It has been a while since Coca-Cola launched a product that did not draw any criticism or scepticism from the soft drinks and retail industries. Coke Zero looked like changing that. The Atlanta-based giant’s biggest launch since Diet Coke two decades ago was widely acknowledged by industry experts as living up to Coke’s own hype.
The proposition – a sugar-free cola aimed at men who did not want to buy Diet Coke because of its female connotations – and its black packaging, previously unused in soft drinks, won praise. A £10m launch campaign also indicated the importance Coca-Cola placed on its new product, and helped it fly off shelves after its June launch.
No ads, low sales?
But national newspapers have recently suggested that after the campaign finished, sales of Coke Zero fell for three consecutive weeks. Data attributed to AC Nielsen showed volume of Coke Zero’s UK take-home sales slid from 2.6 million litres per week to 1.8 million between late July and mid-August.
More recent AC Nielsen figures for the past four weeks provide further bad news for Coke Zero, showing volume growth is down 33%. Other figures suggest Zero faces a difficult task in catching up with rival PepsiCo’s established sugar-free counterpart, Pepsi Max. According to AC Nielsen, in the four weeks to September 2, Pepsi Max’s volume share of the market was 8%, compared to Zero’s 5%.
Industry experts add anecdotal evidence to support the theory that Zero is falling flat. One retail source says: “The 500ml Coke Zero does OK, although most of our chillers are Coke-owned so Zero has a disproportionate amount of space. But the two-litre Zero represents just 7% of all our Coca-Cola brand sales. That is disappointing, and a lower figure than the company might have expected after a heavyweight marketing campaign.”
Another source says evidence indicates that 80% of Zero’s volume has been sold on promotion and, now that many target consumers have tried it for the first time, the test will be to prompt repeat purchases.
Coca-Cola denies the brand is performing badly. While rivals claim that up to 55% of Zero’s volume has been bought by consumers switching from other Coca-Cola products, a company spokesman says that since the launch, 9% of Coke Zero sales have come from consumers switching from Pepsi colas, while only 16% reflect a cannibalisation of Coca-Cola’s own brands.
Expanding the market
The spokesman adds that 47% of sales have come from consumers that are new to the carbonates category, but admits that all these figures from TNS Worldpanel only relate to sales until August 13. He says: “The launch was a fantastic success and generated strong overall trial of almost 2 million households. Repeat purchase rates are also very strong at 28.3%, putting the brand in line with the top 5% of new product launches in the UK, and above all recent cola launches.”
Coca-Cola has high expectations for what it calls “the final piece in the Coca-Cola trilogy” and, after a busy launch during a heat wave, must retain high sales to avoid Zero being branded a disappointment.
With a recent Pepsi Max campaign built around the theme of a variety of options to choose from, and an execution at the time of the Zero launch promoting PepsiCo’s sugar-free cola as “Max Taste, Zero Hype”, Coke’s biggest rivals will continue to keep the pressure on Zero in the hope it loses its fizz.