October 2000
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PEPSICO EXPANDS INTO GROWING NON-CARBONATED BEVERAGE MARKET | |||||||||||||||||
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NEW YORK, USA -- PepsiCo Inc. has announced it will buy South Beach Beverage Co., the makers of SoBe tea and an extensive line of non-carbonated fruit and dairy beverages, including 'functional' teas containing gingko, bee pollen and other herbs and ingredients. SoBe sales are expected to soar 30% this year, contrasted with a flat carbonated soft drink industry. The juice drinks category as a whole is expected to grow by nearly 12% this year. Just days earlier, the British company, Cadbury Schweppes PLC, acquired Snapple -- the industry leader in non-carbonated 'New Age' beverage alternatives. They paid over US$900 million. With growing demand for non-carbonated, flavored soft drinks, Coca-Cola Co. had also been considering investing in South Beach Beverage Co. until last month; but the deal never materialized. SoBe sales are expected to exceed US$225 million this year, up from US$167 million in 1999. [NOTE: in 1996, its first full year of operation, SoBe only made US$1.2 million.] It is reported that PepsiCo paid US$370 million cash for South Beach Beverage. PepsiCo will be adding SoBe to its diverse non-carbonated beverage brands including Aquafina water, Lipton teas, Frappuccino coffee and FruitWorks fruit drinks. Plans are to operate SoBe as a separate company, but to give it the benefits of Pepsi's distribution channels, bottling assets and other economies of scale.
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BEIJING, China -- With a growing middle class in China, now earning around US$4,000/year, there is increasing purchasing power and growing demand for affordable automobiles. General Motors Corp. plans to introduce a new compact car called the Sail, which will sell for about US$12,000. Their flagship car in China was the Buick sedan, which cost around US$40,000. But sales of this car have been lower than expected in the past year, following the US-China trade agreement last November, and GM reduced production. With increasing competition in the high-end market from other automakers including Audi, Honda and Volkswagen and in anticipation of lower car costs (from lower import tariffs), many Chinese buyers have delayed automobile purchases. China is the world's seventh car largest market and GM expects it to be as big as the U.S. market by 2025.
Reader's Comments
EUROPE -- This month, the euro hit an all-time record low -- below 83 cents against the US dollar. Since it was introduced in early 1999, the euro has dropped nearly 30%. Used in 11 European Union countries, some analysts predict the euro could bottom out at just 75 cents.
HANOI, Vietnam -- Federal Express, the leading US courier service, signed a landmark deal with local partners in Vietnam which, beginning January 2, 2001, provides customers with the first direct express transportation service between Vietnam and the rest of the world. FedEx was the first American company back into Vietnam, doing business there since 1994. This new deal implies increasing confidence in Vietnam's business climate.
While Vietnam's trade deficit continues to grow, its exports are also expanding significantly. While exports increased 26.4% to US$11.6 billion,
imports rose faster, by 32.2% to US$12.3 billion. But there are notable areas of strength, and growth is evident. Vietnam's export of garments and textiles, for example, now accounts for 13% of export earnings, and this increased by 4.3% to US$1.5 billion. On the flip side, processed petroleum and oil accounted for the biggest increase in imports, which more than doubled to US$1.6 billion in the same period.
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| AMAZON.COM EXPANDS WITH LOCALIZED BUSINESS INTO JAPAN | [continued, Amazon.com...] | |||||||||||||||||
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TOKYO, Japan -- Amazon.com is expanding its online service to its first
Asian market -- Japan. Amazon is already doing business in the UK, France and Germany.
But Japan was its biggest overseas market and now they will be operating a localized
online retail store, supported by a local warehouse and distribution system in Japan.
The Japanese operation will carry 1.1 million Japanese books and 600,000 foreign language books, including those in English. Amazon will be opening a 170,000 square foot (15,800 square metre) distribution facility in Ichikawa, east of Tokyo. This will reduce delivery time to Japanese customers from 6 weeks (from the USA) to just one or two days.
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While discounting books is against the law in Japan (as it is in Germany and France), it is
legal to discount foreign books in Japan. But according to Amazon, "price is not everything." And they plan to appeal to consumers on customer service, as well as as much
as a 30% discount off the retail price of foreign books. Books in Japan are among the most
expensive in the world.
Amazon's key competitor is Japan's leading bookseller, Kinokuniya Co. Kinokuniya's 4-year-old "BookWeb" service reports monthly sales of US$3.3 million. And recently, Microsoft Corp. and Kinokuniya Co. formed a partnership to sell electronic versions of books in Japan. They will start selling English versions of
electronic books in Japan early next year via the internet. Versions
in the more complicated Japanese script will be available by mid-2001.
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