'Bittersweet' moment for Odwalla co-founder as Coca-Cola axes the brand and focuses on more 'scalable' innovations

By Elaine Watson

- Last updated on GMT

Coca-Cola: "Given a rapidly shifting marketplace... Odwalla will regretfully be discontinued" (picture credit: Coica-Cola)
Coca-Cola: "Given a rapidly shifting marketplace... Odwalla will regretfully be discontinued" (picture credit: Coica-Cola)

Related tags Odwalla Coca-cola Greg Steltenpohl Juice

In a move that may not come as a huge surprise given executives' recent hints about “pruning” the portfolio, Coca-Cola is discontinuing the Odwalla juice brand and the refrigerated network of trucks supplying it to stores. So was the 40-year-old brand just past its sell-by date, or are there wider lessons here about how 'Big Food' handles ‘challenger’ brands?

Speaking to FoodNavigator-USA about the news​ (broken by the Wall Street Journal), Odwalla​ co-founder Greg Steltenpohl said it was a "bittersweet​" moment for him to learn that the brand he started selling from the back of a van in 1980 had been axed.

"There is so much turnover in the beverages space, so 40 years is a pretty long run,” ​he told FoodNavigator-USA.

“I think Coca-Cola did a pretty good job for the first 7-10 years ​[after acquiring Odwalla for $181m in 2001]. They more than doubled the business from the acquiring revenue rates, but I think since then it's been a slow decline.

“The concerns about sugar really started kicking in around 2010, 2012, and HPP also took a bite out of the market, and then they had some business model challenges around the loss of company owned manufacturing.This also highlights how challenging chilled [direct store delivery] really is.”

‘You address your weaknesses or you lean into your strengths’

COVID-19 forced all brands to take a long hard look in the mirror, added Steltenpohl, who now sits at the helm of rapidly-growing plant-based brand Califia Farms.

“You address your weaknesses or you lean into your strengths, and I think that’s what senior leadership at Coke is probably doing here.”

While Odwalla had unveiled a flurry of innovations over the past couple of years, from functional shots and ‘Smoochba’ (pasteurized kombucha and smoothie combo), to keto-friendly smoothies, they haven’t gained much traction, with the bulk of sales still coming from the core portfolio, claimed Steltenpohl.

Greg Steltenphl Califia Farms
Greg Steltenpohl: '40 years is a pretty long run...'

If you’re going to continue innovation, you have to have a very strong connection to your consumer base, and the business models that some of these big companies put in is that they rotate the innovation groups with each marketing director or CMO.”

He added: “There’s a story here about how tough it is to maintain that connection with the consumer with some of these strategic acquisitions. You could argue that the rotational aspects of the acquiring company almost make a long-term strategy for a smaller acquisition factually impossible.”

Maintaining the connection with the consumer

But does this mean that entrepreneurial brands that are swallowed up by big CPG companies will always lose that connection with consumers, even if acquirers work hard to build organizational structures that give acquired brands more autonomy?

It’s super challenging,” ​said Steltenpohl, who recently talked​ about how the market “needs mid-size companies like ours that are close to our entrepreneurial roots and can really act on our convictions and stay focused.”

“The fundamental dynamics​ [of a big CPG company and an emerging brand] are so different, there’s a lack of compatibility, and immune systems on both sides."

He added: “The new managers of an acquired asset are usually people that have worked their way up the corporate ladder. It’s really hard to find executives with management skills and that mission-based passion. You have to have people that have committed to risk taking in their careers, people that have experience of creating businesses as well as managing businesses.”

Coca-Cola: ‘We couldn’t make it work’

Coca-Cola did not respond to questions from FoodNavigator-USA about the performance of Odwalla, but told the WSJ that discontinuing the brand would cut about 300 jobs. The delivery trucks - which also carry Simply orange juice and single-serve Fairlife milk – would be sold, said a spokeswoman.

We couldn’t make it work, we couldn’t figure out the cost-effectiveness of it… It really is the result of consumers changing what they want so rapidly. By freeing up those assets, we can reinvest those costs in what consumers want today.”

Euromonitor: 'There has been a lot of innovation at Odwalla … but without ever moving the needle in terms of share'

Howard Telford, head of soft drinks research at Euromonitor International, speculated that Odwalla might “be the first of several SKU/brand casualties we see in the global system over the next 6-12 months, with attention (and spending) being refocused on those higher margin core brands and innovation in higher performing categories - like flavored seltzer with AHA or Coke Energy – and away from underperformers with more difficult economics (it’s significant that the cold delivery capacity is also being discontinued).”

He added: “In the past, the company has talked about this ‘explorer/challenger/leader’ framework, and Odwalla has really been a perennial ‘challenger’ brand for Coca-Cola for many years, well behind competitor brands like Naked in the US premium juice/smoothie space.

There has been a lot of innovation within the ​[Odwalla] brand in recent years – everything from probiotics, reduced sugar, shot-formats and plant-protein SKUs, but without ever moving the needle in terms of share, even while the company has had significant success elsewhere in juice with brands such as Del Valle in LATAM and Innocent in Europe​,” added Telford.

Odwalla Zero Sugar
Recent innovations from Odwalla include keto-friendly smoothies

Brands with ‘billion dollar potential’

In a June 26 letter to customers seen by FoodNavigator-USA, John Hackett, president of Coca-Cola’s Minute Maid business unit, explained that Coca-Cola was focused on brands with “billion-dollar potential.​”

He added: “Given a rapidly shifting marketplace and despite every effort to support continued production and delivery services, Odwalla will regretfully be discontinued and its chilled DSD distribution network, sourced by the Lineage facility, will be dissolved after July 31​.”

