the parents will pay whatever it takes if they think the diary products are good for their kids. Similar things could be said for the white collar workers, the new “middle class”.

Another thing about those drinks is, although they are not addictive as coffee or alcohol, they are still addictive, especially for the kids. This is wonderful for MengNiu etc. Imagine as the kids grow up, they will drink more and more MengNiu products.  

Talking about coffee, you may notice the “Liang An Coffee” in my previous post. There are lots of coffee houses in China these days. Besides Starbucks (SBUX), other names include “Coffee Beans”, an European name, “Shang Dao Coffee”, “Di’ou Coffee” etc. I think Starbucks will eventally become the No. 1 player in this China coffee business because of the following reasons:

1) They usually have the best location in a mall, office building, etc.

2) The brand, like Apple, they are considered as a “cool” brand.

3) Money: the company has invested heavily, recently it bought the stakes of its joint venture in Beijing, Shanghai and Guangdong. In doing this they will have more control over the store, receipe, customer experience etc.

I visited the “Shang Dao Coffee” twice, it’s more like a bar than a coffee place, you can order beer, snacks, juice, fruit besides coffee. It may help the company make some money, but they are not as focus as Starbucks.

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