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Despite success at home with its distinctive red can, JDB faces an uphill battle in challenging Coca-Cola's world-leading brand and market share position.Photo: Simon Song

China's JDB plans global push for its popular herbal tea drink

Jiaduobao plans to spread herbal tea culture to South America and Southeast Asia despite recent legal ruling on design infringement

Kwong Man-ki

The benefits of herbal tea to relieve inflammation may be little known overseas, but JDB Group is intent on changing that. The company, which outsells Coca-Cola in China with its Jiaduobao tea, is now taking the health drink to new markets in South America and Southeast Asia.

With the beverage that originated in Guangdong having achieved nationwide popularity, the company's next goal was to make Jiaduobao an international brand like Coca-Cola, said Pang Zhenguo, the party committee secretary of JDB.

The company is paving the way for this ambition with plans to leverage the appeal of the drink among Chinese communities abroad as part of a push to target the broader populations in the new markets.

Tea made from Chinese medicinal herbs is believed to be able to lower internal heat that can cause a number of health problems.

"The hot and humid climate that features in South American and Southeast Asian countries is similar to southern China, and their diet will also cause internal heat. So we see a potential market for herbal tea," Pang, who is also the general manager of the company's quality and resource management department, told the

Formerly known as Guangdong Jiaduobao Drink & Food, JDB was founded in Guangzhou in 1995 by Hong Kong businessman Chan Hung-to after he acquired the licensing rights to Wong Lo Kat, a time-honoured herbal tea brand established more than 150 year ago.

However, state-owned Guangzhou Pharmaceutical, the holder of the Wong Lo Kat trademark, applied to the China International Economic and Trade Arbitration Commission to terminate JDB's right to it. JDB renamed its red-canned herbal tea to Jiaduobao after the commission's ruling in May 2012 that the brand rights rest with Guangzhou Pharmaceutical.

A court ruled last week that JDB needed to compensate Guangzhou Pharmaceutical for 150 million yuan (HK$189 million) for design infringement. However, the company said it did not accept the ruling and would appeal to a higher court.

Highlighting the health benefits of herbal tea, JDB started to promote the beverage across the country in 2003 and moved its headquarters to Beijing in 2008.

"People in northern China didn't know herbal tea well when we first promoted the beverage there, but they gradually understand the health benefits, which can help lower internal heat caused by their smoking and drinking habits as well as the dry climate," Pang said.

The company's quest to spread the herbal tea culture to South America and Southeast Asia will see it draw on its experience in promoting the drink to northern China, he said. "What we are doing is to bring the Chinese health diet to foreign consumers overseas," he said.

JDB tested the waters in Brazil in May with a promotional event inviting former Brazilian football star Bebeto, tapping into the World Cup frenzy.

"Bebeto and other visitors liked the sweet taste of our herbal tea, and the eastern features of the drinks," Pang said. Such marketing activities would help build Jiaduobao's image and deepen the presence of the red-canned drink in the country, he added.

According to the China Industrial Information Issuing Centre, Jiaduobao topped the country's canned beverage market last year with a share of 15.3 per cent, followed by Red Bull's 13 per cent and Coca-Cola 8.8 per cent.

Despite its success at home, JDB faces a tall order in challenging Coca-Cola's world-leading status in terms of popularity and market share.

However, the company has targeted markets with significant Chinese communities as part under its ambitions to take the herbal tea to all corners of the world.

"A global presence like Coca-Cola is not impossible," said Pang, adding that Jiaduobao was sold in more than 40 countries, including Singapore, Vietnam and Australia.

In China, growth in the herbal tea market exceeded that for general beverages, with Jiaduobao's sales growth surpassing industry averages, Pang said.

"I believe that a similar growth model can be copied to the international market someday when we promote the health diet of herbal to the world," he said.

Official data shows that China's beverage market grew 13.6 per cent last year. JDB estimates that this growth would slow to 7 to 8 per cent this year. However, the company's sales target for this year was met last month, with an annual growth rate that beat the industry average, Pang said, without revealing the numbers. JDB's sales surpassed 20 billion yuan in 2012.

Sponsoring global events is one of Jiaduobao's strategies in spreading the herbal tea culture and building its image.

At the Asia Pacific Economic Cooperation summit that concluded last month in Beijing, cans of Jiaduobao and bottles of Kunlun Mountain - JDB's high-end mineral water - were piled up at media centres. The sweet-tasting beverage was also served at the leaders' banquet.

A special pack, with the English name of the herbal tea on the red can, was served at the banquet for foreign leaders to let them know more about Jiaduobao, Pang said. A total of 10,000 cans and bottles of the two drinks were supplied to the summit.

"The penetrating effect brought by this kind of global event is good, in particular among foreign communities who never knew us," he said.

The sponsorship push would continue, with JDB eyeing sports, high-end business events and charity activities, Pang said.

This strategy has proved successful in China. JDB paid 60 million yuan to be the title sponsor of "The Voice of China", a music talent contest on Zhejiang TV launched in 2012 with a nationwide reach. The sponsor fee increased to 200 million yuan for the second season of the show last year, and rose further to 250 million yuan this year for the third season.

"The awareness and prestige of Jiaduobao increased significantly after sponsoring the show. Almost everyone knows us in China," Pang said. "We will not hesitate to spend our resources [in sponsorship] if it can benefit our business," he added, declining to confirm if it would continue to sponsor the talent show.

This article appeared in the South China Morning Post print edition as: Herbal tea giant JDB has world ambitions
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