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Coke Announces $400-Million Acquisition Offer to Bean Beverage Maker in Eastern China

| Apr 20, 2015 06:52 AM EDT

Coca-Cola is set to introduce Sprite Zero in India through e-commerce mobile app Grofers.

The Chinese office of U.S. beverage giant Coca-Cola recently announced its $400-million acquisition offer for Xiamen Culiangwang Beverage Technology Co, a producer of plant-based protein drinks.

The move, according to industry experts, is a way by which Coke could expand its portfolio as its current flagship products, sparkling beverages, are gradually becoming less favored by Chinese consumers.

Furthermore, the plant-based protein drinks are also experiencing a growing phase in the country's market.

Based in eastern China's Fujian Province, Xiamen Culiangwang belongs to parent company China Green Group. The healthy beverage maker includes red bean, green bean and walnuts variants in its list of products.

The proposed acquisition states that the China Green Group will continue its role as Culiangwang's raw materials supplier. On the other hand, Coca-Cola China will act as an independent decision-maker for the bean beverage maker's manufacturing and raw materials requirement.

"The acquisition of Xiamen Culiangwang is highly positive for Coca-Cola to adjust its product portfolio and overall development," domestic food industry analyst Zhu Danpeng told the Global Times Sunday. Danpeng is affiliated with research firm 21food.cn.

In a Coca-Cola Feb. 10 report, the beverage giant had a 2-percent year-on-year decline on its global revenue and 3-percent year-on-year drop on its Chinese unit case volume growth during 2014's last quarter.

According to a China Minzu Securities research fellow, Liu Xiaofeng, sparkling beverages could face no growth at all in the country since more of the market consumers are shifting to more healthy choices.

Initially, Coca-Cola planned to acquire Huiyuan Juice group, China's leading juice maker. However, the Ministry of Commerce, due to monopoly issues, did not approve the 2009 offer worth $2.4 billion.

However, Zhu noted that the current offer with Xiamen Culiangwang could see a positive consideration given that the bean beverage maker is not big enough to take some monopolistic roles.

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