Coke pins China hopes on Beijing blitz

By The Wall Street Journal

Hui Minglian, 38, had never tasted a Coca-Cola before stepping inside the "Shuang," or "Awesome," Zone. The giant pavilion, erected by the soda maker in downtown Beijing, is a place where visitors can watch Olympic events free on big-screen TVs.

But when a woman in a bright-red uniform handed her a frosty bottle, Hui downed it right away. "I like it. The cold is good," she said between gulps.

The Cokes, served at precisely 37.4 degrees, are part of a campaign that Coca Cola (KO, news, msgs) hopes will help turn its Olympic sponsorship into marketing gold. In a country where many people prefer their beverages warm, the idea, says Joseph Tripodi, Coke's chief marketing and commercial officer, is "to teach consumers how to drink Coke and how to love Coke."

• Multimedia: Chinese beverage maker takes on Coke

Coke has plugged its flagship cola at other Olympiads for decades. But this blitz is especially important for the brand, as the games present a chance for it to vault ahead of archrival Pepsi-Cola in the race for China's 1.3 billion coveted consumers -- a market that Coke says could be its biggest in the future.

Coke is the global leader in the cola wars, with roughly half the market, more than double PepsiCo's (PEP, news, msgs) soft-drink share. In China, Pepsi-Cola is No. 1. But early results show Coke's Olympics push, which began in early 2007, is eating into Pepsi's lead.

Last year, the Coca-Cola brand claimed 22% of the country's carbonated soft drink market, up half a percentage point from 2006. That still left Coke trailing Pepsi's 22.9% share, which dipped from 23.3%, according to research firm Euromonitor International.

The cola giant faces hurdles. The dozens of Olympic sponsors running ads in China are playing on a difficult field. Several campaigns feature the same handful of famous Chinese athletes; Coke is one of several using basketball star Yao Ming. Celebratory messages carry risk in a year marked by both anti-China protests around the world and the Sichuan earthquake, the largest natural disaster in recent Chinese history.

For now, Coke's Olympics blitz is making progress by other measures. A recent study conducted by marketing consulting firm R3 along with CSM Media Research shows that 47% of Chinese identify Coke as a sponsor of the games. On average only 3% of respondents similarly associate other top-level sponsors with the games, including McDonald's (MCD, news, msgs) and Adidas.

In an early coup last year, Coke signed an endorsement deal with Yao, China's most famous athlete, who for years had represented PepsiCo. Since this spring, the brand's Chinese ad anthem, "Red Around the World," has become a popular tune, even at some Olympic events. On Aug. 17, the Coke music blared from the Beijing National Aquatics Center after China's Guo Jingjing, a Coke-sponsored athlete, executed a gold-medal-winning dive. (Most dive events use standard pop music or techno beats as fanfare.)

Coke won't disclose its spending at the Olympics, but IEG, a firm that tracks and analyzes corporate sponsorships, estimates the company has poured as much as $400 million into the Beijing games. That figure includes $80 million for four-year Olympic sponsorship rights and $320 million spent on ads, promotions and other marketing globally.

2007 market share in China:

Carbonated beverages	Percent of market
Sprite	23
Pepsi	22.9
Coca-Cola	22
Future	4.9
7-Up	4.4

The chief architect of Coke's strategy in China is David Brooks, a fluent Mandarin speaker who has been in the country on and off since 1975. A 46-year-old Wyoming native, he cut his Olympic teeth heading up the company's sponsorship of the 2004 torch relay for the Athens games. Brooks returned to China as general manager of Coke's Beijing Olympics project group in 2005. Today, his team numbers more than 2,000.

"There are very few people in China who don't support the Olympics," Brooks says. "That's something that a mass-market brand like Coke wants to be involved in."

Coke got a jump-start on other sponsors. In 2001, the company unveiled congratulatory billboards all across Beijing that said "Cheer for China," only hours after the city had won the right to host the games.

Continued: A lot of room to catch up

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