There is likely to be a wave of consolidations in China's beverages market as it responds to the USD 5 billion alliance of Tingyi and PepsiCo, according a report from Rabobank. Smaller, 'second tier' beverages players will be affected most by the new alliance, as they struggle to compete with Tingyi-PepsiCo's – as well as fellow beverages giants Coca Cola and Wahaha – established advantages in brand equity, distribution networks, supply chains and investment capital. Despite the dominance of Tingyi-PepsiCo, there are still solutions for smaller beverages businesses to earn profits. Rabobank expects smaller players to partner with each other to pool resources, as well as focus on specific subcategories or specific roles in the value chain. Opportunities exist for international second-tier players to partner with Chinese beverages companies with local know-how, particularly those based in smaller, fast growing cities.