Since 2013, it can be said that carbonated beverage companies have faced their darkest hour. As consumer tastes change, the overall beverage industry's sales continue to decline, with the carbonated beverage market being the hardest hit. In such a sluggish market, carbonated beverage manufacturers have been racking their brains to attract consumer attention, trying to get them to return to their former love for cola. In the past six years, Coca-Cola's sales have only grown by 8%, but PepsiCo has fared even worse than its old rival, with sales dropping by 9% over the same period. According to relevant data, in 2000, carbonated beverages held a 36% share of the beverage market, but by 2006 this had fallen to 30.69%, by 2010 to 22.34%, and by 2015 it had plummeted to 13.7%. In this market downturn, PepsiCo recently launched a customer loyalty program, while Coca-Cola had already begun implementing its total beverage strategy two years ago. Why have the once-glorious carbonated beverages fallen to this state? In fact, the global popularity of carbonated beverages is essentially a cultural spread. When cola was first invented, it was only popular in the United States and its neighboring countries. During the two World Wars, American soldiers brought these small glass-bottled items to the world. Later, American pop culture, especially punk culture, made eating fried chicken and drinking cola a fashion trend, driving the global craze for cola. According to the 2018 Accenture China Consumer Insights, fitness consumption has become one of the five major trends under the new consumption wave, with young people beginning to advocate fitness and healthy living. As people start pursuing healthy lifestyles, the past consumption patterns of high-sugar and unhealthy beverages have undergone a significant shift. More and more people are paying attention to their health, and many countries are considering imposing sugar taxes on high-sugar beverages. As a result, Coca-Cola, PepsiCo, and Dr Pepper Snapple, the three old rivals, seem to have made peace overnight, announcing they would reduce the total sugar content in their U.S. products by 25% by 2025. Moreover, in the face of poor Q2 earnings this year, PepsiCo launched a corresponding customer loyalty program, offering rebates (equivalent to a 10% price cut) to counter Coca-Cola's total beverage strategy. While it is undeniable that most consumers are very price-sensitive, and price cuts have indeed had some effect, this tactic seems to have been part of the "Pepsi Generation" marketing strategy in the early competition between Pepsi and Coca-Cola. But today, PepsiCo may find it difficult to replicate that miracle, partly because Coca-Cola no longer faces the same switching costs as before. At the same time, the market isn't being taken away by Coca-Cola; rather, the overall decline in the soda market is due to consumers' desire for health. It is understood that to participate in PepsiCo's "consumer loyalty program," consumers must first register as Pepcoin members, then purchase Pepsi beverages and Frito-Lay snacks marked with PepCoin, scan the barcodes on bottle caps and chip bags to earn up to 10% cash back, which can be withdrawn once the amount accumulates to $2. Interestingly, PepsiCo also established the position of Global Chief Commercial Officer in March this year to support the company's strategic priorities and growth agenda. It is understood that this role is primarily responsible for the company's long-term growth strategy, marketing, design, e-commerce, global R&D, and commercial output. Additionally, the beverages participating in this activity are not limited to cola, and Frito-Lay is also a PepsiCo company. Does this mean that PepsiCo's rebate strategy is merely a short-term tactic, with the core still serving the company's future growth strategy? As of now, although PepsiCo has improved profits by cutting expenses, whether this customer loyalty program can counter the pressure from rival Coca-Cola or achieve further goals, bringing PepsiCo sufficient revenue and time, remains unknown. Transformation under dual pressure of revenue and profit Unlike PepsiCo's approach of mainly cutting expenses to increase profits, Coca-Cola, facing the impact on carbonated beverages, began trying a user-centric product approach two years ago, continuously advancing its total beverage strategy. As Zhang Ximeng, author of "Chief Growth Officer," said: "The market has shifted from a seller's market to a buyer's market. Today's market is one that is user-centric, experience-driven, with changing demands and a greater need for customer loyalty." To this end, perhaps because the past CMO found it difficult to drive collaboration across departments to achieve company growth, Coca-Cola also abolished the CMO position two years ago and established the Chief Growth Officer (CGO) role. Unlike most CMOs who were responsible for marketing, according to Coca-Cola's announcement, the CGO will be responsible for managing corporate innovation, product development, and sales departments, including five strategic beverage business units. More critically, strategy, M&A, data, and technology departments will all report to the newly appointed CGO. Clearly, transformation cannot yield immediate results. Coca-Cola's full-year revenue in 2017 was only $35.41 billion, down 15% year-over-year; by 2018, revenue fell further to $31.856 billion, down 10% year-over-year. Not only did revenue decline, but net profit attributable to shareholders of the listed company was only $1.248 billion in 2018, a year-over-year drop of as much as 81%. But Coca-Cola has not given up its plan. The newly appointed CGO has indeed been able to strongly drive the total beverage strategy layout. Although 2018 seemed tough for Coca-Cola, by 2019, Coca-Cola still achieved growth in two consecutive quarters. In Q2, Coca-Cola's earnings significantly exceeded many financial experts' expectations, with revenue reaching $10 billion, up 6.1%, surpassing the market estimate of $9.6 to $9.9 billion. As people pursue healthy living, Coca-Cola has also begun targeted marketing in response to such market changes. Multiple earnings reports show that Coca-Cola is striving to transform into a multi-category beverage company, removing the "unhealthy carbonated beverage" label while diversifying its beverage products and promoting healthy eating. On one hand, Coca-Cola launched sugar-free Diet Coke and Coke Zero, reduced the sugar content in classic Coca-Cola, and introduced smaller cans, directly bringing over 3% growth to its soda beverages. Among them, zero-sugar Coca-Cola has achieved double-digit growth for seven consecutive quarters, and classic Coke has grown by over 4%. Additionally, the acquisition of British coffee chain Costa for $5.1 billion in 2018 gave Coca-Cola a ticket into the coffee market, and by the end of the year, it launched the new product "Coca-Cola Coffee" in 25 markets worldwide. According to previous reports, Coca-Cola will also start selling lemon-flavored sparkling wine nationwide in Japan this autumn, which was previously only sold in the Kyushu region, seemingly proving Coca-Cola's determination to formally enter the bottled sparkling wine market. In the second quarter, Coca-Cola successively launched sports drinks, Sprite Fiber+ cucumber-flavored soda, Sprite coconut soda, and tequila-flavored oolong tea in the Chinese market, further enriching its beverage offerings there. After this series of new moves, nearly 25% of Coca-Cola's revenue comes from new or reconfigured beverages, compared to 15% two years ago. Coca-Cola's Chairman and CEO James Quincey also stated: "The total beverage strategy drove strong market performance this quarter, allowing Coca-Cola to maintain a competitive advantage in this rapidly developing and dynamic industry." At the same time, Coca-Cola has been further promoting differentiated beverage flavors for different regional markets, striving to cater to local tastes, which has brought sustained growth in markets such as China, India, and ASEAN. Conclusion As the market changes, even companies that were once world-dominant must face the significant impact of shifts in consumer tastes, preferences, and consumption concepts. Currently, comparing the Q2 earnings of the two old rivals, Coca-Cola and PepsiCo, especially given the overall beverage market decline, Coca-Cola's sales and development momentum remain better than the industry average. Based on this, it is not surprising that PepsiCo launched a customer loyalty program. Clearly, with today's market changes, marketing has evidently become a core strategy serving company growth. The competition between the two beverage companies is more like a microcosm of the industry's broader transformation. Source: Morketing (ID: Morketing) Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet professional new media Dedicated to FMCG manufacturer and distributor transformation and channel digital solutions