Is this the end of Coca-Cola?

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It seems that the big soft drink companies are moving away from sugar, and focusing more on healthy beverages. They are changing their marketing strategy in order to capture renewed market share away from fizzy and carbonated drinks.

Take, for instance, Coca-Cola. It was back in 2009 that Coca-Cola first announced plans to follow Pepsi into coconut water, obtaining a minority stake in Zico Beverages.

Today it’s setting its sights on dominating the coconut water sector altogether, that is estimated to become a $7 billion market globally by 2021.

 

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Eating – and drinking – healthy has dominated headlines and column inches for the past couple of years, with brands increasingly competing to win over health-conscious customers. In short, making beverage offerings healthier is essential to future success.

And Coca-Cola knows this.

Just last week it launched its new organic juice-coconut water blends, ZICOCocoLixir. Flavours include ‘unbe-leaf-able’, ‘turn up the beet’ and ‘for lemon’s sake’.

“Coconut water is — and is perceived to be — a better-for-you product,” Tom Larsen, Zico’s general manager, told Business Insider in a recent report.

Zico also comes in chocolate, watermelon-raspberry, and jalapeño-mango flavours.

“By 2020, Coca-Cola executives estimate that coconut water will be a $1.5 billion category in the US,” reports Business Insider, which makes Coca-Cola’s foray into the coconut water market a strategically essential move.

With market-research firm Technavio estimating that the global market for coconut water will reach more than $7 billion in 2021, the website reported.

Pepsico, for example, launched a new sparkling water brand called bubbly in February.

 

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Will water come to Cola’s rescue?

Given the continuous slow performance of Diet Coke and Coca-Cola Zero, the Coca-Cola Co launched Coca-Cola Zero Sugar, testing the offerings in a few markets.

According to a report by Euromonitor, the company is moving towards a category cluster and has a clear strategy of how to develop and market premium and affordable brands in different markets.

In its Soft Drinks Global Overview report last year, Euromonitor noted that volume growth in global soft drinks is slowing, particularly in carbonated soft drinks and juice. Economic and political instability further threatens global prospects, particularly in emerging markets. Nevertheless, new, lower volume occasions and premium products provide a needed lift in value sales.

The global soft drinks industry has faced unprecedented scrutiny from public agencies and regulators over the impact soft drinks have on global health.

Further excise taxes on soft drinks are likely over the forecast period, as brand owners urgently transition their portfolios towards healthier options, the report noted, adding that smaller store-based impulse channels will gain importance, as will healthy, natural drinks that meet the nutritive needs of an aging population.

 

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Coca-Cola seems to have got a sense of this trend. But will it really pay off?

“The move by Coca-Cola to venture into producing coconut water-based beverages is a very interesting one. Coco-cola is usually associated with carbonated drinks, which are perceived to be unhealthy as they are rich in sugar and artificial preservatives,” MR Raghu, MD Marmore Mena Intelligence, told GMR.

“In an age,” he added, “where people are increasingly moving towards a healthy lifestyle, the introduction of flavored and unflavored coconut water might appeal to that segment and help increase Coca-Cola’s customer base. The addition of coconut water beverages will widen its product range and help to brand itself as a total beverage company. As the potential of the healthy beverage market is high, the move will not only allow them to tap into it but also help with its branding.”

So is this the end of Coca-Cola, as we know it? Definitely not.

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