Coca-Cola has been through some major changes in the last 12 months. It rolled out its ‘one brand marketing strategy’ globally earlier this year, putting the four variants – Coca-Cola, Diet Coke, Coca-Cola Zero and Coca-Cola Life – under the ‘Coca-Cola’ master brand.
Earlier this week, the brand also announced it would be giving Coca-Cola Zero a £10m revamp by replacing it with ‘Coca-Cola Zero Sugar’, in what the company is calling its biggest new product launch in a decade. It hopes that this will also boost awareness of its zero-sugar variants.
Besides the renewed push for Coca-Cola Zero Sugar, it is extending the company’s ‘One Brand’ marketing strategy to packaging. The new design incorporates the Coca-Cola red disc, which the company says “has become a signature element of the brand”.
All the other variants in Coca-Cola’s portfolio will all get a redesign at the same time as part of a global rollout that kicks off in Mexico at the start of May.
Speaking on an analyst call on Wednesday (20 April), chief operating officer James Quincey said that in initial pilot markets the new strategy and packaging had a “very clear impact”.
“It helped us expand and grow the zero calorie variant of Coca-Cola by driving availability and trial. So we would expect to see benefits on the zero sugar variants,” he explained.
“[The packaging] helps us create what we would call ‘corporate blocking’. In other words, we execute in stores all the variants of Coca-Cola together as one big block, which has a much greater store impact, visual impact, engagement with people who are shopping the stores.”
The move follows falling sales at Coca-Cola as consumers shift to lower calorie drinks. In its latest quarterly results Coca-Cola’s revenue declined 4%, while organic revenue grew 2%.
Meanwhile, IRI figures show that total Coca-cola value sales in the UK dropped 2.1% in the 52 weeks ending 26 March 2016. Coke Zero and Diet Coke sales dropped 4.6% and 4.3% respectively.
Transforming the brand
The brand’s CEO Ahmet Muhtar Kent, however, remains hopeful as he believes the company is “in the midst of transforming”.
Also speaking on the call, he said: “We recognise that we still have much work to do, but we have defined a clear path to transform the company and we’re making consistent progress to create long-term value for our shareowners.
“The Coca-Cola Company is becoming stronger, more efficient and more focused on our core strengths of marketing and brand-building, customer value creation and leading our franchise bottling system.”
Quincey added, however, that the company will evolve and “make it better” over time.
He explained: “It’s not just about the efficiency in the advertising. It’s about helping consumers join and stay in the Coca-Cola franchise, whatever of the ingredients they want to manage, including their management of added sugars, whether that’s in drinks or any other categories that have added sugar in. So this has a number of benefits that are going to play out strategically and we will keep improving the execution.”
On the surface, the brand’s decision to revamp its Coke Zero brand in response to research findings seems like a logical response. If people aren’t aware the brand’s no sugar variant is sugar-free, then its labelling probably isn’t working hard enough to communicate its unique selling point. However, Nick Liddell, director of consulting at branding agency The Clearing believes this is “a very narrow telling of the story”.
“Coca-Cola’s UK brand architecture is a mess. It contains two ‘zero sugar’ products, which used to make sense when Diet Coke was targeted at an image-conscious female audience and Coke Zero was marketed as ‘Bloke Coke’.”
“The move to a ‘one brand’ approach effectively robbed these products of their personalities and relegated them from sub-brand status to product variants.”
Nick Liddell, director of consulting, The Clearing
“The result seems a little perverse given the claim that Coke is trying to encourage more people to drink low-sugar or no-sugar products, since they are far weaker in brand terms than when they were allowed their own marketing budget, their own personalities and their own sub-brands.”
Relying on logic, not love
While the new product packaging might look modern and coherent, Liddell believes the product labelling is the true problem and will only lead to more consumer confusion.
He explains: “In naming terms, it’s a total muddle. Zero Sugar Coke isn’t the only sugar-free product. Diet coke is also a zero sugar product and it’s not just for people on a diet. I wouldn’t be at all surprised to see ‘Diet’ substituted for ‘Light’ at some point soon, although this would seem a more suitable label for the ‘Life’ variant, which makes almost no sense at all. The move towards functional, benefit-led variant names undermines, rather than supports, the brand’s overarching emotional positioning.”
A £10m revamp will undoubtedly boost the Zero Sugar brand in the short term. There are concerns, however, for how the strategy will fair in the long term. As Liddell concludes: “The Coke brand has always relied on love and not logic for its success. And in this case, the logic being imposed on the brand seems fundamentally flawed.”