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Coca-Cola Company

Coca-Cola: brand profile

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Can there be anyone reading this who doesn't know what Coca-Cola is? It is still, after all, arguably the world's most famous, most valuable, most widely available brand. But the fizzy brown liquid has seen sales growth stall since the close of the 1990s, as worldwide consumers develop a taste for other beverages. Coke initiated a painful restructuring, and then launched its biggest-ever marketing campaign in 2001, with a new emphasis on local markets instead of global conformity. Think Local, Act Local was the new strategy; but that too was slow to deliver results. Since then the group has struggled to find new ways of lifting sales of its core product. One way has been with the steady introduction of new variants. The most successful of these in recent years has been Coke Zero Sugar, a no-calorie version of the core brand initially designed to be more appealing to male drinkers. The brand is also a big believer in high profile global sponsorships, most notably of the Olympics and FIFA football tournaments. However, one major victim of the new approach has been the quality of Coke's advertising. Once widely regarded as one of the industry's most creatively interesting advertisers, recent campaigns have tended towards overt hard-sell. [See The Coca-Cola Company profile for more history and other brands].

Selected Coca-Cola advertising

Advertising

Who handles the Coca-Cola advertising account now? Click here for agency account assignments.

Competitors

Coca-Cola's main global competitor is Pepsi. See Non Alcoholic Beverages Sector index for other companies and brands

Brand Value

After 13 years as the #1 brand in Interbrand's Best Global Brands survey, Coca-Cola was pushed into the #3 position in 2013 by both Apple and Google. It slipped into 4th place in 2017 with a valuation of $69.7bn. Millward Brown Optimor's Brandz ranking placed it 13th with a value of $87.5bn. Both surveys use different measurement criteria.

Kantar's Brand Footprint ranking, which ranks the world's "most chosen" supermarket brands, maintains Coke in the #1 spot for 2016, with more than 6.0m consumer reach points, a measurement of global brand penetration, availability and purchasing decisions. No other brand of any sort exceeded 4.2m. More than 41% of global households were estimated to buy the brand (less than second-placed Colgate, but more than any other brand), at an average frequency of at least 13 times a year (more than twice Colgate). It was also the #1 "most chosen" brand in eight individual markets including the US, Mexico, Brazil, Spain. No other brand was the leader in more than one single market.

Brand Analysis

Coca-Cola is the world's most famous consumer product, known in every corner of the globe. That raises one very obvious problem. How do you sell more of a product that everyone already knows? Although there is still mileage left in developing countries, the brand's sales in Western consumer markets have been perched for years on the edge of decline, influenced by a whole host of other factors including social concerns over obesity and other health issues, over-familiarity, even occasional bouts of political protest relating either to Coca-Cola specifically, or America in general.

Coca-Cola is just one of almost 500 brands within the parent company's portfolio, but it is by far the most important. Within the Coca-Cola Company, the Coke family accounts for just under half of combined volume sales. In 2017, the Coke family accounted for 45% of total worldwide group volumes, or just over 13.1bn cases. After a decline during the 2000s, that figure rose slowly but steadily towards the end of the decade and early 2010s. However, 2013 was more or less flat on the year before, and 2014 registered a slight decline.

The core product is of course Coca-Cola itself. After 1985, this was generally known in the US as "Classic Coke", to differentiate from the disastrous "New Coke" variant introduced that year. The company finally dropped the "Classic" tag in 2009. The core marketing proposition for Coca-Cola since the late 2000s has been "Open Happiness", originally adopted as the theme for a hugely popular animated ad depicting the secret life of imaginary characters inhabiting a Coke vending machine. The Open Happiness concept has been maintained for all other Coca-Cola marketing. In 2016, the group updated its approach, finally dropping the Open Happiness concept in favour of "Taste The Feeling". This also aimed to unite what became the three main variant products within the brand family - Diet Coke, Coke Zero and Coca-Cola Life - under the over-arching Coca-Cola brand. A new packaging design unveiled in 2016 blurred the differences between each individual variant in favour of the core product.

