BRAND HEALTH CHECK: Coca-Cola - Can New Flavours Help Coke Get Back Its Fizz?

Marketing, April 11, 2002 | Go to article overview

BRAND HEALTH CHECK: Coca-Cola - Can New Flavours Help Coke Get Back Its Fizz?


Coke is losing market share as rival Pepsi makes up ground, but with a history of failed NPD, is adding new flavours the answer to staging a fightback, asks Matthew Arnold.

Coca-Cola Great Britain is preparing to launch its biggest product innovation in nearly two decades with a lemon-flavoured Diet Coke variant tailored to the British palate. Meanwhile, the company's US parent is working on a vanilla-flavoured variation.

The new flavours come as Coke, with its chequered history of new product development and a muddled marketing strategy that has been vacillating wildly between local and global focus, faces renewed competition.

PepsiCo stole 0.2% US market share from Coca-Cola last year, rising to 31.6% share, while Coca-Cola fell to 43.7% according to US trade magazine Beverage Digest.

Pepsi has also pulled off a string of coups, including snatching Coca-Cola's sponsorship of the National Football League in the US.

The problem may be local to the US market. In the UK, according to Canadeam, the Coca-Cola and Diet Coke brands gained market share. But US consumers generate 30% of all Coca-Cola Company sales.

Coca-Cola Great Britain is betting that Lemon Diet Coke will quench its thirst for market share. A similar, but less lemony variant launched last year in the US. Meanwhile a vanilla Coke variant could prove a hit with Americans, who have been adding shots of vanilla extract to the drink since the days of soda fountains.

But Coke's experiments with new flavours in the past have had varying degrees of success. Diet Coke made a splash with the diet-obsessed yuppies of the 1980s, Cherry Coke fizzled, and 'New Coke' was a disaster that threatened to capsize the company's flagship product.

So are lemon and vanilla variants a surefire path to glory for Coke, or could they damage the core brand? What can Coke do to boost its market share and fight off Pepsi?

We asked David Grint, head of marketing planning at the BBC, a former marketing manager at Coca-Cola, and Fiona Blades, account planning manager at former Pepsi agency Claydon Heeley Jones Mason.

VITAL SIGNS

UK sales of Coke and Diet Coke in million litres
               2001     2000    1999    1998    1997

Coke          958.0    893.2   871.9   791.7   803.7
Diet Coke     621.0    563.7   545.4   492.4   480.3

Source: The Coca-Cola Company

DIAGNOSIS

David Grint

Coca-Cola is a great brand and The Coca-Cola Company is an awesome marketing machine.

Why then all this excitement surrounding a brand extension? Surely such extensions are an everyday part of the marketing armoury? Just take a look at another great brand - Kit Kat - which has successfully spawned a number of variants recently. …

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