Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 164 No Refusing Allowed (Seeking monthly votes, recommendations, and subscriptions!)
at the same time.

Across the ocean, in New York State, USA, at the headquarters of PepsiCo.

Sales Director Robert Miller sat in his spacious office, his mood as bright as the sunshine outside the window.

He was reviewing the company's preliminary sales data report for the first quarter of 1979, and a smile involuntarily crept onto his face.

In recent years, Pepsi has successfully suppressed its old rival Coca-Cola in the North American market share through aggressive "Pepsi Challenge" taste test campaigns and marketing strategies targeting young people.

Year-end data from 1978 showed that Pepsi's market share historically surpassed Coca-Cola's, albeit by a narrow margin, marking a landmark victory.

At the start of 1979, with positive market indicators and channel feedback, Robert had reason to believe that this leading advantage would continue or even expand.

He leisurely picked up his coffee, preparing to sign what he considered merely a formality—the quarterly report.

However, when his gaze fell on the detailed data comparisons and market share trend charts on the last few pages of the report, the smile on his face instantly froze.

"This...this is impossible!" Robert slammed down his coffee cup, leaning forward so much that he almost pressed himself against the report.

The report clearly shows that in the first quarter of 1979, Coca-Cola's sales in the North American market increased by 5.7% year-on-year, while Pepsi's growth rate was only 2.1%.

What shocked him even more was that the weighted market share data showed that Coca-Cola's share had rebounded from 48.1% at the end of last year to 49.5%, while Pepsi's share had slightly decreased from 48.3% to 48.0%!

Coca-Cola not only stopped its downward trend, but also achieved a comeback in just one quarter!
"Something's gone terribly wrong!"

Robert's heart sank. The ease and comfort he had felt earlier vanished, replaced by a strong sense of crisis.

He immediately picked up the internal phone and urgently instructed, "Sarah, immediately notify the heads of the sales analysis department and the market research department to come to my office for a meeting in ten minutes!"
Also, send over all abnormal sales reports and consumer research summaries from all channels for the past three months! Quickly!

Ten minutes later, the atmosphere in the office became somewhat heavy.

Mark, the head of sales analysis, and Lisa, the head of market research, sat opposite Robert, looking tense.

“Can anyone tell me what’s going on?” Robert slammed the sales report on the table, his face ashen as he looked at his subordinates. “What did Coca-Cola do?”
Why did the situation reverse so drastically within a single quarter?

Is our market monitoring system just for show?
Why was there no warning?

Mark wiped the sweat from his brow: "Robert, we're also verifying the data."

Initial observations suggest that the growth primarily comes from Coca-Cola's traditionally strong food service and convenience store channels, especially family packs and single-serving ready-to-drink bottled products.

However, the specific cause is still under investigation.

Lisa added, "Monthly consumer tracking surveys show that Coca-Cola's purchase intention and satisfaction index have slightly improved in the last three months, but no significant changes have been found in its advertising spending or promotional efforts."

In terms of word-of-mouth marketing, no large-scale new topics were detected.

"No changes? No new topics?"

Robert pointed to the report, "Did this 5.7% growth and market share rebound just fall from the sky?"
I need the reason!

The specific reasons!
Launch an emergency investigation immediately!
"Use all available resources! I need to know what magic Coca-Cola used within 48 hours!"

“Yes!” Mark and Lisa immediately agreed and got up to leave quickly.

Robert leaned back in his chair, his brow furrowed.

This kind of silent overtaking is the most unsettling.

This means that competitors may have found an effective way to directly influence consumer purchasing decisions without resorting to massive advertising campaigns.

Pepsi remained completely unaware of this tactic.

With PepsiCo's massive sales channel team operating at high speed.

Within just a few hours, preliminary investigation results were available.

Mark and Lisa walked back into Robert's office with the hastily prepared report, their expressions somewhat strange.

“Robert, we’ve made a discovery.” Mark opened the report and reported to Robert, “A keyword we didn’t expect has appeared in the channel feedback and consumer interviews.”

"What keywords?" Robert immediately pressed.

“Bottle caps,” Mark said, pointing to the summary data in the report, “Coca-Cola bottle caps.”

Robert was taken aback: "Bottle cap?"
What's wrong with the bottle cap?
Coca-Cola has changed its packaging?

“No, it’s not the packaging design.” Mark shook his head, equally incredulous. “It’s the user experience of the bottle cap.”

