Coke blow as Chinese block juice takeover

The march of Coca-Cola and American consumerism into China was stopped dead in its tracks today as the Chinese authorities blocked the US soft drinks giant's takeover of one of the country's best-loved domestic brands.

The Ministry of Commerce vetoed Coca-Cola's £2.3 billion takeover offer for China Huiyuan Juice Group, saying it feared Coke's takeover would build up a "dominant position" in the country.

"This could force consumers to pay higher prices and have a less variety of products," it added.

Analysts said the move smacked of protectionism, and augured ill for other Western businesses trying to expand in the Chinese market.

Coke's move on China Huiyuan had been seen as an audacious bid to outsmart arch-rival PepsiCo in China. Coke is already reckoned to have secured half the Chinese fizzy drinks market.

It is also estimated to have already built up abut 12% of the fruit-juice and vegetable-juice market, and a takeover of China Huiyuan would have boosted that to over a fifth.

Coke' sales in China have been rising by about 20% a year while sales in the US have been falling. Chief executive Muhtar Kent recently unveiled plans to spend £2 billion expanding in China over the next three years - more than the firm has spent there in the past 30 years.