Is the brand of Coca-Cola in trouble?
Tom Dougherty, CEO – Stealing Share
16 April 2014
We’re drinking less soda
Recent reports show a decrease in sugary sodas in North America and, with a move by consumers to less sugary options, the question has to be asked: does the iconic Coke have a brand problem?
The short answer is yes.
Close your eyes for a moment and think of all the imagery you associate with Coca-Cola. Is it a red can or the red circle logo or maybe even the polar bears?
“If soft drinks continue to be vilified, Coca-Cola would be foolish to hold up a beverage that no one wants to drink as its standard bearer.”
In any case, I bet your association with Coke is also in its carbonated beverage. More than likely, when you hear Coke, you probably do not immediately think about Powerade or Dasani, both of which are owned by Coca-Cola.
In its earnings call yesterday, Coca-Cola reported its global unit sales rose 2% over the past quarter but that was on the back of an 8% increase in non-carbonated beverages that made up for a 1% decline in carbonated volume. It does not take a math genius to see that, if the anti-carbonated trend continues, Coca-Cola could be in some serious trouble from a brand perspective.
Coca-Cola is a highly diversified company and it isn’t going anywhere anytime soon. But Coca-Cola needs to take a hard look at itself and figure out what it wants to look like in future years.
If soft drinks continue to be vilified, Coca-Cola would be foolish to hold up a beverage that no one wants to drink as its standard bearer. In a modified house of brands like this, you always run the risk of your umbrella brand falling out of favor and having a halo effect on the rest of the portfolio. Coca-Cola is a powerful brand, but the power is in the iconic Coca-Cola beverage.
This is not as crazy as it sounds. There are recent examples in BlackBerry, Kodak, Oldsmobile and Blockbuster, and none of these had the pressure from an emerging health-conscious consumer forcing their hands. They just failed on their own accord for not keeping up with consumer tastes (pun intended).
I do not have the answer for Coca-Cola. I just have the questions. It is not an immediate problem now. But, unless it can figure out how to make a natural sugar substitute with no negative attributes that taste exactly like sugar, the Coke brand may lose its luster. But by the time that substitute is developed, consumer tastes may have shifted so much that the sugary taste is no longer desired.
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