He turned to the next page of the report: "Purchasing managers from several supermarket and convenience store chains reported that in recent months, especially after the weather warmed up, customer complaints about the difficulty in unscrewing Coca-Cola glass bottle caps have decreased significantly."

Some customers have even mentioned that Coca-Cola bottle caps are now "easier to unscrew," "don't slip," and "even the elderly and children can open them easily."

Lisa added, "Our street interviews also yielded similar feedback."

Some consumers, especially women and those over middle age, mentioned that "the Coca-Cola cap seems easier to open recently" and "I don't have to worry about not being able to unscrew it or hurting my hand anymore."

While this wasn't their primary reason for choosing Coca-Cola, it was certainly a frequently mentioned 'small advantage'.

Robert was stunned: "The bottle cap... is easier to open? Just because of that?"

He found it utterly absurd.

Pepsi and Coca-Cola have been locked in a century-long battle, investing billions of dollars in branding, flavors, distribution channels, and advertising. Could the key to their ultimate victory be the experience of opening a small bottle cap?
“If it were just sporadic feedback, we could consider it a coincidence,” Mark said, his expression turning serious. “But cross-validation of the data shows that this phenomenon is widespread.”

Furthermore, we compared consumer feedback from PepsiCo during the same period.

He paused, his voice low: "Complaints about Pepsi bottle caps being 'difficult to twist,' 'slippery,' or 'requiring tools or towels' have increased by 15% year-on-year."

His words plunged the office into silence.

Robert finally realized the seriousness of the problem.

In the beverage industry, especially in a highly homogenized market like carbonated drinks, any small improvement in user experience can be the last straw that breaks the camel's back.

The ease of opening a bottle cap may seem insignificant, but it directly affects the convenience and enjoyment consumers experience every time they use it.

Over time, this can subtly change consumption habits.

"Investigate!" Robert jumped to his feet. "Investigate immediately! What improvements have been made to Coca-Cola's bottle caps?"
Who is the supplier?
Where does the technology come from?

Why do we know nothing about it?

Once the direction of the investigation is clear, the efficiency increases dramatically.

Soon, a name surfaced.

When Mark placed a brief report on Robert's desk bearing the words "Chen Ji Food Co., Ltd." and "Patent for Diamond-Shaped Anti-Slip Bottle Cap," Robert's face instantly turned extremely ugly.

“Chen’s? That small company on Hong Kong Island?” Robert practically spat out the words through gritted teeth.

He remembered.

At the end of last year, there was indeed a Hong Kong company called "Chan Kee" that possessed a patented technology that could improve the bottle cap opening experience.

At that time, the vice president of the international department even went to Hong Kong Island to negotiate on patent licensing. Later, the Hong Kong Island company of "Chen Ji" wanted Pepsi to open up its sales channels to sell their products, but the headquarters refused.

At the time, an executive joked, "An unknown company from Hong Kong Island actually wants to use our sales channels?"
It's a huge joke!"

However, reality gave them a resounding slap in the face.

Coca-Cola clearly seized this opportunity and quickly applied this patented technology to its products.

"Contact Chen's Company immediately!" Robert practically roared. "No! Send someone directly to Hong Kong Island!"

I need to know if we have any chance of getting the authorization back!
Or, can our R&D department come up with an alternative solution in a short period of time?

Just then, Robert's secretary knocked on the door and came in, saying, "Mr. Miller, I found the R&D department's report from the end of last year."

The document states that they searched relevant patent information and found that Chen Ji Foods' 'diamond-shaped anti-slip bottle cap patent' has been registered in major markets around the world, including the United States.

The patent protection scope is written very meticulously and broadly, covering the main anti-slip structures and application methods.

After evaluation, they determined that designing a new bottle cap that achieves the same effect without infringing on the patent in the short term would be extremely difficult, and would require at least eighteen months of research and development.

Upon hearing this, Robert swayed slightly before slumping back into his chair.

A strong sense of regret and frustration welled up inside me.

Because of their initial arrogance and contempt, they missed out on a small but potentially game-changing key technology.

Now, this technology is being used by adversaries to severely damage themselves.

He could almost see countless consumers standing in front of the shelves, instinctively choosing Coca-Cola because of the convenience of that little bit of opening.

Little by little, the difference eventually manifests in these cold, hard quarterly reports.

"Send someone to Hong Kong Island immediately, no matter what, to try to make contact."

