Founded in 1886, Coca-Cola is the world's largest beverage company, selling over 500 brands in more than 200 countries. Its flagship carbonated soft drink is the world's best-selling soda, while other brands like Sprite, Fanta, Smart, Minute Maid, and Ice Dew are household names in China.
In recent years, under the health trend, high-sugar, high-calorie carbonated drinks have been criticized, with Coca-Cola even being named by the UK government as a culprit in diabetes and obesity. The carbonated beverage industry is struggling, and Coca-Cola's revenue and profits have been on an irreversible decline since 2011, hitting a 30-year low last year.
Facing global challenges and pressures, this world giant, which has weathered over 130 years of storms, must actively shed its "carbonated" label and seek more variables and strategic layouts.
Strategy 1: Frequent Acquisitions to Diversify Product Lines
Accelerating the diversification of beverage product types and gradually achieving business transformation is the primary choice for Coca-Cola's new CEO, James Quincey, to shed the "carbonated" label. And making large-scale acquisitions of ready-made product lines is clearly the shortcut.
1. Rapidly Growing Sparkling Water
Just a few days ago, Coca-Cola acquired Mexican sparkling water brand Topo Chico for $220 million to expand its sparkling water business.
The global popularity and growth momentum of sparkling water have attracted competition from Coca-Cola, Nestlé, and others. Topo Chico has a long history, rapid growth, and focuses on sugar-free, calorie-free, and low-additive products, with a loyal young consumer base in North America.
Coca-Cola clearly hopes Topo Chico will become the next star in the "$1 billion sales club."
2. High-Margin Premium Bottled Water
As early as 2002, Coca-Cola spent $2.64 billion to acquire Swiss independent premium bottled water brand Valser. And just this April, Valser quietly launched its Tmall flagship store in China, with 750ml bottles priced around 64 yuan.
In the past two years, China's premium bottled water market has grown at an annual rate of 80%, with average profit margins above 20%. The huge consumption gap in the Chinese market has attracted many foreign brands, such as VOSS introduced by Huabin.
Previously, Coca-Cola's water business in China relied mainly on Ice Dew and Pure Joy, priced at 1-2 yuan, and compared with domestic water-focused brands like Nongfu Spring, C'estbon, Master Kong, and Wahaha, it overlapped in price range and lacked advantages.
Valser, with its noble water source from Swiss Alpine snowmelt surface water, does enrich Coca-Cola's water product line in China. However, its ultra-high price may face the awkwardness of being too high-end for the market. After all, more established high-end water brands in China, such as Evian, San Pellegrino, and Perrier, are only priced at around ten-plus yuan.
For Valser to increase consumer desire, it may need to tell a good story first.
3. Intensifying Competition in Functional Drinks
Monster, which made a high-profile entry into China last year, also has 16.7% of its shares held by Coca-Cola.
The rapid growth and prospects of functional drinks are well known, especially with the unresolved Red Bull trademark licensing case in China, leaving the domestic functional drink market at a critical juncture of competition and restructuring.
As the second-largest functional drink in the US (after Red Bull), Monster has a avant-garde and alternative product image, highly favored by young people. In terms of promotion channels, it avoids highly competitive sports event sponsorships and instead chooses niche extreme sports with higher alignment. With its gradual launch across China, Monster, backed by Coca-Cola's capital, is a force to be reckoned with.
4. Plant-Based Protein Drinks as a New Health Trend
Plant-based protein drinks, considered a blue ocean, are also a key category Coca-Cola has been cultivating in recent years.
For example, the coconut water brand Zico, acquired in 2013, officially entered the Chinese market last year.
Previously, its old rival, Vita Coco, with similar packaging, had already achieved annual sales of 100 million yuan in 2015. Moreover, with "near-water drinks" just becoming popular in China, the coconut water market is still in its infancy, leaving significant room for Coca-Cola.
