THERE are dozens of museums and galleries that celebrate pop culture, but only
one that celebrates the culture of pop.
At the new World of Coca-Cola in downtown Atlanta, which opened this summer,
you enter through a giant ice cube and leave with a bottle of fizz, fresh
off the Coke production line. In between, there are the icons of the brand:
the swirly “ribbon” logo, limited-edition Andy Warhol prints of the
trademark curved Coke bottle, dancing polar bears and Father Christmas.
The £50m monument to things going better is “the happiness factory”, says Phil
Mooney, Coke’s official historian, as he greet visitors. It needs to be.
Happiness is the one ingredient in Coke’s secret formula that has been in
short supply lately.
While Coke, the drink, still maintains its enviable, pop-culture status, Coke,
the corporation, has got the hiccups. The firm recently suffered the double
indignity of being overtaken, for the first time, by PepsiCo as the largest
soft-drinks and snack company by market capitalisation, and elbowed aside by
Google, a company 113 years its junior, as the world’s No 1 brand.
Coke saw its share of the key US cola market dip to 42.9% last year from 43.1%
in 2005,
according to Beverage Digest. Sales of Coke Classic slipped 2%, Diet Coke was
down 0.1%. At just over $50, Coke’s share price is way off its 1988 peak of
$88. The soft-drinks firm needs a hard sell. But how?
Most analysts say that, as health-conscious consumers turn away from fizzy
drinks, Coke should ignore cola and focus on its fruit-juice brands, such as
Minute Maid, and its bottled-water product, Dasani. Last year, sales of
noncarbonated soft drinks jumped 13.2% in the US, while sales of fizzy
drinks fell 0.6%. The figures in Britain and continental Europe tell a
similar story.
But senior executives in Atlanta are boldly – some say recklessly –
going in the opposite direction. In the biggest gamble since Coke changed
its formula and introduced “New Coke” – with disastrous
consequences – it is going back to fizz to put the sparkle back into
Coke.
“The economic engine of the Coca-Cola business runs on sparkling,” Katie
Bayne, Coke’s US head of marketing, told The Sunday Times last week. “This
is where true leverage is, in terms of growth.” Referring to Classic Coke,
the new Coke Zero and Diet Coke, she said: “The future is red, black,
silver.” Bayne, backed by company boss Neville Isdell and global-brand
marketing chief Marc Mathieu, is spending £250m on a “back to basics”
campaign.
New Coke products will be introduced and the firm is returning to its
trademark, “feel-good” advertising. The first new release, Diet Coke Plus, a
vitamin-enriched, sugar-free, zero-calorie Coke, is out in the US and goes
on sale here in October. A modern take on the syrupy 1970s I’d Like to Teach
the World to Sing ads will be on British TV screens soon.
Although Coca-Cola has recently made headlines by splashing out £2 billion
buying up US “smart-water” firm, Gla-céau, and is negotiating to buy
Britain's Highland Spring to boost water sales here, executives insist that
the untapped global demand for fizzy brown water is greater than for any
other soft drink.
“When you get the sparkling thing going, it’s like an unbridled horse. It’s
almost obscene how much profit and shareholder value it can throw up,” said
Bayne, glugging a can of Diet Coke, one of the five she drinks each day from
her office fridge that is the size of Long Island.
What’s giving Coke hope in a sparkling future is that, for the first time in
almost a generation, it has a hit new product and a popular ad campaign on
its hands. Coke Zero, a no-calorie cola that tastes almost the same as
full-sugar Classic Coke, sold more than 120m 24-bottle cases in 12 countries
last year, without greatly cannibalising sales of other Coke flavours.
After the recent, cringingly embarrassing “Real” ad campaign –
which featured actress Penelope Cruz guzzling a Coke and then belching, and
a basket-ball player sticking a cold can in his armpit – the new I’d
Like to Teach the World to Sing-style ads have been hailed as “optimistic
and refreshing” by The Wall Street Journal. One promo, called Happiness
Factory, features animated characters “creating” a bottle of Coke inside a
vending machine. In another, a Coke-drinking hero walks the streets in a
Grand Theft Auto-style video game, handing out bottles of free Coke to
passers-by and singing “Give a little love, and it all comes back to you”.
The “fizz ‘n’ feelgood” relaunch may look and sound good in the Atlanta
mothership, where employees have such a cult-like devotion to the brand that
they speak a special language – Coke code. Each Coke flavour has, they
say, “a unique taste profile, mouthfeel and trans-formational wellness
effect” that “addresses one of the totality of the different need states in
the all-day consumption cycle”.
