Coca-Cola Widens Rollout of Coffee-Infused and Energy-Drink Versions of Coke

The February launch of Orange Vanilla Coke helped drive 6% retail sales growth for the Coca-Cola brand

Coca-Cola Co. is expanding its namesake brand, as it begins to push forward with overseas roll outs of a coffee-infused variant and an energy-drink version of Coke.  Last year, Coca-Cola tested the coffee infused drink in Asia and now plans to launch it in 25 markets by the end of this year.  Despite objections from the company's partner, Monster Beverage Corp., Chief Executive James Quincey recently stated "the company will forge ahead in Europe with Coca-Cola Energy."  As Coca-Cola diversifies beyond its already known beverages, it is looking at offering new variants of its flagship brand.  Recently, Coca-Cola Zero Sugar, a reformulated diet version, grew by double digits in the latest quarter.  In the U.S., with price increases and a late Easter holiday, the company experienced a 1% drop in case unit volume.  With the release of Orange Vanilla Coke in February, Coca-Cola's first new flavor in a decade, retail sales growth for the company was driven up by 6%.  Coca-Cola's rival, PepsiCo Inc., is also further experimenting with new versions of its namesake brand.  The company is launching three new Pepsi flavors in the U.S. made with berry, lime and mango juice.  Furthermore, the soda giant is revamping package designs for two existing flavors, Pepsi Wild Cherry and Pepsi Vanilla.  Berry, lime and mango will be available at national retailers until June 14, and from there at both Walmart and Target stores.  Mr. Quincey explained "the coffee version of Coke is designed to appeal to people who need a mid-afternoon pick-me-up at work."  "Coca-Cola energy will offer a stronger caffeine boost than regular Coke and has a new taste."  Currently Coca-Cola owns an 18.5% stake in Monster, the leading energy drink in the U.S., and distributes its brand through the bottling network.  Recently, Monster said "the launch of Coca-Cola Energy is a violation of an agreement the companies struck in 2015."  The complaint is now being reviewed in arbitration.  Monster and Red Bull are the current well known brands in the energy drink industry.  Although some would ask why Coca-Cola would enter such a dominated market, it is evident that the market is still nascent in emerging markets, which Mr. Quincey believes, is "presenting an opportunity to introduce a drink that blurs the boundary between an energy drink and a cola."  Furthermore, the company feels the implementation of its new creation will help to complement the other brands that sell successfully in the energy drink category.  Coca-Cola's last quarter sales increase was helped mainly by bottlers in the U.K. and Europe, stocking up on concentrate ahead of a "potentially disruptive Brexit."  Organic revenue, which excludes currency swings, acquisitions and divestitures, "increased 6% in the first quarter from a year earlier.  Unit case volume grew 2%, helped by 6% growth in bottled water, enhanced water and sports drinks."  Also in its first quarter, Coca-Cola purchased the British coffee-shop chain Costa for $5.1 billion and plans to launch its first ready-to-drink Costa products this spring.  Mr. Quincey touched base on the acquisition and explained that "Costa serves its red-and-white cups of coffee in its roughly 3,800 cafes, including about 2,500 in the U.K. and a growing presence in China.  The launch of new bottled Costa drinks will be concentrated in markets where the chain already has a presence."  

This article relates to the marketing concept in several different ways.  First off, Coca-Cola is expanding its target market by now offering products that lie in both the energy and coffee industry.  Secondly, the company is differentiating itself by providing the only products on the market which offer coffee or energy with Coke.  In doing so, they are segmenting into an industry with high demand which has the capability of poising them for even greater success.  Lastly, Coca-Cola has observed its external marketing environment, especially when it comes to the issues going on in the U.K. regarding Brexit.  The company made several different changes, as well as addressed its competitors (Pepsi and Monster), to create 2 products which have the ability to dominate the soda/beverage industry once released.

I chose to write about this product because as a consumer, I enjoy seeing what new products are offered every time I go to the grocery store.  Also, as someone who enjoys Coca-Cola's products, I did not hesitate one minute when seeing they were offering even more products to their already differentiated product line.  This article did a great job explaining the vision Coca-Cola had when they were beginning to create these products, as well as what the future holds for the soda giant.  Coca-Cola is already an extremely successful company.  Now, with the introduction of products which do not currently exist in this industry, an industry with very high demand, I cannot wait to see the large amounts of success that will continue to be brought to Coca-Cola and I look forward to seeing the next market changing product it has to offer. 

    

Link: 

https://www.wsj.com/articles/sports-drinks-boost-coca-cola-sales-11556020460?mod=searchresults&page=1&pos=1