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Coca Cola has struggled to maintain their market share in the growing beverage market while rival PepsiCo expands businesses into snack foods, sports drinks and bottled water. Coke’s failure to diversify its product offerings may be attributed to corporate culture, failed CEO’s and failed product introductions. According to “Gone Flat”, Business Week, 2002, former CEO Roberto C. Goizueta often discussed Coke’s market share as a “share of stomach”. Today’s consumers are selecting beverages other than sodas, so Coke must think beyond sodas to realize a dominate “share of stomach”.

It is time for Coke to expand their product line to include gourmet coffees, bottled in a container similar to the iconic Coke bottle and incorporating the Coca Cola trademark to capitalize on existing brand equity. Coffee flavors should be developed using extensive market research and taste tests, so Coca Cola can offer the most exciting and unique flavors of coffee. Two or three flavors should be launched to introduce the new brand. Similar to the hallowed four sodas: Coca-Cola, Diet Coke, Sprite, and Fanta, Coke must focus on a few varieties of coffee to capture market share.

In 2006, Coca Cola launched Coca Cola Blak, a coffee flavored soda. While some might view this as a move towards diversification, it will not open up new soda markets, but will likely cannibalize existing Coke sells. In addition, recent efforts to ban sodas from schools, entries of new competitors and health conscientious consumers, will continue to erode the soda market. According to a company press release, Starbucks’ total net revenue rose 20.3 percent, from 2004 to 2005. As of February 2006, Starbucks had 6,216 company-operated outlets worldwide: 5,028 of them in the United States and 1,188 in other countries and U.S. territories. There is clearly a demand for gourmet coffees. Starbucks has captured the retail portion, but there remains a vast market for prepared, take home, gourmet products.

Coke Coffees will be introductory so extensive advertising and promotions will be needed to generate interest. Guerilla marketing, through the internet, using humorous content such as that provided by JibJab.com, would ensure circulation and word of mouth interest. A coupon for a free sample should be included in all packs of Coca Cola products to recruit from existing customer base. Taste tests can be done at college campuses, sporting events, concerts, malls and at restaurants already partnered with Coca Cola. Co-marketing campaigns with Coke Classic and Coke Coffee can build on existing brand equity, by showing the two sides of Coke: past and future, classic and edgy, cool and hot.

The greatest barrier to overcome is the reluctance of the board to expand into new offerings, aside from soda products. Offering a new flavor, new package or new marketing strategy will not revitalize a declining market. Coke must develop their product line to include beverages other than sodas. It is clear that Coke’s current strategy is to offer even more flavors to entice soda drinkers back, such as: Vanilla, Cherry, Raspberry, Lemon and Lime Coke and Diet Coke flavors, as well as, Coke Zero, C2, Coke with Splenda, and most recently, Blak. It will be challenging to overcome a culture unable to accept changing market demands. According to “Gone Flat”, “the beliefs and attitudes that make up a culture filter into everything else….That’s why the problems at Coke have proven so intractable.” A cultural change must come from the top down and must include an unwavering intention to redefine Coca Cola as more than a soda pop company. Lastly, Coke must repair the damage done to relationships with business partners, such as bottlers and retailers. Coca Cola must be willing to share the rewards of success, as well as, the risks of thinking out of the (soda) box.

© Copyright 2006 Lisa Hood. All rights reserved.