Companies

China cola company tries to regain fizz

(China Daily)
Updated: 2011-01-06 14:02

BEIJING - After winning an intellectual property lawsuit with PepsiCo Inc, the former Chinese beverage market leader Tianfu Cola hopes to make a comeback next year, the company's top executive said.

"We believe the regained formula will be a new start for us," said Qian Huang, general manager of China Tianfu Cola Group.

Chongqing-headquartered Tianfu Cola Group Corp won a lawsuit against its former joint-venture partner, the China unit of PepsiCo, claiming that it stole the recipe for its beverage,

"Our next step is to take back our trademark and recover from bankruptcy," Qian said.

PepsiCo said the use of the "Tianfu" formula and techniques from their joint venture was legitimate, according to a statement sent to China Daily on Wednesday.

However, the joint venture Chongqing Pepsi-Tianfu Beverages Company Ltd, the owner of the Tianfu Trademark will act on the court verdict and pass the relevant know-how to the former partner ahead of expiration of the relevant contract.

Qian said the company now aims to produce, not only the cola series, but also juices, sodas and functional drinks.

Tianfu Cola is considering raising funds from financial groups, Chongqing Evening News reported.

Before the Tianfu Cola Group founded a joint venture with PepsiCo in 1994, Tianfu Cola was recognized as an iconic name in the Chinese beverage industry, for it developed its own cola formula and once occupied 75 percent of the Chinese cola market.

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After the establishment of the joint venture, Tianfu Cola lost its local market share. In the lawsuit, the company claimed that PepsiCo broke their promise that at least half of the joint venture's products would be under the Tianfu brand, and reduced its production ratio from 74 percent in the first year of cooperation to 0.5 percent in 2007.

Since the foreign beverage giants entered China in 1990s, the "big eight" Chinese traditional beverage brands, which included Beijing Beibingyang, Shanghai Zhengguanghe and Chongqing Tianfu-cola have all disappeared from the market.

There have been concerns that foreign companies, such as Coco-Cola that offered to buy Huiyuan in 2009 and Danone which purchased Wahaha, Robuts and Zhengguanghe, only aim to gain domestic market share rather than develop the local brands.

"The beverage industry is dramatically competive now and a strong brand is especially important for new products," said Wu Zhengwu, a food and beverage industry analyst from AJ Securities. "Since Tainfu Cola broke up with PepsiCo, as well as its binding sales channels, the restart expenditure for new Tianfu Cola, which include advertisements, and opening up networks and paying for entry into supermarkets could be huge."