Shop Talk
Retailers, consumers and prices
Check Out Line: Coke’s secret lab looking for newest drinks
Check out Coke’s scientists concocting the beverage maker’s next blockbuster.
With carbonated drinks sales fizzling, companies like Coca-Cola and PepsiCo have for years been exerting great efforts to find the next home run drink. Bottled waters, energy drinks and sports drinks are now commonplace, with new variations popping up that claim to boost relaxation, health, beauty, anti-aging, muscle repair, mood and immunity.
At its Atlanta headquarters, Coke has a team of scientists feverishly working away like the Muppet Show’s Dr. Bunsen Honeydew and Beaker, toying with new beverage formulations. And they have to be creative. Look how weird the world of drinks has gotten: some of the unusual products out on the market now include chunky aloe vera drinks and spicy drinks like those made by Prometheus Springs, with flavors like Lychee Wasabi and Pomegranate Black Pepper.
Coke is not taking any chances. It’s Venturing and Emerging Brands unit functions as a sort of in-house VC firm and invests in independent brands like Honest Tea and Zico coconut water, and developing its own drinks, like a new carbonated dairy drink called Vio.
Also in the basket: - Alberto Culver posts stronger-than-expected profit - Lorillard beats expectations - Jones Apparel signs license deal with Inter Parfums
(Reuters photo)
Check Out Line: Have a Coke and a confused looking grin
Check out the confused American consumer.
Coca-Cola Co actually saw sales volume rise in North America in the second quarter, a rare feat.
Now imagine what would happen if U.S. consumers could actually figure out if they can afford to keep spending the money on a soda, what with high unemployment and the jittery stock market.
The world’s biggest soft-drink company says it has the brands to grow in North America, the ability to spend to support those brands and other factors.
But one quarter of growth is not enough to make the folks in Atlanta jump for joy.
“The consumer is still confused in the United States,” CEO Muhtar Kent said during a conference call with analysts.
“There’s still confusion out there in terms of the consumer spend levels, but we are moving on the right path. That’s the key message here,” he said.
Check Out Line: Appetite grows for food deals
Check out what we’re hearing from top executives attending our Food and Agriculture Summit in Chicago this week.
Kantar Retail Americas Chief Executive Ken Harris, a top industry consultant, said he sees a healthy appetite for strategic acquisitions in the food and grocery space this year as improving credit markets and a recovering U.S. economy tempt buyers.
“It’s not about making a big acquisition, but you’ll see some smart acquisitions starting to happen over the next six to 12 months,” said Harris, who advises food manufacturers and retailers on their business models and acquisition strategies.
Also in the basket:
Danone: U.S. yogurt consumption to double
Olympic Gold for Coke, McDonald’s and Visa
When is Olympic sponsorship money well spent? A Performance Research poll shows it may depend on how the funds are used.
Coke, McDonald’s and Visa dominate consumer awareness when it comes to the Olympics, according to a study by the Rhode Island-based research firm that evaluates the sponsorship industry.
Sixty-eight percent of Americans polled confirmed the Olympic sponsorship of Coke and McDonald’s, followed closely by 66 percent for Visa, Performance Research said. Those three companies also were listed as having consumers’ favorite Olympic TV commercials and doing the most to support the Games.
“They start their advertising early and they’re continuous with it,” Performance Research President Jed Pearsall said of the three companies’ success. “They’re always reminding people they’re Olympic sponsors.”
Other sponsors trailed far behind in consumer awareness — AT&T (36 percent), Procter & Gamble (27 percent), Polo Ralph Lauren (26 percent), GE (25 percent), Samsung (24 percent) and Panasonic (20 percent), according to the study.
Meanwhile, ambush marketing is alive and well at the Games despite the efforts of the International and U.S. Olympic committees as restaurant chain Subway was associated with the Olympics by 26 percent of respondents, Performance Research said.
Nearly half of respondents saw Subway’s ad with swimmer Michael Phelps, who won eight gold medals at the Beijing Summer Games in 2008, and 79 percent of those believed Subway supported the U.S. Olympic team.
Check Out Line: Coke’s actions speak louder than its words
Check out Coke’s about face on its relationships with one of its bottlers.
Coke plans to buy the North American operations of its largest bottler, Coca Cola Enterprises, in a substantially cashless deal that would let it cut costs and be more flexible in its distribution.
The announcement of the deal comes just as Coke rival PepsiCo is about to close its own $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group and PepsiAmericas. It also reverses Coke’s previous stance, spelled out in repeated comments over the past several months, that its current relationship with its bottlers was just fine and it didn’t need to copy Pepsi.
Coke CEO Muhtar Kent said last April when the Pepsi deal was first announced that its franchise model was the best way to go and repeated that stance again in July, September and December.
Also in the basket:
M&A is up big time across the globe and jobs are taking it on the chin because of it. Look at pharma/insurance/energy sectors. Jobs have been hit hard from M&A. If I worked for CCE, I’d be worried about my job.
Check Out Line: Have a Coke and an in-line quarterly profit
Check out Coke’s quarterly profit.
