Suntory looks to Pepsi's network to boost sales

Japanese beverage maker Suntory Holdings Ltd said Monday it plans to expand further into the Chinese drinks market by starting sales of its soft drinks next year through Pepsi's local sales network.

It will be the first time for a Japanese drinks producer to cooperate with US or Europe-based companies to expand in China.

The privately-held company will start by selling its "Rich" milk-based soft drink in January in South China's Guangdong Province, and then consider expanding sales to other areas, Dow Jones reported.

Dow Jones said the company plans to lift its sales to 30 million bottles by 2012 in China, three times its estimated 2009 sales. It is targeting a sales value of 20 billion yuan ($2.93 billion) by 2012, five times this year's level.

However, Chen Jing, an analyst with Beijing Orient Agribusiness Consultant Ltd, said the cooperation between Suntory and Pepsi won't change the overall landscape of the soft drinks market in China, because the company's "share in China is out of the top 10, far behind the giants such as Wahaha or Coca-Cola."

"Coca-Cola has the best performance on results, and Wahaha has had a leading position in the soft drinks market in China for at least three consecutive years, with more than 50 percent of the share among the top 10 drinks producers," Chen said.

Chen Chen, an analyst with Shenzhen Zhongzhe Investment Consulting, said demand for soft drinks, especially healthful drinks such as juice and tea, will not shrink in coming years, as the economy continues to recover and consumption rises.

Figures provided by Shenzhen Zhongzhe Investment Consulting in December said the production of soft drinks was 74.52 million tons between January and November of this year, up 25.89 percent over the same period last year.

Suntory could not be reached for comment, and Pepsi told the Global Times that it plans to disclose detail of the deal on January 11 of next year.

Founded in 1899, Suntory launched in the Chinese market in 1979. Earlier this month, it agreed to buy a 70 percent stake in Hong Kong-based wine importer ASC Fine Wines Holding Ltd.