Rougemont Fruit Nectar – Distributing in China

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Main Concerns

· Lavoie Classified the Chinese fruit beverage industry into three main product categories Domestic fruit drinks, fruit teas and imported juices.

· 50 brands fell in the niches � low price and low quality, mid price and medium quality and high price and high quality

· 5% of the domestic fruit drinks were low price and low quality

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· Brands were blatantly copied from the competitors including identical packaging and names.

· As a consequence consumers exhibited little or no loyalty to any particular brand.

· One of the main concerns for Lavoie was the what type of fruit beverage he wanted to develop ?

· Lavoie identified that the beverage for the Chinese market would be the “thicker” Orange juice and he believed Beijing Oasis could do the job

· The next concern was to secure reliable raw material supplier.

· Lavoie thought that the name Rougemont or Red mountain did not fit the Chinese context hence he changed the name of the nectar to Ru Meng meaning “Dreams of a woman”

· The Packaging was very unique in design largely because of the imported material from France

· Some issues regarding packaging where 1) Customers were expected to puncture the top of the can with an opener. ) The nectar consisted of fruit meat and the customers needed to be taught to shake the can before drinking.

· The sizes of the bottles were a issue too since most consumers were accustomed to purchase single serving sized beverages

· Chinese Distributing System

· Goods passed through almost three tiers of distributors. Top layer has distributors that were located in China’s four largest commercial centers, second tier comprised of wholesalers in large cities and third layer had distributors in small cities

· State owned distributors

· Good for companies with little financial backing

· City distributors had much better warehousing and transportation coverage than foreign competitors

· Every neighborhood was known and could be reached easily

· Foreign Distributors

· There were two entrants to the Beijing and Tianjin distribution markets

· These companies were trying to establish national networks Each firm offered three similar packages

· Establish an independent network

· Partnership with Beijing natives with upper level incomes

· It will allow for the greatest degree of freedom and control

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