At the same time, the R&D department was instructed to put aside all secondary projects and focus all their efforts on developing anti-slip technology for bottle caps!
I refuse to believe that Pepsi would be stumped by a bottle cap!

But he knew in his heart that even if the R&D department said it would take eighteen months to develop, it would still take at least one or two months from design, testing, production line modification, and distribution.

During this period, Coca-Cola will continue to leverage this small advantage to erode Pepsi's market share. A storm triggered by underestimation is quietly sweeping through Pepsi's headquarters.

Hong Kong Island.

The top floor of the Weiye Building.

Chen Bingwen is on a long-distance phone call with Ling Peiyi.

Over the phone, Ling Peiyi reported to him on the sales situation in the Japanese market in the first quarter.

Under the combined influence of advertising and the "buy one get one free" promotion.

According to preliminary estimates from Suntory's market research department, in the functional beverage sub-category, "Pulse's" market share has surged from almost zero at the beginning of its launch to approximately 38%.

Although it still lags behind Lipovitan, which holds approximately 62% of the market share, it has become a formidable challenger with extremely rapid growth momentum.

Lipovitan is clearly feeling immense pressure, and in addition to continuing its "buy two get one free" promotion.

They also increased advertising efforts, especially in subway and tram ads during commuting hours, and increased sales rebates for distribution channels.

However, according to Ling Peiyi's statistics, it is still not possible to effectively curb the upward trend of "pulse".

“Lipovitan is in a very passive position right now,” Ling Peiyi said with a smile. “Their product image is more ‘medicinal,’ and they mainly rely on traditional channels and loyal customers.”

Our "Pulse" is more fashionable and closer to young people. With the endorsement of Jackie Chan and Momoe Yamaguchi, as well as the incentive of the "buy one get one free" campaign, we have a clear advantage in attracting new customers and competing for incremental market share.

Suntory's confidence has greatly increased, and it has proactively proposed to expand its procurement plan for the next quarter, hoping to explore the possibility of distributing its products to a wider range of third- and fourth-tier cities and the catering industry.

Chen Bingwen listened quietly, a satisfied smile on his face.

The success in the Japanese market not only brought huge profits.

More importantly, it thoroughly validated the effectiveness of the combined approach of "product innovation + celebrity endorsement + channel cooperation + creative promotion".

He also greatly admired Ling Peiyi's execution, market insight, and adaptability.

"Director Ling, you did an excellent job!" Chen Bingwen affirmed.

"Thank you, Mr. Chen! It's mainly because your strategy was well-formulated; we were just carrying it out."

Ling Peiyi answered modestly, while also giving Chen Bingwen a small compliment.

"Alright, enough with the formalities."

Chen Bingwen then changed the subject, explaining, "Although the Japanese market now has a strong competitor in health products, overall sales have gotten back on track. The next step is to consolidate our gains, refine our operations, and expand steadily."

"I'm considering having Zhao Liming succeed you, to be responsible for the day-to-day operations and future development of the Japanese market."

He has experience in channel management and a calm personality, making him suitable for the tasks at this stage.

Hand over your work to him and make sure he gets familiar with the situation as soon as possible, especially maintaining good relationships with key partners like Suntory and Dongbao Donghe.

Ling Peiyi on the other end of the phone was clearly a little surprised, but quickly agreed: "Okay, I will organize all the information as soon as possible and hand it over to Zhao Liming."

“Yes,” Chen Bingwen nodded, “After the handover is completed, you will return to Hong Kong Island.”

There's more important work waiting for you here.

Ling Peiyi's heart skipped a beat, and she vaguely guessed that it might be related to the market development that Chen Bingwen had mentioned to her before.

He immediately replied, "Yes, Mr. Chen! I will complete the handover as soon as possible and return to headquarters!"

With Wattley officially launching its background investigation of Watsons and the imminent signing of a HK$300 million syndicated loan agreement.

The two important projects, the acquisition of Watsons and the backdoor listing, have entered a critical stage, requiring Chen Bingwen to devote all his energy to them.

The reason for recalling Ling Peiyi was to prepare for this crucial upcoming battle.

After hanging up the phone, Chen Bingwen prepared to go to the R&D center to check on the progress of the paper cup milk tea development.

Just then, Vincent Fang walked in with a faxed document in hand, looking somewhat strange.

"Mr. Chen, I just received a fax from the United States, signed by PepsiCo."

