China Food

Dialogue with CEO of Swire Cola China: 5.5 billion yuan of planned key investment in production capacity, full of confidence in the second half of the year

As the bottler of the world’s largest soft drink company, Swire Cola plans to throw a large amount of “real money” into China to pursue growth.

In a separate video exchange with the snack generation recently, Party construction, the CEO of Swire Coca Cola China, revealed that the planned investment of the company will reach 5.5 billion yuan in the next five years. In addition, having worked hard in Swire for nearly 30 years, he also talked about how to seize the market explosion point, the recent business situation in Shanghai, innovative measures for carbon reduction, etc.

Party building, CEO of Swire Coca Cola China

Now, let’s listen to this “veteran” in the beverage industry.

Sugar free combination

In China, Coca Cola’s second largest market, Swire and COFCO, as bottlers, share the world.

As far as Swire is concerned, mainland China is the market with the highest proportion of revenue. Last year, the revenue was HK $28.774 billion (about RMB 23.258 billion), and the profit attributable to Swire was HK $1.418 billion (about RMB 1.146 billion).

“We always believe that the Chinese market is full of opportunities and vitality, and we are full of confidence in the Chinese market.” Party Construction said that the company’s business strategy mainly includes excellent execution, digital innovation and better product portfolio.

Among them, when introducing the product portfolio, sugar free became the key word in the leader’s population.

“When it comes to the product portfolio, you can also see that the sugar free category has developed very fast recently.” Party Construction said that for this reason, the company also launched more sugar free products, covering soda water, tea and other categories, such as sugar free Sprite, sugar free Fanta, Chunyue soda water, sunshine sugar free lemon tea, etc.

He told the snack generation that at present, about 60% of Swire Cola’s beverage brands in mainland China provide low sugar and Zero sugar products. “Now our sugar free products are also large in scale, enjoying the opportunities brought by changes in consumers to the company’s business growth.”.

In its view, the reason why the company can take advantage of this Dongfeng to quickly launch a rich “sugar free portfolio” is inseparable from Coca Cola’s whole category strategy. Zhankunjie, CEO of Coca Cola, believes that consumers are looking for more beverage choices, including various products that can meet different needs, emotions and times.

Following the pace of Coca Cola, the party construction pointed out to the snack generation, “Swire Coca Cola has always been positioned as a full range of beverage companies. In the Chinese market, you can see that it was not just selling soft drinks for a long time.”

“I joined Swire Cola in 1994. I have the impression that we started selling bottled water in 1996 and 1997.” Party Construction recalled that later, the company successively expanded to fruit juice, tea drinks, coffee, energy drinks and other categories. Although some consumers may not be very clear, because the company has Coca Cola in its name, “many people will think it is a soda company”.

Swire Coca Cola full range beverage

Patience of “long-distance running”

After years of sedimentation, this beverage giant has now occupied a position in many categories in advance. When the market is ripe, it can increase investment and seize the air outlet.

Similarly, taking sugar free as an example, the Party Construction said that Coca Cola launched diet coke as early as 1995, and zero Coca Cola was launched in 2005.

“But sugar free drinks (in China) have only begun to break out (quickly) in recent years. If you think you won’t sell them if you don’t get up, you may give up this opportunity today. So we have been insisting and waiting for the opportunity.” Party Construction said, “we have a high degree of attention to each category, mainly based on consumer demand, and follow the demand to make innovation and adjustment.”

He also revealed that Minoru and Fanta under Coca Cola have also become “main” brands after long-term and continuous cultivation.

“Some products, such as Costa coffee, have also achieved success after (long-term) market cultivation, which is better than if juice.” Party Construction said, “meringue is an example. It has been growing from a little bit in the early stage to a large scale today.”

As introduced by the snack generation, Coca Cola also “liked” meringue in the first quarterly report of this year. It mentioned that the global single box sales of nutritional drinks, fruit juices, dairy products and plant-based beverages increased by 12%, mainly driven by products such as meringue fruit orange in the Chinese market.

In addition to fruit juice, Fanta, another classic soda of Coca Cola, is also a “long-distance runner”. “In fact, Fanta was not very famous in the early stage. Up to now, it has a large sales volume and business scale every year.” Party building theory.

Large scale production expansion

In order to unlock the growth potential in the next stage, Swire cola, which has been rooted in the mainland for more than 40 years, has drawn up a large-scale production expansion plan.

Party Construction told xiaoshidai that in the next five years, the company expects to invest 5.5 billion yuan, including 20 production lines. “(5.5 billion) is mainly invested in factories and production lines.” He said, “in the future, according to the development speed of each place, in addition to adding production lines, we will have one more (New) factory building to a certain extent.”

