UK: Europe loses its fizz as carbonates battle with bottled water
Figures released by UK-based market research company Canadean show that in the last 10 years the European market share for soft drinks overall has risen from 29% to 37%.
Share of Throat 1989
Share of Throat 1999
But the carbonates soft drinks sector has dropped by 4% to 34%, while in the same period, the bottled water sector increased its market share in Europe by 4% to 42%.
Share of Throat 1989
Share of Throat 1999
Coke claims that it remains comfortable with its 11% European sales increase, but the world's no.1 soft drink company has struggled to recover completely from last year's contamination scare, leaving a serious impact on the company's earnings.
Coca-Cola was forced to recall and destroy millions of cans and bottles from Belgium, France and other European countries, when hundreds of people fell ill after consuming the soft drink.
While Coke was struggling to regain consumer confidence, during one of its biggest product recalls in the company's 114 year history, Perrier Vittel, Nestle Group's water division, was concentrating on three key strategies:
- To increase the influence of its major world brands of natural mineral waters;
- To strengthen its local operations with a dynamic development policy based on the principle of national brands; and
- To develop, under the Nestle brand, a bottled water concept for the broadest possible target that meets the specific needs of different regions in the world.
Nestle also launched Pure Life (safe water) into developing countries and Aquarel completed the company's portfolio of 69 brands, being the first pan European brand of water to be introduced into the market.
When Douglas Daft was appointed CEO of Coca-Cola, the company adopted his "think local, act local" policy. Decisions were no longer made out of Atlanta and Europe is no longer a single division. Instead it has been broken into 10 different geographic groups.
Management has more freedom and new flavours have been launched "locally". A pear flavoured drink is now on sale in Turkey and a berry flavoured Fanta is available in Germany.
Nobody can dispute Coke has worked hard to accomplish a working "think local, act local" strategy in Europe and it has re-gained some consumer confidence as well as some share of the European market. But industry sources say that while the company's efforts have improved its reputation, sales are still not meeting expectations.
West Europe: Soft Drinks Demand Forecast 2000-2010 by Major Category
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|Packaged Water|| |
|Juice & Nectars|| |
|Other Soft Drinks|| |
Source: Global Soft Drinks in 2010 Canadean October 2000
Aggressive marketing, hard hitting advertising campaigns and brand awareness are possibly the reasons for these changes in market trends, or has the fizz gone out of carbonates as consumers become more health conscious.
With the health and purity image of still water, bottled water is expected to continue gaining on the carbonate sector and opportunities for branded products are proving strong for Perrier brands. The global "think local, act local" policy works, but it is clear from today with the sacking of John Sechi, president of Coca-Cola in Germany that to think local, you need to be local. Is it time for Coke to go back to basics in Europe?
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