China’s Ministry of Commerce released a statement today blocking the acquisition of Huiyuan Juice, one of China’s largest 100% juice brands. The Ministry of Commerce claims that through the acquisition, Coca-Cola would become the dominant player in the market. And through this dominant position, Coca-Cola may potentially make it tougher for competition, coercing consumers to pay a premium price for beverage products.
CEO Muhtar Kent released a statement saying, “We are disappointed, but we also respect the MOC’s decision.” China represents Coca-Cola’s fourth largest market, and Coca-Cola will undoubtly make a push toward some other Chinese beverage company to increase its presence in the market.
The breakdown of this deal may actually be a blessing in disguise for Coca-Cola. This deal was first announced in September 2008, before the full effects of the worst economic conditions since the 1940s. The deal if completed may have beocme too expensive for Coca-Cola given the economy’s current situation. In addition, Huiyuan Juice’s growth trend have slowed since the September acquisition news. The company experienced lower sales in the first two quarters of 2008, and lost market share in the low end fruit juice segment (which accounts for the majority of the company’s revenues).
Until another acquisition is made, the company will increase its focus and promotions for exisiting products. Coca-Cola currently leads the diluted juices market with 9.7% market share.