Sales of Coca-Cola’s flagship product, the carbonated sugary drink we know a Coke, dropped 3.5% last quarter; proof you can’t go against a cultural tide of healthier living and expect sales to hold forever. Coke’s parent has been doing a great job of diversifying its portfolio the last 10 years by adding juices, milk-based protein drinks, waters and energy drinks. Even with the tide receding for flagship Coke, earnings have been surprisingly okay. Looks like that is not the case anymore.
If you follow the tech sector as I do, you will know that product innovation can completely change markets is 3-5 years. The beverage sector has lots of innovations, according to Beverage Digest, but they are really incremental. Coconut water, craft beer, energy concoctions, and cold pressed juices are nice ways of redistributing marketing wealth, but haven’t fueled the big ass innovations we’ve seen in tech.
Coke needs to think differently. I’ve posted before about how they need to send R&D people into the jungles in search of the next cola nut…something with healthy properties. But Coke also needs to think about pricing and delivery. Why 12 oz. cans? Why cans and bottles? Why not explode the price point for a six pack? How about an annual subscription fee? Coke’s head is so tied up in its bottler arrangements, distribution networks, store detailers, fountain business it can’t think like an agile start-up. Sure they can buy 49% of the next Honest Tea, but can they be the next SnapChat.
My bet is they can. But not if they follow the innovation courses of GM or the financial industry. Follow the tech paradigm. Peace.