These variants have played a significant role in the continuing popularity of the Coca-Cola brand. Among what has sometimes been a bewildering number of other forms, the best-known has always been Diet Coke, currently the world's #3 soft drink by sales (behind original Coke and Pepsi). In around a third of the 200 or so countries where it is available it is marketed as Coca-Cola Light to avoid negative connotations from the word "diet". Diet Coke gradually established its own marketing proposition to match main brand's Open Happiness. Its tag line has become "Stay Extraordinary".

These twin leaders have been accompanied by a constantly changing portfolio of other spin-offs. The one with the greatest longevity is arguably Cherry Coke, but others come and go with occasionally astonishing frequency. The group never seems to stop launching new versions. Among the try-outs have been Coca-Cola/Diet Coke With Lemon (introduced in 2001), Vanilla Coke (introduced 2002, but discontinued in most major markets three years later, although it still exists in the US as Black Cherry Vanilla Coke), Coca-Cola/Diet Coke with Lime (2004) and so on. A coffee-flavoured variant, Coca-Cola Blak, launched in France and some other countries in 2006, followed by another test, Coca-Cola Sango, flavoured with blood orange. The Australian arm of Coke has been especially bold with flavour experiments, and has introduced a succession of limited edition variants including Coffee No Sugar, Ginger and Raspberry in 2017. Some of these different local editions subsequently make their way into other markets, yet very few demonstrate the longevity of the parent brand.

Indeed some launches might seem positively eccentric. In 2004, for example, the company became involved in a skirmish with arch-rival PepsiCo over the so-called "mid-calorie" segment. The latter initiated this particular scrap with the announcement that it would launch a new Pepsi containing fewer calories than the main drink but more than the traditional diet version. According to market research, a sizeable chunk of male drinkers were avoiding low-calorie colas because of the "diet" image and supposed artificial after-taste, but were keen to reduce their calorie intake. Coke responded with a matching product, which launched in summer 2004 under the name C2. However both companies' products quickly fell flat, failing to find a market.

Undaunted, Coca-Cola continued to explore the low- or no-cal market. Two new beverages launched mid-2005, each containing a different kind of sweetener. The most successful of these was Coca-Cola Zero, a no-calorie beverage sweetened with a mixture of aspartame and acesulfame potassium. It has become the third pillar in the Coke family, with sales above all the other variants, and positioned as the male counterpart to Diet Coke. After a slow start, Coke Zero gradually accumulated a strong following in the US, and has also launched successfully into numerous other countries. Its male orientation has earned it the nickname in the UK of "Bloke Coke". As a result, Coke Zero has ended up as one of the company's most successful launches of recent years. In a further tweak to its positioning, that brand has gradually been renamed Coca-Cola Zero Sugar since 2016, apparently because some consumers were unclear as to what exactly it contained zero of. In some markets, the company has gone one step further with the replacement of the Coke Zero concept altogether with Coca-Cola No Sugar, in a traditional red can, but bearing a black "No Sugar" banner. Australia was the first market to start phasing out Coke Zero in 2018 in favour of Coke No Sugar.

As a result of Coke Zero's growing popularity, Diet Coke's marketing has been skewed increasingly towards a female market, especially in Europe, not least through creative collaborations with fashion designers Jean-Paul Gaultier (in 2012) and Marc Jacobs (in 2013). In the US, singer Taylor Swift was named as "program ambassador" in 2013. Matching Coke's Open Happiness and Diet Coke's Stay Extraordinary, Coke Zero adopted the marketing proposition "Enjoy Everything".

The other low-cal version introduced in the US in 2008 was Diet Coke With Splenda, which contained Johnson & Johnson's trademark sweetener instead of the aspartame used in standard Diet Coke. Do US consumers really care about the kind of sweetener in their Coke? The company certainly felt so. Similar concerns over ingredients and their effects have led to a consistent market in the US for Caffeine-Free Coca-Cola. Along similar lines, yet another Diet Coke variant launch in the US and other markets in 2007: Diet Coke Plus with added vitamins and minerals and even Diet Coke Plus with anti-oxidants and a hint of green tea. However, the newest and longest-lasting addition to the no-cal and mid-cal range is Coca-Cola Life, first introduced in Argentina in summer 2013, and rolled out globally over 2014 and 2015. This product uses a combination of sugar and stevia extract and was packaged with a striking green label. (Pepsi responded later in 2014 with its own stevia-based version). Coca-Cola Life enjoyed some initial success, not least as a result of its unusual branding, but sales quickly faded. It was withdrawn in at least one market - the UK - in summer 2017, and others have followed.

