Hard sell needed for soft drinks
marketing its brands as a new report shows that the US carbonated
drinks market continues to struggle.
In 2004, the US CSD industry posted volume growth of over 1 percent according to a study published last week by Beverage Digest/Maxwell. A figure that was higher than the slight increase of 0.6 percent last year, but below the 2-4 percent growth rate that signified the 1990s. Moreover, growth last year was driven by diet CSDs and energy drinks.
Beverage Digest estimated the retail value of the industry grew by 3.25 percent to about $65.9 billion, up from $63.8 billion in 2003.
However, market leader Coca-Cola suffered a decline in its CSD volume and in its market share, losing 0.9 share points. Apart from Diet Coke, which posted 5 percent growth, Coke's other top 10 brands also drifted downwards, according to Beverage Digest.
The soft drinks giant said on Friday in its year-end report to the Securities and Exchange Commission that: "Carbonated soft drinks (CSDs) remain a fundamental and profitable part of our family of brands and we believe we should invest in marketing our family of brands more aggressively than in the past few years".
The company added that it also needed "to further expand our new products pipeline and continue to develop our innovation capabilities".
In real terms, this means that Coca-Cola plans to increase its marketing and innovation spending by approximately $400 million in 2005, a move it intends to maintain "for the forseeable future".
In order to keep its market share, the company believes, among other goals, that it must "generate new avenues for growth through our core brands, with a focus on diet and light products" and "reenergize markeing and innovation".
Coca-Cola owns or licenses nearly 400 brands, translating, in terms of daily consumtion, into around 1.3 servings a day consumed worldwide.
The company drew attention in its SEC filing to the products, brands and brand extensions launched in 2004, which included Diet Cola with Lime in Australia, New Zealand and North America and Coca-Cola C2 in Japan and North America. And the extension of the rebranding of Diet Sprite to Diet Sprite Zero/Sprite Zero, which began in Greece in 2002 and now includes 23 countries, including the US.
Beginning this week, Coca-Cola with Lime will be in stores and supermarket shelves throughout the US and will benefit from a high profile media campaign run in English and Spanish. The latter hopes to attract America's growing Hispanic community.
In terms of raw materials, the company plans to change little in 2005 and is confident it will experience no difficulty in sourcing the various sweeteners used in its drinks.
