Coca-Cola Co., faced with stagnant cola sales, is betting that at least a quarter of its sales growth will come from unusual flavours, bottled water, juices and other non-cola beverages as it caters more to regional tastes.
Fanta Wild Berries is one of those drinks Coca-Cola is touting as an example of thinking locally, a key plank in Chairman Douglas Daft’s plans for the world’s larger soft-drink maker. Introduced in Germany in December – and created by regional executives – it’s based on an obscure northern German dessert of strawberries, raspberries and cranberries called Rote Gruetze. Daft wants to raise sales of such beverages to 25 percent from the 5 percent Coke now sells.
Reaching that mark may be no small task. In the U.S. alone last year, more than 3,000 drinks were introduced and only a small percentage of them will survive, according to new-product tracker Marketing Intelligence Services. While Coca-Cola wants to own the hottest non-carbonated brands, it still wants to sell more than 1 billion servings of Coca-Cola Classic a day. The challenge could be a daunting one, analysts say.
“The Coca-Cola trademark is what got this company to the dance,” said Tom Pirko, president of New York-based BevMark LLC, a consulting firm, who adds that moving away from pushing the Coca-Cola brand could prove to be “a tremendous distraction.”
Coke says that Fanta Wild Berries is a hit: it sold 6.1 million cases in the first quarter and 5.4 million cases in the second quarter. Though that’s less than one percent of the company’s European sales, it’s the kind of growth that Daft wants. Atlanta-based Coca-Cola had $19.8 billion in total sales last year.
Company executives say it will take a decade to reach Daft’s 25 percent sale target, in part because of the large numbers of competitors already selling these alternative beverages. And Coca-Cola is adopting a riskier profile by selling new drinks that aren’t guaranteed winners. Though it’s pleased with sales of Fanta Wild Berries, some consumers are still wary.
“I don’t like it, as I find it too sweet and too sticky,” said Oliver Klein, a 25-year old economics student at the Community College of Mainz.
Coca-Cola needs to stimulate growth, though a gradual recovery in worldwide economies appears to be helping the business.
In the first quarter, Coke had back-to-back quarterly losses for the first time in at least nine years. In the second quarter, helped by better results in Europe, Asia and Latin America. Coke’s stock price has risen almost 50 percent from a 52-week low of 42 7/8 on March 14.
One area where Coke has been able to boost its growth rate has been from recently acquired brands. Last year, Coke bought the right from Cadbury Schweppes Plc to sell brands such as Canada Dry and Crush in Japan, Brazil and other countries. Also last year, Coca-Cola bought half of Inca Kola Peru SA, maker of IncaKola, the most popular soft drink in Peru.
Since taking over from Doug Ivester in February, Daft’s mantra to his marketers has been “think local, act local.” Daft wants decisions about new-product introductions, promotions and advertising made in the company’s markets around the world. Reuters