Coca-Cola reported a fourth-quarter profit that matched Wall Street’s expectations as strong volume in China, India and Brazil offset a decline in North America. Lower costs and market share gains in both the carbonated and noncarbonated segments helped too.
Coke’s growth in the developing markets — fourth-quarter volume rose 7 percent in Latin America and 11 percent in the Pacific region — helped offset a 1 percent volume decline in the closely watched North American market. Volume was up 1 percent in Europe.
Also in the basket:
McDonald’s January same-store sales up 2.6 pct
Coca-Cola’s tale of four cities
It was the best of times, it was the worst of times …
When trying to determine how and when consumers will recover from the downturn, Coca-Cola CEO Muhtar Kent sees the world broken into four quadrants. It’s “A Tale of Four Cities,” he said.
Think of four different quadrants, Kent said on a call on Tuesday after the company reported second-quarter results.
1. Europe, North America and maybe a couple of other economies – “where we will probably be experiencing resets in terms of the consumer psyche, where they’ll probably do things differently than they’ve done in the past.” 2. China, India, Brazil - very strong, quick rebound 3. Japan – “stagnation” 4. Eastern Europe, Russia and the Ukraine - volatility. “It could come back quickly and then it could go back down quickly. I think we’re in for a few years of zigs and zags for Russia, Eastern Europe and so forth.” (Reuters photo of Kent at a 2008 news conference in Tokyo)
Cola truce? Coke and Pepsi trade niceties on Twitter
Cola rivals Coke and Pepsi gave their long-standing feud a rest last week after a user-provoked experiment on Twitter prompted the two pop makers to trade friendly greetings on the popular social networking service.
Coca-Cola responded first to a clever user’s message suggesting that the two make nice on Twitter, offering “A gracious (yet competitive) hello” to Pepsi. In return, Pepsi extended a Twitter-style olive branch of sorts to its competitor: “Can rivals and tweeps coexist? We’re willing to find out. ” Tweeps, for those unversed in the lingo, is a cutesy term for Twitter users.
The whole episode began with the single Twitter message sent by a digital media consultant from a web marketing firm called Amnesia Razorfish based in Sydney, Australia, but quickly grew as other users got in on the fun and repeated (or “retweeted”) the message to their own friends and followers across the social network.
Within three hours of the original message being sent, Coke had fired off its friendly response and even decided to add Pepsi to its Twitter network. Pepsi took a bit longer to respond but wasn’t far behind in returning the virtual handshake.
Considering both companies’ long-standing commitment to the whole cola-war marketing scheme, such a quick decision to take part in the digital truce may come as a bit of a surprise. But what’s probably more illuminating about the viral affair is that it shows two companies with deeply established brands adapting their marketing strategies to the world of social networking.
Whether the whole incident actually compelled anyone on Twitter to go out and buy a bottle of Coke or Pepsi is less important than the essential message it sends to consumers – namely, that their brands are still fun and youthful.
Moreover, as people increasingly turn to the Internet for information and entertainment, companies are being forced to accept that they have less control over what information gets to consumers. In such an organic environment, top-down brand management no longer seems to be a sustainable strategy.
Sodeman’s got it right. I’m sure it wasn’t the board members or exec’s trading tweets here!
Check Out Line: Signs of stability at Coach
Check out signs of stabilizing demand at U.S. handbag and accessories maker Coach.
The leather goods company posted a lower quarterly profit, but said business was stabilizing at its North American stores at pre-December levels. The company has refrained from deep profit-sapping discounts in a strategy that has preserved the status of its brand but hurt sales.
Chief Executive Lew Frankfort said consumers have some optimism that the worst of the uncertainty is behind them and Coach has greater visibility into how shoppers will behave in the coming months.
Coca-Cola also reported a lower profit, but its results met analysts’ expectations. That came a day after rival PepsiCo posted a better-than-expected quarterly profit and offered $6 billion to buy the remaining stakes in its two largest bottlers as it seeks to better control its distribution and cut costs.
Signs have been mixed as some companies still point to pressure on consumers, and even top Federal reserve policy makers have different opinions.
Also in the basket:
Not your father’s soda machine
Coca-Cola is trying out high-tech, flat-screen vending machines.
The new machines, which feature a touch screen, will be tested this spring in select Simon malls in the southeastern U.S.
Coca-Cola and Simon will also test several interactive promotions with the machines, which will accept Simon gift cards.
“The new machines incorporate sight, sound and motion video to take the vending experience from transaction to true interaction,” said Anthony Phillips, global brand manager at Coke.
Coke did not say which malls will feature the next-gen machines, but some of Simon’s properties in the Southeast include Orlando’s Waterford Lakes Town Center, Miami’s Dadeland Mall, Atlanta’s Lenox Square and The Fashion Centre at Pentagon City in Arlington, VA.
(Photo: Provided by Coca-Cola)
i work at capital one and i wish we get one waaaaaaa. (squeaky voice)
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Resident Shop Talk Expert
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