But analysts caution – using, thankfully, plain English – that it
will be a tough sell. With growing concern over rising obesity and diabetes,
carbonated drinks are getting less and less fashionable.
Coke executives acknowledge the seriousness of the problem by no longer
referring to soda as just plain “soda”, “pop” or “carbonated beverage”.
Instead, the favoured term in Atlanta these days is the benign-sounding
“sparkling beverage”.
While Coke Zero is a success, analysts point out that the key, north American
soda market – the US accounts for a third of the £50 billion-worth of
fizzy drinks sold each year – remains sluggish. Sales of carbonated
soft drinks declined by 1.4% in 2006 to £6.6 billion, research by
Information Resources, the market-research firm, shows. By contrast, sales
of bottled water increased 14% to £2.3 billion. In Britain, the volume of
take-home cola – of all brands – last year rose by a meagre 7%
from 2001. Over the same period, the volume of water sold rose by 74%.
With the exception of Zero, Coke’s recent track record in launching new
carbonated drinks is patchy, to put it mildly.
C2, a cola that had about half the carbohydrates and calories of Coca-Cola
Classic and was aimed at weight-conscious consumers who didn't like Diet
Coke, bombed when it was introduced three years ago and has been scrapped.
Sales of new cola flavours, notably vanilla, have fallen well short of
expectations.
While Coke insists that Diet Coke Plus is selling well in the US, it might not
be a hit here. Coke’s last bid to launch a “healthy” product turned into the
biggest marketing fiasco since Hoover’s “free flights” pro-motion. The
company was forced to withdraw its Dasani bottled water brand after it
emerged it was filtered tap water from a plant in Sidcup, Kent, prompting
critics to compare it to “Peckham Spring”, bottled tap water sold by Derek
Trotter in the hit BBC sitcom Only Fools and Horses.
But Coke executives insist they can buck the market and fashion a future from
fizz. They claim that, globally, the sparkling-drinks market is growing at
its fastest rate for a decade.
Coke’s second-quarter results show a 4% rise in global sales of all the
different flavours of Coke. “The opportunity for growth is unlimited,” said
Bayne. “We just have to be as aggressive as we’ve been in the past about
finding it.”
To counter health concerns, Coke is launching a new advertising campaign to
try to convince consumers that Coke can be “a healthy part of a balanced
diet”. It has also joined the “Calories Count” public-health campaign and
research programme in the US and is working with Lough-borough University
here to develop initiatives to encourage children to lead healthy lives.
Bayne conceded that in the US “the market is off”. “We still have some
problems that we’re working on,” she said. “It’s a journey and I’m
confident.”
Not confident enough, though, to put the figures where her mouth is. “I can’t
commit yet to specific numbers. We’re turninga ship that is massive. I know
what we’re expected to do and it’s an aggressive change. With our new
products and ads, we’re back and we’re gonna shake things up.”
French-born Mathieu prefers to put it in language that only a European can get
away with at squeaky-clean Coke Towers. He reaches for the latest marketing
manual, Manifesto for the Revival of an Icon, and opens it on his fav-ourite
page – a reworked cover of the Sex Pistols’ 1977 album. “Never mind the
bollocks,” he reads. “Bring back the fizz.”
‘HEALTHY’ COLA
COKE hopes consumers in Britain will take to its first healthy cola --
vitamin-enriched Diet Coke Plus -which goes on sale in October. The drink
comes in a slim, silver can, decorated with leaves and rainbow colours.
Coke claims a can of the new drink provides adults with 15% of the recommended
daily dietary intake of niacin, vitamin B6, and vitamin B12, and 10% of the
allowance for zinc and magnesium.
Rhona Applebaum, Coke’s chief scientist, insists it is so healthy that doctors
might prescribe it to patients.
Such claims have provoked a sharp reaction from American health campaigners
who claim Coke’s ‘liquid candy’ is partly to blame for obesity and diabetes.
‘It’s laughable to try to pass off diet drinks as healthy,’ said Connie
Bennett, author of Sugar Shock, which exposes the health risks of sugary
food and drink. ‘They sell water. Why don’t they just market that more?’
Tom Pirko, president of the consultancy firm Bevmark, said market research
showed that consumers thought marketing artificially sweetened soft drinks
as healthy was ‘a joke’.
