---
title: "Coca-Cola's Dual Decline Traps It in a Dilemma: The Era of the Single Blockbuster Product Is Gone for Good"
description: "Coca-Cola's 2016 revenue and profit both fell, marking its fourth consecutive year of decline, reflecting the inevitable decline of carbonated drinks. The FMCG market is shifting toward emotional and personalized consumption, making it unlikely for new blockbuster products to emerge, as the market fragments into multiple tiers."
author: "孙吉正"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-02-27"
language: "en"
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# Coca-Cola's Dual Decline Traps It in a Dilemma: The Era of the Single Blockbuster Product Is Gone for Good

> Coca-Cola's 2016 revenue and profit both fell, marking its fourth consecutive year of decline, reflecting the inevitable decline of carbonated drinks. The FMCG market is shifting toward emotional and personalized consumption, making it unlikely for new blockbuster products to emerge, as the market fragments into multiple tiers.

**Click the image for details**
FMCG attributes are beginning to show a trend of emotional change, which is precisely related to the fast pace of modern society and aligns with the cultural and psychological trends of sensory, noisy, and superficial consumption.
**The decline of carbonated drinks has become an inevitable trend.** Recently, Coca-Cola released its latest financial report for 2016, which showed that both revenue and profit declined in 2016. Revenue was $41.863 billion, down 5.49% year-on-year; net profit was $6.527 billion, down 11.21% year-on-year. This is the fourth consecutive year of declining performance for Coca-Cola.
"The Chinese beverage market is undergoing a fission of consumption patterns. In the future, the probability of a single blockbuster product emerging is very slim. Instead, products will meet the emotional and personalized needs of the younger generation, which will also lead to frequent 'explosive hits' in the beverage market, while 'evergreen' products will be hard to come by," said brand marketing expert Lu Shengzhen to a reporter from China Business Journal.
**The Blockbuster Product Dilemma**
In 2012, Coca-Cola's revenue peaked at $48 billion, but then sales declined by about $6 billion over five years.
Similarly, Coca-Cola's old rival PepsiCo also faced declining performance. On the evening of February 11, PepsiCo released its fourth-quarter and full-year financial report for fiscal 2016. The report showed that PepsiCo's fourth-quarter net revenue was $19.948 billion, down 1% from $20.118 billion in the same period of 2015.
Regarding the decline in performance, Coca-Cola responded that it was due to the company's global bottling business restructuring plan, which transferred these businesses to franchise partners, thereby reducing the company's profit and sales revenue. In 2017, these impacts will continue until the bottling restructuring is completed, and the largest part of this plan will be completed.
Zhu Danpeng, a commentator on China's food industry, told a reporter from China Business Journal: **In the context of consumption upgrading, a single blockbuster product is difficult to simultaneously meet the five tiers into which the Chinese beverage market is gradually dividing**: ultra-high-end, high-end, mid-range, mid-low-end, and low-end. This makes it very unlikely for new blockbuster products to emerge in the future, while existing blockbuster products are also experiencing sluggish growth. The dilemma of blockbuster products is a result of precise market segmentation.
Coca-Cola has also realized that relying solely on a traditional product will make it difficult to achieve healthy market development in the future, especially in the carbonated beverage market, where high sugar content has always been criticized by consumers. At a Coca-Cola executive meeting, the company proposed to implement a "One Brand" strategy globally, **where original Coca-Cola, Coca-Cola Life, Coke Zero, and Diet Coke will no longer operate as independent sub-brands. That is, in future advertising, marketing, and brand strategy, the four products will be integrated into one product operation.**
Senior Coca-Cola executives said of this adjustment: "Compared to profit, we place more emphasis on multi-form media growth and marketing efficiency." Zhu Danpeng analyzed this, saying that products like Coke Zero and Diet Coke do not contribute significantly to Coca-Cola's overall business. In the context of an overall weak carbonated beverage market, integrating carbonated beverage products is to further save and improve operational and marketing costs, thereby increasing overall profit margins. However, it also indirectly confirms that the decline of the carbonated beverage market is a trend that is difficult to reverse. Coca-Cola hopes to present the same product in diverse forms to meet consumer needs.
