News Analysis: Brand Coca-Cola's Big Gamble

Marketing, August 3, 2005 | Go to article overview

News Analysis: Brand Coca-Cola's Big Gamble


The company's first umbrella activity risks denting the health halo of its non-carbonated brands.

This month Coca-Cola is taking the unprecedented step of promoting its full portfolio of drinks brands through an umbrella advertising campaign (Marketing, 27 July).

Industry insiders are confused by Coca-Cola's motives and think it could be playing a risky game. They warn the move could backfire on the company by associating its healthier drinks with the carbonated brands.

Like its rivals, Coca-Cola has experienced a backlash against fizzy drinks as consumers have turned to healthier alternatives such as fruit juices and water. To maintain sales, the companies have invested heavily in extending their brand portfolios.

'Coca-Cola has been broadening its portfolio for more than a decade and over the past two years it has become even more aggressive in growing its non-carbonated offering,' says Garry Hemphill, chief executive of US-based company Beverage Marketing.

But while Coca-Cola does not exactly hide its ownership of brands such as Malvern water and Schweppes, neither has it made a point of promoting it.

The company attributes the turnaround in its UK strategy to research which revealed that consumers are ignorant of the full range of brands in its portfolio. Insiders believe it will be hoping they view the over-arching Coca-Cola ownership as a comforting factor when they purchase its drinks.

The first stage of the campaign, by Vallance Carruthers Coleman Priest, features a number of brands printed on a vintage Coke bottle. The activity includes print executions, primarily in the women's press, outdoor activity and a website, www.refreshinglife.co.uk.

'The campaign is consumer-focused but it is a good platform for us to talk to everyone about what we are doing,' says a Coca-Cola spokeswoman.

Limited portfolio

Although Coca-Cola's core cola brands netted it a 25.4% volume share in 2004, health concerns and the weather are two of the biggest factors affecting the carbonated drinks sector, which experienced a fall of 5.2% in 2004, according to Mintel.

This means that it would be beneficial to have a wider range of options to rely on, but many believe there are holes in the company's portfolio.

'PepsiCo is massively ahead in the non-carbonated sector and Coca-Cola does not control any of the leading juices, functional drinks or waters,' comments John Band, consumer markets analyst at Datamonitor.

Coca-Cola has been trying to remedy this situation for some time. Its big water hope in Europe was Dasani, but the UK launch ended in disaster last year when it was withdrawn, following a cancer scare related to chemicals found in the product.

Last month Coca-Cola launched its orange juice brand Minute Maid in the UK, in a bid to tackle the domination of PepsiCo's Tropicana, but it is too early to tell whether it will be successful.

One supermarket buyer believes that by promoting its ownership of smaller brands and using the campaign to prop them up, Coca-Cola could be risking the health credentials of products such as Minute Maid. …

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