Sales fizz as Coca-Cola’s ‘one brand’ strategy shows signs of paying off
While Coca-Cola says it is too early to tell if its one brand strategy is working, early sales figures suggest the soft drinks maker has experienced a boost from its shift to showcase all its variants under its masterbrand.
The strategy, introduced at the beginning of March, saw the company scrap individual brand campaigns to instead showcase each of its four product variants – Coca-Cola, Diet Coke, Coca-Cola Zero and Coca-Cola Life – under the Coca-Cola master brand.
Along with the introduction of new packaging, which gave each variant the same design and layout, the company also introduced a shift from its “Open Happiness” strapline to “Choose Happiness” in Great Britain.
It has since launched two TV ads and has kicked off a campaign promoting its sixth year of partnership with the Rugby World Cup as its first major sports sponsorship platform to showcase the new strategy.
The move was part of an effort to grow sales in the company’s flagship European market, Great Britain, as well as boost its lower and no calorie variants.
The brand hopes to have half its Coca-Cola sales from lower and no calories variants by 2020. They currently make up roughly 40% of its portfolio.
Sales start to fizz
The company says it’s “still early days” in terms of measuring sales results off the back of the new strategy, however initial data suggests an uplift in sales since its introduction.
Data from IRI shows that total Coca-Cola value sales across its variants were up by 1.46% year on year to £480.3m for the 20 weeks to 18 July (the period during which the strategy has been in place). Volume sales fell slightly (0.69%) to 425 million litres.
Growth in the wider cola market was slower, up 0.5% to £1.7bn. Main rival Pepsi saw total sales drop 8.4% for the same period to £161.7m.
However sales of standard Coca-Cola fell by 2.79% to £246.9m while sales of Coke Zero were also down slightly. This was offset by a rise in sales of Diet Coke and the introduction of Coke Life in August last year.
Nicoleta Alcea, account director of business insights at IRI, says: “The core range is growing, and this doesn’t appear to be related to distribution. That leaves us with rate of sale, which is effected by price promotion or media and advertising.”
She added that each of the variants has seen less in-store promotion than usual this year, suggesting that the brand’s marketing efforts are the main driver of sales.
Brand perceptions slower to improve
The strategy is also part of an effort to help consumers make informed choices by more clearly communicating product differentiation. Consumer research commissioned by the company showed that half of consumers do not know that Coke Zero has no sugar and no calories, with many unclear about the difference between Coke Zero and Diet Coke.
This lack of knowledge suggested the company’s efforts to build personality behind its brands had stunted consumers’ understanding of the products, according to Bobby Brittain, GB marketing director for Coca-Cola. The company is now pushing the taste and characteristics of each product rather than a distinct personality.
Brittain says initial feedback suggests consumers’ understanding of each product’s ingredients is improving and that they are paying more attention to its campaigns.
YouGov’s BrandIndex shows that Coca-Cola’s Attention score rose by 5.2 points over the past six months, giving it the first place ranking on a list of 27 carbonated soft drinks. Coke Zero also saw its Attention score rise by 1.8 points putting it at number four, while Coca-Cola, Diet Coke, Coke Zero and Coke Life now hold the top four spots in terms of Ad Awareness.
However Coca-Cola’s overall Index score – a combination of metrics including quality, impression and value – has dropped by two rankings in the last six months, putting the brand 10th. Its Buzz score – a measure of the positive and negative things said about the brand – also dropped by 4.8 points, putting it at the bottom of the list.
Marketing driving improved results
Coca-Cola has come under the spotlight in recent months as the war on sugar takes more of a spotlight. Tesco recently decided to remove some sugary drinks from its shelves but campaigners have highlighted that other brands such as Coca-Cola are also bad for people’s health.
Brittain says Coca-Cola is putting more investment behind the brand as a whole, as well as its individual products, in Great Britain.
His thoughts reflect those of the global Coca-Cola Company, which is also seeing growth following an increase in marketing investment. In January it named a new CMO in Marcus De Quinto who has already introduced a number of changes including realigning its marketing, reviewing its media roster and appointing three WPP agencies to create a new global brand
Speaking in July, CEO Muhtar Kent credited marketing for driving growth across both emerging and developing markets, adding that the company saw a double-digit increase in media spend during the period.
The company’s organic revenue grew by 4% in the quarter while its global volume also rose by 2%.
Its move to increase media spend is in line with the five-point marketing-led plan the company introduced last year in hopes of driving a resurgence in its revenues following successive quarters of decline in 2013.
I’m struggling to understand how the initial numbers suggest this is a success. After all, volume sales are down, which suggests to me that the strategy hasn’t driven Penetration, which is crucial if a brand is to grow in the long run. I wonder whether the increase in value sales is actually driven by the PPA of Coca Cola Life commanding a higher £/kg, as this NPD wouldn’t have appeared in the previous year’s data.
Hardly surprising that people don’t know the difference between diet coke and coke zero. One is branded as having ‘zero calories’ and the other as ‘no calories’ and the only difference is coke zero uses two different types of sweetener.
Fundamentally the difference is branding. Coke Zero is aimed at men who think that drinking diet drinks is just too feminine, so Coca Cola produced Zero with much more masculine branding to assuage their poor macho egos.