Chinese cola brand headed to U.S. market
The Associated Press - SHANGHAI, China

China's homegrown cola brand is taking on Coca-Cola and Pepsi on their home turf, sending its first exports to the United States.

Wahaha, China's biggest beverage maker, says it sent its first shipment of 14,200 cases of "Future Cola" to New York and Los Angeles in late April.

Wahaha, whose name in Chinese is meant to mimic the sound of laughter, markets its cola as the "patriotic brand."

Future Cola will sell at the same price as Coke and Pepsi, Wahaha spokesman Shan Qining said Thursday. He would not give exact figures.

Wahaha began as a milk and popsicle factory run by a school but has grown into a state-controlled conglomerate with 10,000 employees and assets totaling $532 million.

French food maker Danone owns 30 percent of the company, based in the eastern city of Hangzhou.

Wahaha launched Future Cola in 2000 as a challenge to Coca-Cola's and Pepsi Co.'s hold over the local market. It is known in Chinese as "Feichang Kele," or "Extreme Cola." The company's Web site shows cans and plastic bottles with red labels and a logo in Chinese that appears similar to Atlanta-based Coca-Cola's.

"The high content of CO2 and the fine taste has won Chinese people's hearts," said Web site. "With its unique characteristics of nationality, it has become one of the symbols of Chinese national brand."

Wahaha also sells a caffeine-free cola "specially designed for children's physiology" and lemon, apple, orange and salt-flavored carbonated drinks that it says are good for health. Other products include sunflower seeds, health tonics, bottled water and tea and children's clothing.

Although the company is viewed inside China as a model of entrepreneurship due to its humble origins and the strong role played by its founder, Zong Qinghou, it is majority-owned by the government.

Danone has put at least $71.2 million into its five joint ventures with Wahaha, enabling the company to purchase modern production lines from overseas and vastly improving its competitiveness.

The French food and beverage giant claims Wahaha as one of its four biggest brands, along with Danone, Lu and Evian. Danone's tie-up with Wahaha has also helped make it one of China's biggest suppliers of yoghurt and other dairy products, which are marketed under Danone's brand name here.

"Wahaha is still a national brand," Shan said. "As a matter of fact, Danone needs to pay fees for using Wahaha Group brands."

While touting the special Chinese characteristics of Future Cola, Wahaha says the drink is comparable to competing brands.

In taste tests, consumers could not distinguish Future from the other brands, said Shan.

"Even the Pepsi people mistook ours as theirs," he added.

Shan said he was uncertain about future sales in the U.S. market. "It all depends on the reaction of American consumers," he said.

The Chinese carbonated soft drinks market is growing at an annual rate of about 10 percent, according to local reports, with total annual sales expected to reach 2.26 million tons by 2005.

In China, Wahaha has concentrated on expanding sales in the rural market and smaller cities. Future Cola and its other brands are absent from the shelves of top supermarkets in the big cities, where Coca-Cola, Pepsi and Japanese soft drink makers dominate the market.

Coca-Cola, known in Chinese as "Kekou Kele," or "tasty and fun," has poured more than $1 billion into China since 1979 and now holds the biggest share _ 35 percent _ of the carbonated soft drinks market.

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