Coke's Australian arm took the colour experimentation a step further in November 2014 with the launch of limited edition regular Coke cans in a rainbow of different colours including orange, purple and pink. However the most successful variation concept by far, also originally initiated by Coca-Cola in Australia (or rather its local agency Ogilvy & Mather), has been "Share A Coke", in which the regular drink was repackaged with labels bearing different individual personal names. That promotion was first launched in summer 2011/12 and, following great success in Australia, was rolled out globally to 80 other markets, including the US in 2014. It was widely credited with increasing sales, by as much as 19% in some markets. The promotion was relaunched for summer 2015, with the number of different names increased four-fold in the US to as many as 1,000 variants. The 2016 incarnation of Share A Coke replaced the individual names with well-known song lyrics. The names concept was re-introduced in North America in summer 2017, but some bottles featured popular surnames like Johnson, Smith, Thompson, Garcia and Lopez instead of first names. Meanwhile in Europe, the company introduced a new idea: holiday destinations. Bottles will be labelled Barbados, Bali, Ibiza, Miami and other popular resorts, complete with a competition to go there.

The reason for this constant process of reinvention is very straightforward. Underlying sales of brand Coke have been in steady decline for years. The brand hit its peak in 1997, the first year in which Coca-Cola served more than 1 billion servings a day. Yet just one year later the group was forced to acknowledge that sales growth in just about every market outside the US had stalled. At the time, the company put much of the blame on a strong dollar exchange rate. But there were a number of other causes for the slowdown, including a general move by consumers away from carbonated drinks, economic slowdown, and plain old market saturation. And just when international volumes began to show signs of life again, sales in the US hit exactly the same wall.

It didn't take long for the company to realise that the best way of maintaining interest in an over-familiar brand was to develop a string of new variants which encourage consumers to keep sampling the extended family. Even the small boost delivered by a new variant can make a noticeable difference. The problem is that new spin-offs tend to experience a surge for their first few months on-sale, and then decline rapidly. For example, Vanilla Coke and Diet Coke with Lemon are both estimated to have hit sales of around 100m cases at their peak. But in 2002, just two years after launch, market intelligence monitor Beverage Digest/Maxwell reported a volume fall of 21% for Vanilla Coke in the US, and of 56% for Diet Coke with Lemon, followed by further declines of around 50% apiece in 2004. As a result the company had to find a new variant to make up that lost volume, or risk losing share to a rival product.

Maintaining that constant cycle of reinvention is hard work. Since the late 1990s, the main Coke brand has suffered a steady erosion in sales. For several years, this was offset by a rise in sales for Diet Coke, but since 2005 even that stalwart has faltered, notching up a series of accelerating declines. Between 2007 and 2013, US volumes of regular Coke have declined by a total of 9.4%, according to researcher Beverage Digest, while Diet Coke slumped by an alarming 19.2%.

For 2014, Beverage Digest estimated total US volumes for the whole Coke family at around 2.66m cases, down 2.4% on the year before. The main Coke brand edged up just 0.1% to around 1.55bn cases, but Diet Coke slumped by almost another 7% to 748m cases. As a result, Diet Coke relinquished its five-year hold on the #2 position among CSDs back to Pepsi. Coke Zero enjoyed a second year just inside the Top 10 carbonates, despite a 2% volume slide to around 158m cases. All other Coke variants added a further 204m cases between them. The next biggest products in the company's US portfolio are Sprite, Dasani and Fanta, with volumes of 570m, 400m and roughly 194m cases respectively.

