Coca-Cola

Despite the launch of its much-hyped One Brand strategy and a multimillion-pound push for its
Taste the Feeling marketing campaign, Coca-Cola sales are declining as it faces dramatic shifts
in consumer habits and growing concerns around sugar.
Coca-Cola has had a difficult couple of years. Consumers are increasingly moving away from
sugary drinks, and the announcement of a UK tax on soft drinks, which will come into force in
2018, as well as the Government health committees damning childhood obesity report, have put
renewed pressure on the soft drinks industry. Total UK cola value sales for the six months ending
2 July 2016 were 756.8m, down 4.3% on the same period last year, according to Nielsen. If we
look specifically at the Coca-Cola brand, the figures are even worse. Total UK Coca-Cola classic
value sales for the same period were down 7.8% to 267.5m. Diet Coke, Coke Zero and Coke Life
all saw sales fall by 5.4%, 3.4% and 54.5% respectively. Even though volume sales were not
supplied, thereby making it unclear how many promotions were held, the figures clearly show less
Coca-Cola is being bought. And this trend is not only in the UK. At Coca-Colas second quarter
results yesterday (27 July), global net revenues fell 5% year-on-year. The brand has also
downgraded its organic revenue growth prediction for 2016 from between 4% and 5% to 3%.
The fact that the Government announced plans for a tax on select sugary soft drinks has impacted
the carbonated soft drinks market in the UK. The tax drew attention, again, to the sugar content of
various drinks, including carbonated soft drinks, which is likely to have dampened demand, says
Kiti Soininen, head of UK food, drink and foodservice research at Mintel. In response to the
Nielsen value sales figures, Coca-Cola claimed its own data shows that the cola category grew
0.6% for the year to 26 December 2015, compared with 2014. And volume sales across the Coca-
Cola range were up 0.4% on the previous year. However, these figures date from before the Taste
the Feeling campaign launch.
 Strategy

To focus more on the health issues:

It is clear that Coca-Cola is trying to adapt to changing consumer habits. In January, Coca-Colas
global CMO Marcos de Quinto addressed the issue head on by acknowledging that the food and
drinks industry is facing a challenge battling the over-consumption of sugar. To ensure the future
of the company it rolled out its One Brand strategy, which was piloted in the UK last year, on a
global scale. The strategy sees its four variants Coca-Cola, Diet Coke, Coca-Cola Zero Sugar
and Coke Life placed under one master brand. Any marketing activity will focus on the overall
brand, without creating different personalities for its variants.
The hope is that the new strategy will ensure the company can adapt more quickly to changing
consumer needs. It will do this by making consumers more aware of its low- or no-calorie variants,
while strengthening the overall brand. Speaking on an investor call, however, chief operating
officer James Quincey admitted the effect of the One Brand strategy has yet to be felt. He
explained: The roll out started in January. That sort of marketing innovation takes time to take
effect. We will keep pressing away with innovation. Its too early to call it a success, we can call
that at the end of the year.

Battling declining sales:

Coca-Cola has to use its marketing might this summer with the hope it can counter the downturn.
It has sponsorships deals with UEFA for the European Championship and the Rio Olympics. The
brand also launched CokeTV to build deeper relationships with young adults. And it is pushing its
lower calorie options. It has revamped Coca-Cola Zero Sugar as part of a 10m campaign, marking
the companys biggest marketing investment in a new product in a decade. That move comes after
Coca-Cola discovered half of consumers did not know it contained no sugar.

A focus on premium products:

Coca-Cola faces a cocktail of challenges it must adapt to including changing consumer behavior
and growing public health concerns. That makes its focus on quality and premium options the right
choice. David Lancaster, senior account manager at analysts CGA Strategy, explains: Even
though volume sales are largely flat, more brands are focusing on quality and launching low-
calorie options, so there are some green shoots within the sector and there is an opportunity for
growth. With Coca-Cola pushing its low- and no-sugar strategy, it seems clear the brand is eager
to change brand perceptions. However, it has to continually promote its healthier options if it wants
to keep up with changing consumer preferences and manage falling sales. This will increase the
consumption for being healthy and boost the sales.