In addition to Zico coconut water, its juice brand Minute Maid launched a plant-based protein drink called "Newcomer" in 2017, available in coconut and sesame-walnut flavors, and has been launched in multiple regions.
5. Niche Ready-to-Drink Coffee
Coca-Cola seems to have a special fondness for the coffee category. As early as 2005, it formed a joint venture with Nestlé to produce and market coffee, but the partnership ended after just two years.
Undeterred, Coca-Cola invested $1.25 billion in 2014 to acquire a 10% stake in Keurig Green Mountain Coffee (GMCR), the leading single-cup coffee company in North America. However, Coca-Cola was more interested in collaborating with Green Mountain to promote a home carbonated beverage system called Keurig Cold. Imagine, who would want to clumsily brew a more expensive and unhealthy Coca-Cola at home?
Its own brand, Georgia Coffee, with over 40 years of history, is popular in Japan, South Korea, and Hong Kong, and is hailed as the "best-selling ready-to-drink coffee globally," already in the "$1 billion brand club." It officially entered the Chinese market in 2014.
Despite the rapid growth of China's ready-to-drink coffee market, Georgia's China launch, with two flavors tailored for Chinese consumers—"Creamy Latte" and "Rich Classic"—priced at 5-6 yuan, did not achieve the explosive success seen in neighboring Japan. Some analysts believe that compared to earlier entrants like Nestlé, Yaha, Kirin, and Brown, the lack of differentiated pricing strategy was a major misstep.
It remains to be seen whether Coca-Cola, with its deep attachment to the coffee market, will make bigger expansion moves in the future.
Strategy 2: Revamping Existing Products for Innovation
1. Major Investment in Brand Revitalization
Recently, Coca-Cola invested £10 million in brand revitalization for its Schweppes brand in the UK market, the largest investment in Schweppes' over 200-year history in the UK. (In China, Schweppes is known for its "+C Lemon Soda.")
Schweppes is also a member of Coca-Cola's "$1 billion brand club." The revitalization includes redesigning the classic packaging and bottle shape, and launching the Schweppes 1783 cocktail tonic water series to reclaim market share in the premium tonic water segment.
Previously, Schweppes held a 32.6% share of the UK cocktail mixer market, but facing the rise of new brands, Coca-Cola hopes this major investment will bring "a new beginning" for Schweppes.
2. Streamlining Cola Flavors and Discontinuing Diet Coke
In August this year, Coca-Cola announced it would stop producing Diet Coke, starting in the US, replacing it with "Coca-Cola Zero Sugar," developed over five years to taste closer to classic Coke.
Although the new product still uses aspartame as an artificial sweetener, the strategy of "either with sugar or without, but same taste" significantly reduces choice anxiety for Coca-Cola enthusiasts.
After all, for classic Coke flavor, even a slight difference can trigger resistance and dissatisfaction among loyal fans.
Therefore, for the mega-product of carbonated cola, to maintain stable and predictable returns, so-called "innovation" is more like "dancing in chains."
3. Classic Juice: Packaging and Content Upgrades
The sluggish Chinese consumer market, especially the double-digit decline in juice beverage business, is likely most distressing for Coca-Cola, particularly since Minute Maid Pulpy Orange was once so popular in China for many years.
Last year, Coca-Cola finally "operated" on this old brand, launching the sub-brand "Chuncui" series, changing the traditional slim bottle to a more playful "cartoon style," and upgrading the juice content from 10% to 30% high-concentration juice.
However, a year later, the painstaking upgrade seems to have received a lukewarm response. The reason may be that the domestic NFC juice market is maturing, and the diversified choices of high-concentration juice brands could be obstacles to improving Coca-Cola's juice sales.
4. A Variety of Cola Flavors
In fact, besides classic original cola, Coca-Cola often thinks outside the box, developing unique "quirky" flavors for different regions.
For example, the green Coca-Cola Life, only available in Argentina, not only changes color but also uses natural, healthy stevia leaves as a major selling point, though it wasn't widely promoted due to high costs.