In 2018, another attempt was made to halt the steady decline in sales of Diet Coke, with the introduction of a new slimline can and some unusual new flavours, including "twisted mango" and "feisty cherry". There was some early evidence that this had halted the slide in sales. In its 1Q 2018 results, the group said Diet Coke had returned to quarterly sales growth in North America for the first time in eight years. It remains to be seen whether this trend can be maintained.

In the UK, the Coca-Cola family was the overall #1 take-home beverage brand in 2017 with sales worth £1.14bn (Nielsen, The Grocer), up around 3% on the year before after several consecutive declines. Regular Coke accounted for just under £576m, having fallen steadily for several years. Diet Coke contributed £421m while Coke Zero Sugar was up by around 37% year-on-year to £144m. Stevia-sweetened Coca-Cola Life generated sales of a little over £20m in its first year on-sale, but then faded quickly, and was eventually terminated in 2017. The introduction of additional tax on drinks with high levels of sugar, introduced in the UK in April 2018, is expected to further depress sales of Coke Red in favour of Zero Sugar and Diet, with the result that the UK will be the first country wehre sugar-free Coke sales exceed full-sugar.

Around another £500m comes from on-trade sale of Coca-Cola and Diet Coke in bars, pubs and restaurants, representing around 18% share, according to figures from Britvic/Nielsen. In this segment, however, rival Pepsi has the edge, outselling Coke by both value and volume because of its close traditional association with the licensed trade.

Brand History

The birth of Coca-Cola is the stuff of marketing legend. The drink was invented in May 1886 in Atlanta, Georgia by Dr John S Pemberton. Conceived as a nerve tonic, the medicinal content (as well as the name) was derived from the extract of Coca leaf that the drink contained. Pemberton's bookkeeper, Frank Robinson, suggested the name, and it was he who penned the flowing script that is still the drink's logo. During its first year, sales of Coca-Cola averaged six drinks a day, adding up to total income for that year of $50. Since the year's expenses were just over $70, Dr Pemberton reported a loss. Although he was convinced that his invention would one day be a national drink, Pemberton was himself too sickly to throw himself into the business, and soon sold the formula, reportedly for just $1. Ownership of the drink passed from hand to hand until it reached drugstore clerk Asa Candler in 1891. Candler secured distribution throughout soda fountains in the United States, Canada and Mexico and offloaded the problem of production by selling bottling rights to another company. The iconic "hobbleskirt" bottle was introduced in 1916, designed to remind drinkers of a curvaceous female body, but in 1919 the business changed hands once more - for the last time - when it was purchased by a prominent Atlanta businessman, Ernest Woodruff.

For the next sixty years, the key figure in the development of Coca-Cola was Woodruff's son, John, who became president of the company in 1923. It was he who built Coca-Cola into a truly global business. Two factors were key to this. The first was an enormous commitment to advertising, particularly in the US. D'Arcy advertising (later part of DMB&B) had been appointed in 1906, and by the 1920s and 1930s the agency had in all but name become a subsidiary of the Coca-Cola Company, its principal client. Copywriter Archie Lee devised a campaign that emphasised traditional American values, as well as happy concepts like refreshment, satisfaction, taste and purity. The original slogan "Delicious and Refreshing", was replaced with the more artful "The Pause That Refreshes" (in 1929) and "It's the Real Thing" in 1941. For a Christmas campaign in 1931, Coca-Cola reinvented Santa Claus as a fat, jolly white-bearded cherub dressed in red, with a broad belt and black long boots, fixing the modern image of the patron saint of Christmas. Previously, Santa had generally been pictured in blue or green, often tall and thin.

The second factor in John Woodruff's plan was international expansion. Woodruff later stated that a Coke should always be within an "arm's reach of desire" for any consumer. He set about establishing a network of bottling and distribution partners around the globe, initially to supply the US Army abroad during World War II, later to cater to growing demand from local consumers. But as European bottling plants grew rapidly in the post-war boom, they were increasingly approached by competitive brands, notably Pepsi-Cola. Like Coke, Pepsi saw Europe as an important growth market after the war, and had become a real competitor by the 1950s.

