Critical analysis

Business News: The Many Flavors of Coca-Cola -- In search of growth, soda giant is pressing local units to develop new beverages

Bellman, Eric; Maloney, Jennifer . Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Aug 2018: B.3.

ProQuest document lin

k

FULL TEXT

When Coca-Cola Co. directed its global subsidiaries to launch more local flavors last year, the company's Indian arm came up with a unique drink: chunky mango juice. Indians commonly squeeze mangoes to soften them and then bite a hole in the tropical fruit's tough skin to suck out the pulp, Coke's Indian drink developers knew. So they concocted a beverage to mimic that experience, called Maaza Chunky.

The invention of an India-only product was something the beverage behemoth wouldn't have attempted three years ago, but it reflects a push by Coke Chief Executive James Quincey to get the company to shed its culture of cautiousness, expand into new categories and bring products to market faster.

"There are products out there in the world that perhaps we wouldn't have tried a few years ago," Mr. Quincey said in an interview.

Before Mr. Quincey was named CEO in May 2017, investors and analysts had criticized the Atlanta-based company for focusing too long on sugary soft drinks, even as consumers switched to healthier options and the company's global beverage volumes stalled.

Since then, Coke has pushed harder to diversify, launching more than 500 new products and variants last year, a record for the company and an increase of roughly 25% over the previous year. Recent launches include a cucumber-flavored Sprite in Russia, a line of whey shakes in Brazil, a sesame-and-walnut drink in China and a salty lemon tonic water in France and Belgium. Coke says its expanding portfolio is helping to drive its recent growth in volumes.

"We're not betting the ranch on every idea until it's proven to have some traction," Mr. Quincey said. "I think we see more innovation in the marketplace . . . but just as importantly, a focus on removing the things that don't work." Coke is asking its international arms -- which deliver more than half its revenue -- to experiment and speed up their research and development efforts. It used to take a year or more to get a new product to store shelves in India; now it can take just four months, executives say.

"We have this mandate now to go create products and businesses which are much more in tune with the local needs," said Shehnaz Gil, one of Coke's executives in India. "It's part sommelier, part science."

Creating Maaza Chunky was complicated. Because of the drink's consistency, Coke had to develop a new can and a way of filling it.

Focusing too much on new, unproven brands has risks. Rival PepsiCo Inc. relearned that lesson last year when it shifted too much shelf space and advertising money to new brands like Izze Fusions, a fruit juice-soda blend. Sales and market share fell for core brands, including Pepsi-Cola, Mountain Dew and Gatorade.

In Japan, Coke has for years brought new products to market more quickly and frequently than it has elsewhere in the world. Its recent launches there include a laxative Sprite and the company's first alcoholic drink -- a fizzy lemon concoction. By contrast, other Coke business units around the world have depended more on brands originally developed for Americans.

The new strategy calls for the company to "lift and shift" the best local innovations and acquisitions and bring them to other countries, Coke says.

The company launched Coca-Cola Plus Coffee in Australia last fall. Based on the drink's reception there, the company made some tweaks before rolling out versions to markets including Vietnam and Turkey.

Some inventions fall flat. The company's last attempt at a coffee-flavored soda flopped soon after launching in Europe and North America in 2006. The flavor put people off, and Coca-Cola discontinued BlaK in the U.S. the following year.

Credit: Eric Bellman, Jennifer Maloney

DETAILS

Subject:	Product development; Soft drink industry
Location:	Turkey Russia United States--US India North America Vietnam Australia China Brazil Belgium France Japan Europe Atlanta Georgia
People:	Quincey, James
Company / organization:	Name: PepsiCo Inc; NAICS: 312111; Name: Coca-Cola Co; NAICS: 312111
Publication title:	Wall Street Journal, Eastern edition; New York, N.Y.
Pages:	B.3
Publication year:	2018
Publication date:	Aug 24, 2018
Publisher:	Dow Jones &Company Inc
Place of publication:	New York, N.Y.
Country of publication:	United States, New York, N.Y.
Publication subject:	Business And Economics--Banking And Finance
ISSN:	00999660
Source type:	Newspapers
Language of publication:	English
Document type:	News
ProQuest document ID:	2092511063
Document URL:	https://search.proquest.com/docview/2092511063?accountid=14270
Copyright:	(c) 2018 Dow Jones &Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.

Last updated: 2018-08-24

Database:	ABI/INFORM Collection,US Newsstream
LINKS Linking Servic e

Database copyright  2018 ProQuest LLC. All rights reserved.

Terms and Conditions Contact ProQuest