‘We are becoming a lot more disciplined and making the tougher decisions to prune back’

Speaking at the Deutsche Bank global consumer conference on June 10 (read the transcript here​) Coca-Cola CFO John Murphy said the company was focused on “scalable initiatives that can be launched across multiple markets at a faster rate." ​He cited Coke Energy and sparkling flavored water brand AHA.

He added: “The reality is it's a lot harder to bring an explorer ​[brand] through to being a leader that I think many times we like to acknowledge… We are becoming a lot more disciplined and making the tougher decisions to prune back while we allow the ones that have the opportunity to grow to get the attention that they deserve.”

‘Reshaping the innovation pipeline’

Speaking to analysts on Coca-Cola’s Q1 earnings call in April, CEO James Quincey said Coca-Cola had been “ruthlessly prioritizing to deliver on core SKUs​,” and was “taking this opportunity to reshape our innovation pipeline to eliminate a longer tail of smaller projects and allocate resources to fewer, larger, more scalable, and more relevant solutions for this environment​.”

Murphy, who noted that core sparkling brands generate better margins, added: "It's been an opportunity to trim back significantly the long tail."

 

Related news

Show more

Related products

show more

Replacement Isn't the Future. Variety Is.

Replacement Isn't the Future. Variety Is.

Content provided by ADM | 22-Mar-2024 | White Paper

Successfully navigating the intersection of food and technology can help your business meet evolving consumer demands.

Consumer Attitudes on Ultra-Processed Foods Revealed

Consumer Attitudes on Ultra-Processed Foods Revealed

Content provided by Ayana Bio | 12-Jan-2024 | White Paper

Ayana Bio conducted the Ultra-Processed Food (UPF) Pulse survey, offering insight into consumers’ willingness to consume UPFs, as well as the variables...

Future Food-Tech San Francisco, March 21-22, 2024

Future Food-Tech San Francisco, March 21-22, 2024

Content provided by Rethink Events Ltd | 11-Jan-2024 | Event Programme

Future Food-Tech is the go-to meeting place for the food-tech industry to collaborate towards a healthier food system for people and planet.

Palate Predictions: Top Flavor Trends for 2024

Palate Predictions: Top Flavor Trends for 2024

Content provided by T. Hasegawa USA | 08-Jan-2024 | Application Note

As consumers seek increased value and experience from food and beverages, the industry relies on research to predict category trends. Studying trends that...

Related suppliers

18 comments

Show more

Naturally cured

Posted by Audra,

Hello am giving a testimony about Trado Medical Doctor Oduku Paul the great herbal doctor, he has the cure to all manner of diseases, he cured my herpes simplex virus, though I went through different website I saw different testimonies about different spell casters and herbalist, I was like: 'Many people have the herpes simplex virus cure why are people still suffering from it?' I thought of it, then I contact Dr.Oduku email, I didn't believe him that much, I just wanted to give him a try, he replied my mail and Needed some Information about me, then I sent them to him, he prepared it (CURE) and sent it through Courier Service for delivery, he gave my details to the Courier Office, they told me that 3-5 days I will receive the package and i took the medicine as prescribed by him and I went for check-up 1 week after finishing the medicine, I was tested herpes simplex virus negative, if you are herpes simplex virus patient do me a favor for you to contact him and I will try my possible best to make sure you get cured, when you contact him, make sure you tell him that I referenced you.. odukuherbalremedies@gmail.com or you may call or whatsApp him on +2349064430408 for directives and also you can reach me on +19513444981 all your health problem will be solve for a better life.stay bless my friends. you can still search the Google on!!

Report abuse

HIV remedy

Posted by laura,

I was diagnose 2017 and find out I’m HIV positive.I was scared because there is no cure for HIV but today some people still don’t believe that there is cure for HIV, it can only be cured through Africans root and herbs,and our doctor’s here in USA few of them know’s about the African herbal medicine can cure Hiv but they chooses to hide it from us just to make a sales of ARV DRUGS. I did a research online finding way to get rid of my disease,I saw a comment about a herbal doctor on internet Name Dr Alabi who has t several disease with his powerful herbal medicine, I contacted him on whats-app, chat with him explain my self to him.He said he can cure hiv perfectly well, he gave me his request which i send to him. within 5 days he sent me the herbal medicine through ups courier delivering service And told me how to take the medicine for 2 weeks to get cured,I did for 2 weeks,within this 2 weeks i notice a very big change in my health and i new some thing great has happened then i went to confirm my result it was absolutely Negative.The doctor who new i was hiv positive was asking me how come i am negative, what did it took to get cure and were did iget this medicine from and how did i get rid of it I told him everything about the herbal medicine that cure me. imagine doctor telling me not to let anyone know about it,I wasn’t shock though i knew they know about the herbal cure but choose to hide it in other to make sales on ARV DRUGS,if you are HIV positive please contact my savior dr.alabiherbalhome@gmail.comor WHATSAPP him through this number +2348115204568

Report abuse

herpes virus cure

Posted by sharon,

I have a wonderful testimony to share to the whole world on how Papa Egbe used his herbal product on me, I have been affected with HPV for 6 years and I might papa Egbe through a testimony shared by someone online and told my self let me give him a try and visiting many hospitals and herb home for cure and so lucky for me he did a wonderful job on me and the virus I have had for 6 years was completely cured, thank to Papa Egbe for making me healthy again. What are you infected with=
Hepatitis ABC.
Hiv and aids.
Hsv 1&2.
Hpv.
Cancer of any kinds.
Diabetes.
Genital wart.
Kidney Disease.
Heart disease.
Relationships and marriage problems.
Contact him now for a cure via email papaegbespiritualtemple@gmail.com or via WhatsApp +2348134959928, with your infection listed and not listed, for Natural Remedies.

Report abuse

Follow us

Products

View more

Webinars