Comment - Soft Drinks & Water - 4-MEI Inviting 'New Coke' Repeat?
Earlier this month, it was announced that The Coca-Cola Co and PepsiCo have been forced to alter their cola ingredients in order to avoid having to add cancer-warning labels to their US packaging. This situation has resulted from a single laboratory study undertaken on rodents that isolated a particular unfavourable ingredient. The culprit in question is 4-methylimidazole (4-MEI), which gives the drink its caramel colour.
Earlier this year, as a result of the study, the state of California added 4-methylimidazole to its official list of product ingredients that might cause cancer whilst setting safe (lower) usage levels for the chemical in cola. This is despite the fact that a human would reportedly have to drink around 3,000 cans of the products in question every day to equal the intake of 4-MEI given to the rats in the study. Under the state's law, Coca-Cola and PepsiCo would have to put cancer warning labels on their bottles and cans alerting the public to the possible risk if they were to continue with their existing cola recipes. This is considered too off-putting to many customers, so the two multinationals have decided instead to reduce the amount of 4-MEI in their colas.
Whilst it is California that has outlined the potential hazard, new versions of Coke and Pepsi are to be rolled out across the rest of America in order to streamline manufacturing processes and simplify the supply chain. Coca-Cola is also said to be planning to introduce the new formula into neighbouring Canada. Whether its rival will follow suit is not yet certain.
Meanwhile, the European Food Safety Authority, which assesses the risk of food and drink across the EU, does not believe the ingredient poses any real danger. As a result there is no reformulation currently planned this side of the Atlantic.
However this could well change. The shock waves are already spreading out globally with Coca-Cola Sabco, the Mozambican branch of Coca-Cola, recently having to deny that there is any chance that its soft drinks can cause cancer. Nonetheless, a Coca-Cola representative in South Africa has apparently told reporters that the US changes would also take place in South Africa. The two may well decide to go the whole hog and launch the new colas on a global level. That could prove an interesting watershed in the future of the two cola giants.
It was in April 1985 that Coca-Cola had previously changed its cola formula, referring to it as 'New Coke'. The move was an attempt to re-energise both the brand and the lethargic cola segment of the CSD category in the US at the time. It was the first formula change in 99 years (if you ignore the reputed removal of trace elements of cocaine from the original formula in 1903).
Unfortunately, the move 27 years ago didn’t go down too well with consumers. It was a major and expensive marketing disaster that badly bruised the Coke brand. Sales slumped, revenues suffered and people complained in their thousands whilst hoarding cases of original Coke. The earlier formulation was resurrected, as Coca-Cola Classic, in July 1985, just three months after the introduction of the new formula. New Coke, or Coca-Cola II as it was subsequently called, subsequently fizzled out of existence.
What are the implications, then, of the latest plans to alter the recipes of the two leading cola brands? The basic formulation and taste are supposedly to stay unchanged. Indeed, Coca-Cola is claiming that its recipe is remaining intact. But will the public accept this or will they discover subtle differences, real or imagined, that are reflected in their taste buds?
Could we see another episode of consumers stockpiling the old whilst boycotting the new?
And, what of the alternatives? Nothing much, if anything, is being heard about competing cola brands that may be content to accept Californian cancer warnings on their packaging. Coca-Cola and Pepsi currently dominate the US cola category but they still have their competitors - Polar, RC and Shasta colas to name but three. At present such brands carry little weight in the US market but could forthcoming events see a significant change in the status quo?
If only one of Coca-Cola or Pepsi were adopting the new guidelines for 4-MEI, then we might well see a switching of consumer camps from one cola giant to the other. With both of them following the same tack, any disgruntled consumer has no option but to look beyond the two mega-brands. If public discontent spills out onto the global plain we could see brands like Big Cola, which has been making waves in a number of Latin American and Asian markets, soaking up volume from the two cola giants. Or perhaps local brands, such as Jolly Cola in Denmark, will recover lost ground and once again become national favourites. Coca-Cola and PepsiCo market shares could be irrevocably hit, as consumers shift their brand preferences. Alternatively, the move away from carbonates in general could be accelerated.
Can either Coca-Cola or PepsiCo really afford to take the risk of losing a considerable chunk of a fickle consumer base, in order to avoid a health warning in just one US state? Or, will we see a backtracking as with Coca-Cola in 1985?
In any case, the real health risk of cola, as with carbonates in general, is not minuscule amounts of potentially hazardous chemicals, but rather the undeniable high sugar presence in the product and its implications in respect of child obesity.
- Focus - Pernod's YTD Performance by Region
- Comment - Will We Understand the Language of Rum?
- Is Diageo on the Brink of a Brain Drain?
- Focus - Heineken's Q1 Performance by Region
- just On Call - Pernod shifts Scotch focus in China
- CFO of Diageo's United Spirits stands down
- Pernod Ricard sees YTD recover as sales increase
- Remy Cointreau US head to step down
- Pernod Ricard unveils Havana Club ad campaign
- BrewDog launches GBP25m crowd-funding attempt
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Bacardi Limited - Strategy and SWOT Report
- ALDI 2015: Radically transforming Anglo Saxon grocery markets