Blog: Coke must look outside of CSDs
Olly Wehring | 26 June 2006
You don’t get appointed to lead the world’s largest drinks company if you’re not confident that you can take the business forward.
Neville Isdell returned to Coca-Cola Co. two years ago to rescue the US soft drinks giant from declining growth and failed product launches. Isdell has urged company executives to draw up sharper marketing campaigns to revitalise the Coca-Cola brand and to focus more on innovation to reduce dependence on a declining carbonated soft drinks segment.
To some extent, Isdell’s strategy has worked. In April, the company posted a 10% rise in first-quarter profits with non-CSD volumes up 11%. Coke has been far more active on the innovation front, enjoying success with Coke Zero in Australia and, for the first time in the company’s history, testing and launching a new product - Coke Blak - outside the US. And with the launch of media campaigns including “The Coke Side of Life” earlier this year, the company is working hard to re-engage with consumers presented with more and more choice.
But has Isdell’s success caused him to set one target too far? Speaking at the World Food Business Summit in Paris last week, Isdell said the company would aim to double the brand value of Coca-Cola to account for half of the company’s sales by 2015. Growing Coke’s “core” CSD sales was one of “six strategic growth paths” to achieving that aim, Isdell insisted, with “enormous opportunities” in the category - and not just in emerging markets.
However, with consumers turning away from full-calorie, sugary soft drinks in favour of healthier options, Coke is sure to find it tough to drive value from its flagship brand. As the company posted in its most recent figures, volumes in North America, its largest market, were propped up by other brands, including Powerade and Dasani.
Just one indication of the work that needs to be done is the future of its drinks venture with Nestlé. The two companies have been reported to be in talks over the future of the venture, Beverage Partners Worldwide, which markets Nestea iced teas and coffees worldwide. US reports said that Nestea sales had slumped in the first quarter of the year, in stark contrast to a buoyant bottled teas category. Meanwhile, Coke is suffering from falling volumes in key overseas markets like Japan and the Philippines.
The company would be better off giving more attention to the ‘non-Coke’ parts of its portfolio. Health drinks, teas and juices are the growing segments of the soft drinks category and Isdell needs to address these areas if he wants to take the company further.
Frank Sinatra liked a drink. He was famous for it. ...
Want to know how to make it to the top of the beverage business? According to Muhtar Kent, it's all about the networking....
A red sticker to a shopper is like a red rag to a bull. And as the masses charge at the deals, UK off licences and supermarkets are finding new and novel ways to entice the herd. ...
To celebrate its 250th anniversary, Cognac brand Hennessy is trumpeting a virtual time capsule, making a parallel between it and a barrel of Cognac....
- Comment - Diageo CFO to North America? Do the Math
- Rekorderlig Deal Sees Molson Coors Miss Out
- 5 reasons why Constellation's Meiomi buy works
- Hail Marie Brizard: But, For How Long?
- Constellation Brands basks in beer glory
- Diageo ditches Shui Jing Fang plans in China
- MillerCoors changes CMOs with immediate effect
- C&C Group chairman backs CEO amid turmoil
- Molson Coors acquires Rekorderlig UK rights
- William Grant partners Rugby World Cup