Coke’s CEO Muhtar Kent at a newly opened bottling plant in Myanmar last year.
Can Coke be saved?
I guess such questions can be put to even 127-year old brand icons who are celebrated by the likes of Warren Buffet for their rock-solid investment value, but Coca-Cola Company is facing its greatest challenge ever as parents and milleniums are turning away from carbonated colas (Coke’s average drinker is 56 years old), and Coke faces new generations consuming fruit and other other energy and non-carbonated drinks in an effort to adopt a healthier lifestyle and diet. Coke is on the wrong side of this trend (60% of Coke’s revenue comes from Coke or Diet Coke), says a professor of marketing, echoing Harvard’s Clay Christensen talking about the innovator’s dilemma.
“For Coke to regain brand relevance, it has to try and meet changing consumer goals,” said Ravi Dahr, professor of management and marketing and director of the Center for Customer Innovation at the Yale School of Management regarding Coke’s dilemma of market slide and reduced beverage consumption, even though Coke can boast of an increase of more than 1.1 billion cases sold worldwide last year over the previous year.
But in a shrinking beverage market, how many new fishing holes can the soda giant find to find new consumers? Professor Dhar said. “Innovation is one way. A different way may be to try to identify relevant goals that can be tied to moments which are made for carbonated beverages. This requires deep consumer insights and being on the offense rather than defense about the category.”
Marketing guru Seth Godin, founder of the popular website Squidoo and author of “Purple Cow,” put it in terms more familiar to social media marketers and the revolution the Internet is bringing in almost every part of our lives and to every business: “Coca-Cola may also need to take more radical steps. It has a priceless brand.” But, he went on: “They’re not in the sugary-water business. They’re in the storytelling business. They think their assets are bottlers, shelf space and futures contracts on sugar. But the real asset is trust, share of mind and a story. So they should obsess about making something new, creating services and experiences and interactions that people will happily pay for that have zero to do with beverages that make people obese.”
Coke’s social marketing news bureau, “Journey” may be one step in that direction to take a greater share of mind and a story.
A Coca-Cola spokesman said that the company had a “venturing and emerging brands” team, whose goal was to develop new billion-dollar brands. The team has helped develop and has invested in Honest Tea, Core Power milk-based protein drinks and Zico coconut water.
When Steve Jobs was trying to woo former Pepsi CEO John Sculley to join Apple, he famously asked, ““Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?”
Coke has another problem, too: its Herculean consumption of fresh water. Coke used 77 billion gallons of fresh water for its products in 2011, half of it from groundwater aquifers. Currently 1.2 billion people have no access to fresh, potable water. CEO Muhtar Kent says he expects to double Coke’s sales by 2020. Experts say this is unsustainable rate.
Even then, people knew something was up. Question now, does Coke have either the time and emergent team skills to chart a new trend and continue to be relevant, not to mention access to fresh water?
Here’s the story on Coke’s current woes: