Three major convenience store chains have agreed to jointly develop and market soft drinks in cut procurement costs and to better compete with industry leader Seven-Eleven Japan Co., sources said Wednesday.
The three -- Lawson Inc., FamilyMart Co. and Circle K Sunkus Co. -- are ranked second, third and fourth in terms of market share in the convenience store sector, with a combined 21,000 shops.
The alliance is looking for an edge in its battle with Seven-Eleven Japan, which has 11,000 outlets, the sources said.
The companies aim to cut procurement and other costs and boost profit margins in soft drinks.
They will start marketing three new soft drinks in August on a trial basis by teaming up with Coca-Cola (Japan) Co. and two other beverage makers.
The drinks will sell in 500-ml plastic bottles and other sizes, the sources said.
The partners may expand their cooperation to include marketing of alcoholic beverages and processed food, depending on how successful the joint marketing of soft drinks is, the sources said
The three chains have fallen behind Seven-Eleven in terms of their profitability. The product development tieup is aimed at strengthening their bargaining power with suppliers and manufacturers.
Convenience store sales have been falling on a same-store basis for 22 months due to flat sales overall, combined with rapid growth in the number of stores. The market is now saturated.
Against this backdrop, Seven-Eleven has relied on its size and product development skills to consolidate its market leadership.
In contrast, smaller convenience store chains are struggling and having to rethink their strategies. Analysts say mergers may lie ahead as the industry goes through a shakeout.