Other flavors like cherry cola, ginger cola, garlic cola, vanilla cola, and popping candy cola... all challenge your imagination and taste buds, attracting a stream of adventurous consumers.
Additionally, there are diet cola for women, zero-sugar zero-calorie Coca-Cola Plus, and Karl Lagerfeld-designed Coca-Cola bottles with special bottle designs, couple cola that requires two bottles to open together, and creative caps with up to 16 designs, including water guns, brushes, pencil sharpeners... all attached to the bottles!
Beyond mind-boggling beverage flavors, Coca-Cola has also entered the fashion world, launching shoes, hats, hoodies, and T-shirts to maintain its presence.
Whether these actions weaken the "carbonated drink" stereotype is debatable, but they successfully prove that this is a design company delayed by selling beverages!
Strategy 3: When Desire Falls Short, Marketing Steps In
I forget which advertising professional said something like, "The lower the consumer desire for a product, the more it needs pervasive advertising." Reflecting on Coca-Cola's recent marketing moves, this truth becomes evident.
1. 3D Surround Experience in New York Streets
On August 8th this year, in Times Square, Manhattan, New York, Coca-Cola's "3D robotic billboard" composed of 1,760 independently moving LED screens successfully broke two Guinness World Records.
This billboard, claimed to be the world's first and largest, provides a three-dimensional, multi-sensory new experience for up to 300,000 tourists and pedestrians daily at the world's busiest intersection.
2. Celebrity Endorsements in China
Some say the only celebrities in China who can truly drive sales are Kris Wu, Lu Han, and TFBOYS.
In early 2017, to promote its newly launched ginger cola in China, Coca-Cola signed popular young star Lu Han, featuring him in TV ads, posters, online videos, "secret message bottle" marketing campaigns, and a series of public welfare activities, all with this star who has the affection of over 40 million fans.
I wonder if the fans, who just collectively "lost their love," will find a ginger cola adds a bit more spice to their taste?
3. Rainbow Limited Edition for Love
Just this past September, Coca-Cola quietly launched a limited edition in Australia with rainbow-colored hearts, to express and call for support for the legalization of same-sex marriage. Sales from this limited edition rainbow Coca-Cola will also go towards marriage equality in Australia.
The landmark billboard at Kings Cross in Sydney was also replaced with a striking rainbow graffiti artwork.
This marketing move of publicly speaking for love subtly embeds Coca-Cola's brand philosophy of inclusivity, diversity, respect for equality, and encouragement of the pursuit of happiness.
Clearly, in appealing to and unleashing people's pursuit and desire for freedom and happiness—the ultimate truth—Coca-Cola's decades of brand marketing have been both skilled and sincere. No wonder, no matter how terrible the ingredient list, we can't bring ourselves to hate that red logo and brown sugar water.
Conclusion
All major companies and brands, such as Coca-Cola, Nestlé, P&G, and domestic ones like Yili and Wahaha, inevitably face brand and sales decline in the face of changing times and shifting consumer groups.
What were once "stars" and "heroes" become today's constraints and biggest obstacles. The massive and complex organizational structures, and the defensive mindset of maintaining stability and volume, do not allow them to turn around quickly or take risks easily. Innovation, as the fundamental driver of development, also appears cautious, only "scratching the itch" in minor details.
For Coca-Cola, which started with carbonated drinks, it cannot completely abandon this pillar. Under this premise, the "decarbonation" path has only three routes: acquiring emerging brands to expand product categories, engaging in interesting marketing to stimulate consumer desire and sentiment, and making micro-innovations in more refined and specialized areas.
Coca-Cola's loyal fan, "stock god" Warren Buffett, once optimistically stated that for Coca-Cola, with over 130 years of history, even a hamburger could be managed well.
So, on the "decarbonation" road, whether it's pain or surprise, please give us another hundred years of anticipation!
Source: Beverage Distributor's Treasure Book (ID: yljxsbd)
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