In 1970 Coca-Cola scored a new triumph with an ad campaign devised by McCann-Erickson, which had won the account from D'Arcy in 1955 because of its more extensive worldwide network. This commercial featured a group of multi-national teenagers assembled on a picturesque hilltop who said they'd like to teach the world to sing. It was a huge worldwide success, still one of the industry's most iconic ads. However Pepsi responded later in the decade with its own marketing coup, the Pepsi Challenge, which seemed to prove that the majority of consumers really did prefer the competitor when asked to taste both products blind.

In 1982, after experimenting unsuccessfully with low-calorie drinks TAB and Fresca, the company introduced Diet Coke, an early success which has gone on to become the world's third most popular soft drink. But Coca-Cola assisted its arch-rival considerably in 1985, when it made one of the world's most notorious marketing blunders. Thinking it could see off the Pepsi Challenge once and for all, Coca-Cola announced plans to "improve" the taste of Coke. The move was a disaster, inspiring a national outcry in the US from consumers horrified that this trusted brand was being interfered with. It quickly became obvious that Coca-Cola had failed to understand the core appeal of its main product. Consumers didn't really care too much about the taste of the drink. What they wanted was the symbolic value of Coca-Cola and the all-American values it represented. The company was forced to abandon its plans, and write off the relaunch marketing costs. Instead the original formula was reintroduced as Classic Coke.

In 1991, the company stunned the advertising industry when it pulled the creative element of its advertising account from McCann-Erickson and handed it to Edge, a dedicated unit established by talent agency CAA, and subsequently acquired by Coca-Cola. That decision did much to turn Coke into the monster brand it had become by the end of the decade. Edge developed the long-running polar bears concept and controlled the "Always" and later "Enjoy" campaigns in association with McCann. In 1995, Coke acquired a majority interest in the agency and brought it inhouse. Two years later, Coca-Cola achieved more than 1 billion servings per day for the first time. As the company proudly announced, it had taken 22 years to sell the first billion servings of Coca-Cola. Now, they were selling a billion drinks a day.

The next three years proved difficult for the company. A sudden economic downturn in emerging markets caused sales in several international markets to stall. Other problems followed. In 1998 Pepsi sued the company for its monopoly of US fast food restaurants (the so-called "fountain drinks" market). A year later, the company's European operation was thrown into turmoil after two batches of product were contaminated in separate incidents in Belgium and Holland. Although the company quickly withdrew its products, it did too little to appease inflamed national sentiments, with the result that the Belgian and French governments placed a temporary ban on all Coca-Cola products, a PR disaster which cost the company around $60m in recall costs. Other investigations were launched Belgium and Italy into the company's anti-competitive marketing practices.

With sales still flat, the group was forced to admit that its habit of using the same marketing campaign in every territory worldwide was alienating rather than converting local consumers. In 2000, Coca-Cola disbanded Edge and put its core creative account up for pitch. Interpublic was subsequently appointed to become the brand's global ad strategist, rolling out a new strategy for 2001 of "Think Local, Act Local", designed to show that Coke had not lost touch with its regional markets. This led to the launch of a massive "Life Tastes Good" campaign comprising different sets of ads, each produced in its local region, celebrating the impact of Coca-Cola on everyday life. The company's huge sponsorship programs, tied in to the FIFA World Cup and the Olympics, as well as sole sponsorship of the first Harry Potter movie, were also designed to suggest a more localised approach.

But that strategy too was beginning to tire by 2003, and Coca-Cola began looking outside the Interpublic stable for the first time in years, commissioning WPP's Red Cell Berlin Cameron to produce a distinctly different set of ads under the "Real" banner. In 2004, the group began a move back towards the concept of I'd Like To Teach The World To Sing, with an ad from the UK's Mother agency, under the banner I Wish. In a further shake-up of group marketing, the Classic Coke account for North America was shifted out of Berlin Cameron again in October 2005, and into Wieden & Kennedy.

See The Coca-Cola Company for more information and web links.

Last full revision 27th April 2018

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