For example, in Henan and Guangdong, Swire Cola is promoting the construction of new factories. Party Construction said that last October, the company laid the foundation for its expansion and reconstruction project in Zhengzhou, with an investment of no less than 900million yuan. At the beginning of this year, Swire Cola announced that it would invest 1.25 billion yuan to build a new factory in Guangdong, setting a new record for its single investment.

“In fact, we have been putting into production in the past few years, including this year and the most difficult year 2020.” He said that in 2020, when the epidemic broke out in Wuhan, Swire Coca Cola still decided to add a production line for the Hubei plant in April of that year, and the latter was officially put into operation in 2021.

In the face of the epidemic, Swire cola, in addition to increasing investment against the trend, is also trying to recapture the business once impacted this year. When talking about the recent epidemic in Shanghai, the Party Construction said that its team has made a lot of efforts to ensure the normal operation of the business.

“In terms of the whole supply, we also encountered some difficulties in the early stage, but through the coordination of the central supply chain, we coordinated some products in the surrounding areas such as Zhejiang, Anhui and Jiangsu to go to Shanghai to ensure supply.” He said, “we have more than 600 employees who have been staying in the (Shanghai) plant. They mainly focus on production and manufacturing, mainly on supply (drinking water and other products).”

As the situation became clearer, the party construction revealed that compared with April and may, the Shanghai market had seen “very good signs of reversal” in June.

“The whole business has gradually returned to the normal track. We are still full of confidence in the second half of the year, and the business meetings have been positive. We will still invest in those who should invest, because the Chinese market is a long-term opportunity.” He said, “in fact, these twoorthree years are indeed a special period, but (later) we can see economic recovery (signs). We are confident that we will continue to deepen our efforts in the Chinese market and continue to develop our business.”

party building

Carbon reduction innovation

Swire cola, which has a firm belief in the Chinese market, is also working hard to help achieve the important goal of “carbon peaking and carbon neutralization”.

“In the 2030 sustainable development strategy of Swire cola, we proposed to reduce the absolute carbon emissions of the entire value chain and help limit global warming to 1.5 degrees Celsius higher than the pre industrialization level.” Party building theory.

According to Taikoo Coca Cola’s 2021 sustainable development report, for climate commitments, the company currently divides three types of emission sources, including direct greenhouse gas emissions in scope 1, indirect greenhouse gas emissions in scope 2, and other indirect emissions in scope 3 (Note: upstream and downstream partners), etc.

party building

“By 2030, we hope to reduce the absolute carbon emissions of our core businesses (scope 1 and scope 2) by 70% based on 2018; on the other hand, we hope to reduce the absolute carbon emissions of the value chain (scope 1, scope 2 and scope 3) by 30% based on 2018. The difference between the two is that the latter not only reduces emissions by itself, but also affects relevant stakeholders.” Preach party building.

To this end, Swire Cola is also constantly exploring innovative measures to reduce carbon, such as building a “carbon elimination Manor”.

According to the introduction of the party construction, the “carbon elimination Manor” is a composite community development project integrating carbon reduction, biodiversity protection and Rural Revitalization. It was first implemented in Xishuangbanna, Yunnan last year. The project aims to ensure farmers’ income with the concept of more sustainable development and make the ecology better.

“The economic source of local farmers in Xishuangbanna (mainly) is rubber forest. If they are all rubber trees, there will not be much vegetation, biodiversity will be poor, and soil erosion will also be caused. There are elephants there, and elephants will have some conflicts with local communities.” Party building said.

He said, “the ‘carbon elimination manor’ project is mainly to promote the planting of some nuts, especially macadamia nuts, and mangoes. There will also be Shrubs under these trees, which will reduce soil erosion and improve the overall biodiversity. We also provide beehive breeding for honey bees. Farmers can earn some (extra) income from selling honey, and bees will also reduce the conflict between people and elephants, because elephants are afraid of bees getting into their ears.”

It is reported that after one year of construction, Yunnan “carbon elimination Manor” has completed the 230 Mu eco-friendly planting plan, and 300 beehives have been put into production and installed with photovoltaic panels, so as to build a sustainable development model for local villagers. In the future, Swire Cola plans to build five “carbon elimination manors”.

“Sustainable development requires continuous investment. We all know that we can’t just do our own business without paying attention to the community. Doing more about social welfare is more conducive to the development of the company and can help achieve sustainable growth.” Party building theory.

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