They hope to send representatives to Hong Kong Island soon to have in-depth discussions with us regarding the licensing of the diamond-shaped anti-slip bottle cap patent.

Upon hearing this, Chen Bingwen was slightly taken aback, then took the fax and quickly glanced through it.

The fax was politely and officially worded, but the urgency it conveyed was hard to completely conceal.

"Pepsi?" Chen Bingwen put down the fax, a meaningful smile playing on his lips. "That's a bit unexpected."

At the end of last year, they refused to open the channels to us, causing negotiations to break down. Now they want to renegotiate?

Fang Wenshan nodded: "It seems that the situation has changed now."

Pepsi's sudden initiative to contact them, a complete 180-degree turn in attitude, must have a reason.

Combining the scattered information gathered from previous trial sales channels in North America with the perpetual rivalry between Pepsi and Coca-Cola, a clear deduction formed in Chen Bingwen's mind.

"It seems that the effect of our bottle cap patent on Coca-Cola products is even more significant than expected."

Chen Bingwen stated with great certainty, "It's significant enough to make PepsiCo feel the pinch, and it may even affect their market share."

Otherwise, given Pepsi's stature, they would never have taken the initiative to come back to us, a 'small Hong Kong company' they once looked down upon.

Fang Wenshan's eyes lit up: "Mr. Chen, do you mean that Coca-Cola put pressure on Pepsi's market performance after using our bottle caps?"

“That’s the most reasonable explanation,” Chen Bingwen said with a smile. “And the pressure is considerable.”

Otherwise, they wouldn't have been in such a hurry to send someone over.

Fang Wenshan immediately realized, "That's right! That must be it."

Chen Bingwen walked to the huge world map and pointed to the North American and European tectonic plates. "Last time we negotiated, we just wanted to use their channels to sell our sugar water and 'Pulse' (a popular energy drink), but they refused. But this time, the situation is completely different."

He turned around and said, "This time, they've come to save their own lives!"
It's to stop the bleeding!

It's to reclaim the market share that Coca-Cola stole!

"Therefore, the price offered in this negotiation will definitely not be the same as last time."

Chen Bingwen sneered and said, "A licensing fee of several hundred thousand US dollars?"

What percentage commission?

Open up some channels?
That's too cheap for them.

This time, I'm not asking for a small amount of money, nor am I looking for simple access to distribution channels.

He looked at Vincent Fang and said, "This time, I want to use the bottle cap patent to exchange for our 'Pulse' energy drink and future new products, so that we can fully enter Pepsi's core sales network in North America and Europe."

What we need is not temporary channels, but long-term, stable, and prioritized channel cooperation.

If necessary, we can explore establishing a joint venture to operate our products.

Fang Wenshan felt a chill run down his spine. Chen Bingwen was trying to take advantage of Bai Shi's illness to kill him!
This is no longer a simple patent licensing negotiation, but a blatant strategic blackmail, targeting PepsiCo's golden sales channels that it has cultivated for decades and that span North America and Europe!
He took a deep breath. "Mr. Chen, will Pepsi agree to this?"

This is tantamount to letting them open the door to the North American market for us, raising a tiger to threaten our own future!

Fang Wenshan felt that the idea was too bold, even a bit crazy.

“They have no choice,” Chen Bingwen said with unusual firmness. “Coca-Cola is using our bottle caps as weapons, chipping away at their market share one shot at a time.”

With each passing day, Pepsi's wound bleeds for another day.

Since they've come to us for negotiations again, it means they can't break through our patent matrix barrier, at least technically, in the short term.

Rather than watching Coca-Cola continue to expand its gains and completely suppress itself, it's better to just stand by and watch.

Or should we temporarily set aside our pride, obtain our patent license, and fight against Coca-Cola, our mortal enemy?

"Pepsi executives are not fools."

They'll do the math.

In the short term, it means that channels have been opened to us;

In the long run, however, this is their only chance to stabilize their base and even open up a second front.

Functional drinks and carbonated drinks are not complete substitutes; the market can coexist.

Pepsi is helping us, and in doing so, helping themselves find new growth curves and hedge against risks in the carbonated beverage market.

“I understand.” Fang Wenshan took a deep breath, trying to keep up with Chen Bingwen’s train of thought. “Then what’s our negotiation strategy?”

"The strategy is simple: be tough and leave no room for refusal."

(End of this chapter)