Coca-Cola announced plans in March to release its first-ever alcoholic drink, doing so in Japan – a country where alcopops (known as chu-hi in Japanese) are very popular. With lower alcohol content and sugary flavour, chu-hi are particular favourites with female drinkers and the ready-to-drink cocktail market has almost doubled since 2001, Nikkei reports.
Hoping to repeat some of the success of Japanese alcopops, a Chinese company has marketed its own fruit-based cocktail to great fanfare. The problem? The packaging is shockingly similar to Japanese beverage giant Suntory’s Horoyoi label.
Last week, Beijing News reported that Suntory had taken legal action against Rio, the Chinese firm in question, for copyright infringement and unfair competition. Suntory claims that Rio’s Weixun line, which comes in six flavours including peach, lemon and grape, shows “substantial similarity” to its Horoyoi range in design concept and visual appearance. Although Suntory is yet to launch its Horoyoi label in China, the lawsuit, which was filed in Beijing, demands Rmb3 million ($472,738) in compensation.
At first glance, the packaging of the Rio products looks almost identical to Horoyoi. Even the name Weixun is the literal translation of Horoyoi, which, in Japanese, means “slightly drunk” or “tipsy”, says Sohu, a portal.
In fact, as one Chinese netizen helpfully points out, apart from the wording on the cans (one in Japanese and the other in Chinese) there is virtually no difference in the presentation of the two products. “From packaging to advertising, it is clear that Rio blatantly ripped off Horoyoi,” he pointed out. “It is so egregious that it is despicable,” another netizen agreed.
Meanwhile, a Rio representative told Beijing News that the company has not suspended sales of the products in question. Rio Weixun has been a strong seller for Shanghai Bairun, Rio’s parent company, since its release last year. With alcohol content of just 3%, the fruity cocktails are easy to drink and Bairun told analysts that production volumes have actually been ramped up.
The Chinese drinks maker could certainly use a boost. Rio, which dominated the ready-to-drink cocktail sector with flavours like “blue rose and whisky” five years ago, has struggled to retain its momentum in the competitive sector. Sales started to slow in the second half of 2015 and some of its distributors were so anxious to offload inventories that they sold them at a loss.
“When Rio was very hot, a case of 24 bottles could fetch as much as Rmb240. Later, during the market downturn, we would be lucky to get Rmb200, and the profits were very thin. By the end of 2015, we were just dumping the goods. Sometimes we lost Rmb30 to Rmb40 a case, so the more we sold, the more we lost. Nevertheless, if you kept the inventory, you’d have lost even more,” one distributor told National Business Daily.
By 2016, Rio’s sales were Rmb8.1 billion, a 63% decrease from the same period a year earlier. That year, Bairun reported a net loss of Rmb147 million. After drastic cost-cutting, the company finally reined in its losses and last year it reported a net profit of Rmb137 million, although that was still well below its forecasts of Rmb706 million.
The biggest challenge for Rio was competition from rivals eager to repeat its initial successes. The new entrants included Blackcow Food, a maker of soy and grain products, which released its own brand of bottled cocktails at the end of 2014. Baijiu maker Wuliangye and juice maker Huiyuan also tried their luck (see WiC361).
“The problem with so many manufacturers entering the alcopop market is that it has not only distracted consumers but also created a situation where supply far outpaced demand,” reckons National Business Daily.
Barriers to entry in the alcopop sector remain low. Virtually every spirits maker can make bottled cocktails by adding fruit juice to the alcohol. And with so many brands competing in the segment, cultivating brand loyalty is difficult.
Suntory’s lawsuit, which is set to be heard later this year, could turn out to be another headache for Rio’s bosses.
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