China, home for the largest population of tea drinkers in the world, has decided to go in for the real (carbonated) thing.
Coca-Cola Co. yesterday announced it has signed a deal with the People's Republic of China that will make it the only cola inside the Great Wall.
The agreement was a major victory for America's largest soda-pop bottler and, at the same time, dealt a major defeat to Pepsico, maker of Pepsi Cola and Coca-Cola's arch rival in the international cola war. It also added a little extra fizz to the Sino-Soviet split.
Pepsi has enjoyed a virtual monopoly in the Soviet Union that began with the detente of the Nixon years. Now, on the eve of normalization of relations with the People's Republic, it is Coke's turn.
Over both deals falls the shadow of the White House. Donald Kendall, chairman of Pepsico, is a close friend of former president Nixon. J. Paul Austin ,chairman of Coca-Cola, is a major financial supporter of the president.
Austin, in announcing the deal in Atlanta, said his company's business pursuits were unrelated to the negotiations that led to the diplomatic recognition of China. He also said his firm did not consult with the Carter administration in making the deal.
"Traditionally we carry on our own relations," he stated. We had no advice from anybody. We have been quietly negotiating with China for the better part of 10 years."
Austin noted that Coke will be the first American consumer product to go on sale in the People's Republic. The company will begin sending both bottles and cans-bearing the Coke trademark in English and Chiese-to China next month and expects to build a bottling plant in Shanghai by the end of next year.
Austin said the Chinese inscription on Coke cans will translate as "can mouth, can happy," which the Chinese will interpret to convey the idea of "very refreshing." The Chinese pronunciation will approxiamtely come out ot"Coca-Cola."
The agreement marks the reentry of Coke into mainland China. Coca-Cola was sold in China from 1928 to 1949, and was distributed from bottling plants in Shanghai, Tsingtao, Tientsin and Canton.
Initially, Coke will be shipped into China from existing plants on the West Coast, or from Hong Hong and Japan. After the wholly Chinese owned plant in Shanghai is in operation, other plants and some canning installations will be added in other cities, with the Coca-Cola company selling the cola concentrate for cash.
Austin said the company would arrange for and supervise the importation of machinery for new plants, and provide the technical assitance for plant construction and start-up.
Although Pepsico did not want to talk about it, it is clear that there had been a keen competition for the Chinese busines, which is likely to be substantial. Coca-cola officals in Atlanta said that the price for the concentrate and for the retail bottles and cans had not yet been set.
Although Pepsi Cola has exclusive cola rights in the Soviet Union, the other huge communist market, Coca-Cola officials said, "We're not conceding anything to anybody." They point out that Coke has gained exclusive rights for the 1980 Olympic Games in the Soviet Union, and for the Spartakiad preliminaries. In addition, Coca-Cola expects to sell its Fanta orange drink in Russia.