Regarding the blockbuster product model, Lu Shengzhen analyzed that the advantage of the blockbuster product model is achieving production scale through standardization, lowering costs through scale production, and winning by volume. This allows companies to concentrate resources on a single field, forming dual competitive advantages in brand and channels, and even achieving a monopoly position.
At the same time, the blockbuster product strategy also entails more risks, and its drawbacks are equally noteworthy. After a period, blockbuster products will encounter growth bottlenecks. The emergence of a blockbuster product often requires the company to concentrate all resources for cultivation and promotion. Especially in recent years, the beverage industry has launched a blockbuster product every year, but once a product does not fit the market, it may lead to the failure of the year's plan. Lu Shengzhen said: For example, Wahaha launched the functional beverage blockbuster product Gewasi in 2013. According to a report by China Times, due to the dispute over the authenticity of Gewasi's knockoff and poor market terminal sales response, the product quickly declined. To ensure the success of this blockbuster product, Wahaha reportedly spent 500 million yuan in advertising expenses in the year of its launch.
At the same time, even mature super blockbuster products cannot guarantee eternal popularity, especially when current consumption habits are often changed by a trend. This is true even for brands that are deeply rooted in consumers' minds. The sluggish growth of Coca-Cola and PepsiCo due to their unhealthy labels illustrates this point. The experts mentioned above pointed out that once there are signs of significant market adjustment, if there are no substitute products to follow up during this period, the blockbuster product may directly fall from the first tier to the second or third tier, or even disappear.
**Is the Era of Emotional 'Explosive Hits' Coming?**
**"The dilemma of the blockbuster product model also proves that China's beverage market is moving toward a consumption concept that subverts brand loyalty, showing a general trend where products must satisfy, cater to, and cleverly exploit certain consumer psychology."** Lu Shengzhen told reporters that FMCG attributes are beginning to show a trend of emotional change, which is precisely related to the fast pace of modern society and aligns with the cultural and psychological trends of sensory, noisy, and superficial consumption.
When reporters visited several convenience stores in Beijing, a store clerk told reporters that recently, "Tea π" has been purchased in large quantities, while "Hai Zhi Yan" and "Xiao Ming Tong Xue" are not as popular as before.
A distributor from Xuzhou told reporters that in the tea and juice beverage market, the momentum of "Hai Zhi Yan" and "Xiao Ming Tong Xue" is much weaker than before. On the one hand, the support from manufacturers is not as strong as before; on the other hand, the rise of "Tea π" in the second half of the year has also caused the shipment volume of the former to decline significantly.
Lu Shengzhen's view on this is that because the psychological needs for lifestyle quality and labeling in beverage products are becoming increasingly weak, the entire product is shifting toward emotional filling. Emotional products themselves are fleeting. For example, "Xiao Ming Tong Xue" uses quotation-style and personified beverage products, but this trend will not last long, and it is difficult to produce the blockbuster products that sold well for over a decade in the past.
Reporters noted that although Coca-Cola's overall performance declined, small-pack and low-sugar sodas performed relatively well. In the fourth quarter of 2016, the share of small-pack sodas increased by nearly 10%, while the share of sugar-free cola gradually grew in the second half of the year. Coca-Cola China told reporters that Coke Zero and Diet Coke will update their packaging, and Coke Zero will be renamed "Coca-Cola Zero Sugar" to emphasize its sugar-free feature.
Coca-Cola's strengthening of low-sugar product marketing is partly to cater to market trends and partly to show a diversified development trend. **Current beverage consumption demand is beginning to show trends of changeability, fragmentation, and multi-directionality. Emotional and personalized factors have become the guiding standards in the current beverage market, which is also the main reason why 'explosive hits' have gained consumer favor in recent years, Lu Shengzhen told reporters.**
Regarding the future direction of the beverage market, the industry experts mentioned above believe that for beverage companies, product development must keep up with changing trends. They should organize specialized R&D institutions to conduct strategic research on possible market trends and quickly launch corresponding products to respond to rapid market changes. Secondly, even such follow-up R&D requires careful judgment, exquisite packaging, and meticulous channel promotion. Companies cannot lose patience in product cultivation and market farming because of speed.
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