Homo Sapiens

Hongsawaddy.

Yangon.

As the local Coca-Cola distributor, Mao Qian had been extremely troubled lately. For the past month, Coke sales had been plummeting.

July in Yangon was the hottest month of the year, which should have been the peak season for carbonated beverage sales.

But recently, instead of rising, Coke sales had fallen. This made Mao Qian antsy, so he quickly sent his subordinates to investigate.

In less than half a day, a few of his subordinates ran back, panting for breath.

One of the panting subordinates quickly said, "Boss, we found the reason."

"Quick, tell me! What’s going on?" Mao Qian asked anxiously.

"HUFF... HUFF... It’s because a low-priced cola has appeared on the market. Their 500-milliliter bottled cola is selling for only 300 kyat."

Myanmar Kyat is about one Huaguo yuan.

"What? You’ve got to be kidding me!" Mao Qian’s face paled in shock.

One of the subordinates took a dozen or so different drinks out of a bag and placed them on the table. "These are all beverages made by that company. Their prices are much lower than the market rate. Only a few of their real-juice drinks are priced higher, but even those are cheaper than comparable products."

Mao Qian picked up a 500-milliliter bottle of Qingye Cola and looked at his subordinate, completely bewildered. "A glass bottle? For 300 kyat?"

"Yes." The subordinate also found it hard to believe.

But the proof was right in front of them, an undeniable fact sitting on the table in the form of glass bottles.

Clinging to a final sliver of hope, Mao Qian twisted off the cap and took a sip. His expression darkened even more. This cola tasted almost identical to Coca-Cola and Pepsi.

The truth is, while a cola formula might have been a trade secret decades ago, now basically any beverage factory could whip up a similar-tasting product.

After all, technology for component analysis equipment had advanced by leaps and bounds. Trying to keep a formula secret was pure fantasy. Unless you never brought the product to market, anyone could just send a sample to a lab to get the basic ingredients. After a few experiments, they might not achieve a 100% perfect replication, but they could definitely imitate 90% of it.

A cola only has so many ingredients, after all.

Coca-Cola and Pepsi dominated the market because of their vast sales channels, raw material supply chains, and marketing.

Qingye Cola, lacking sales channels and marketing, had to rely on low production costs and price dumping.

In any case, the raw materials were chemical products—things like aspartame, high-fructose corn syrup, phosphoric acid, carbon dioxide, vitamin C, citric acid, and caramel color—all of which could be synthesized industrially.

A while ago, Liu Zhifan had even purchased a saccharification technology patent from a company in Huaguo. This technology used fungal fermentation to convert various starches into syrup.

Meanwhile, Li Qingye, over in Luzon, upgraded and modified this technology to maximize its cost-effectiveness. The production cost for various syrups was squeezed to the absolute minimum, to the point where they could even use plants like tree branches and grass leaves as raw materials.

Compete on production costs?

Qingye Group could run any other company into the ground.

In the Yangon market, the flavored juices and carbonated drinks produced by Qingye Group were beating the local beverage companies so badly they were crying for their mothers.

Mao Qian now had no choice but to face this situation.

Since the Coca-Cola Company controlled the pricing, Mao Qian himself had no way to drastically adjust the wholesale price. The prices were contractually bound, and as the distributor for the Yangon region, he still had a regional general distributor above him.

To avoid being driven into bankruptcy, Mao Qian quickly reported the matter to the general distributor for Hongsawaddy.

Soon, the Coca-Cola Company’s Hongsawaddy Branch began receiving complaints and reports from distributors all over Hongsawaddy.

Xia, the branch manager, put down the file in her hands and stared grimly at the dozen or so bottles arranged on her desk.

"Manager, according to the latest statistics, our company’s market share has dropped to 11%. Pepsi, Luxi, and Venus are in a similar situation," said the head of the marketing department, his expression equally grave.

Xia picked up a bottle of Qingye Cola, her expression as if she were staring at some terrifying beast. "This is horrifying. If this continues, we’re going to be driven out of the Hongsawaddy market."

Previously, in the Hongsawaddy beverage market, the Coca-Cola Company held a 37% share, Pepsi had 28%, and two local companies combined held about 20%.

Now, it had suddenly plummeted to just 11%, and the downward trend was continuing.

The head of marketing said helplessly, "Manager, we should report this to headquarters. We don’t have a bottling plant in Hongsawaddy. Our products are all shipped from South Asia. The competition can push their prices down to a third of ours. We can’t do that!"

With transportation and storage costs, plus the profit margins for distributors and retailers, it would be incredibly difficult for the Coca-Cola Company to match the competitor’s retail price.

After all, for Coca-Cola’s Hongsawaddy Branch, the factory price was about 50% of the retail price, and the distributors’ wholesale price was around 70-80% of the retail price.

To cut the retail price to one-third, well, she, Xia, didn’t know magic. Was she supposed to do business at a loss?

Take a 500-milliliter plastic bottle of Coke, for example. Sourcing it from the factory in South Asia, the cost per bottle was already around 280 Myanmar Kyat. The factory price for distributors was between 450 and 500 Myanmar Kyat, the distributors’ wholesale price to retailers was between 700 and 800 Myanmar Kyat, and the final retail price was between 900 and 1,000 Myanmar Kyat.

Even if they opened a local factory and imported the cola syrup, they could at best reduce the factory cost to about 25% of the current retail price.

After thinking it over and over, Xia saw no other way. She could only report it to headquarters immediately and let them deal with the headache.

America.

Atlanta.

The headquarters of the Coca-Cola Company.

While it was a bright, sunny noon in Southeast Asia in the Eastern Hemisphere, the moon hung high in the sky over North America in the Western Hemisphere.

Due to the time difference, although the Coca-Cola Company headquarters building was still brightly lit, very few employees were actually working.

It wasn’t until around ten o’clock the next morning that the president’s secretary received the report from the Hongsawaddy Branch. While life at headquarters was relatively comfortable, they still possessed the keen instincts expected of a major commercial enterprise.

After all, as the second-largest beverage company in the world, they would have gone bankrupt long ago if they lacked even that much business sense.

After hearing the report, President Keane’s expression immediately grew serious. "Qingye Group? A retail price of only one-third of ours, and they’re using all glass bottles? Can they even bear those costs? Even with a home-field advantage, that must be difficult, right?"

The secretary stood by, silent.

Keane looked up. "Lady Hanna, have Caesar and Frank come here."

"OK."

A short while later, Caesar, who was in charge of cost control, arrived first, followed closely by Frank, who handled global market research.

Keane said nothing, simply handing the file to the two men. "Take a look."

Confused, the two men quickly began flipping through the file.

A moment later, Caesar exclaimed, "Impossible! This is impossible! Are they insane? Even with recyclable glass bottles, there’s no way to cut costs to one-third."

Frank strongly agreed with Caesar. "This company is probably trying to use a low-price promotion to capture market share first, then they’ll slowly raise the price."

But Keane shook his head. "No, I don’t think so. Look closely at the photos. The packaging on those glass bottles is marked with a ’Suggested Retail Price: 300 Myanmar Kyat.’ This means they intend to sell at this price long-term."

"But can they really make money doing this?" Caesar racked his brain but couldn’t see how their competitor could possibly be turning a profit.

Keane gave a serious order. "This is an extremely important matter. Caesar, Frank, you will both leave for Hongsawaddy immediately to investigate this. I want to know how this company is keeping its costs so low."

Although they felt the president was making a mountain out of a molehill, neither of the men refused. ’After all,’ they thought, ’isn’t a business trip just a company-funded vacation?’

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