These have hardly been salad days for the sugary drink category.
According to a report released this month by Beverage Digest, consumers are swilling less soda, leading the category to decline for the eighth straight year. The amount of soda consumed worldwide in 2012 is down to 1996 levels. Here in the U.S., it has fallen to 1987 levels. In fact, the only brands that haven’t experienced a significant sales drop are Coke, Sprite and Diet Dr. Pepper (sales of these brands were flat–at least they didn’t lose ground).
The reasons for this category-wide dip are mainly over health concerns. With two-thirds of American adults now labeled as “overweight to obese,” the major soda companies have been held up as major culprits.
This seems to be one problem the category isn’t able to spend its way out of. Ad spending for major brands is at an all-time high, In fact, PepsiCo’s global ad spending for the first quarter of 2013 is up a staggering 11%. Yet the snack and beverage giant’s profits have fallen 5% for the same period.
So what are the soda companies to do? They have mountains of cash at their disposal. Their brand names are some of the most recognized in the world. And distribution? They’re about as ubiquitous as the air we breathe. Both Pepsi and Coke are acknowledged leaders in both mobile and social media (Coke, in fact, has the most Facebook fans of any brand–more than 61 million).
For clues as to what might help them and what probably won’t, let’s look at what the category’s two biggest players are doing.
Pepsi has doubled down on tying the brand’s future to well-known celebrities. The takeaway from its advertising and promotion seems to be “if you like this celebrity, then you’ll like Pepsi.” This strategy worked like gangbusters in the 1980s. Celebs like Michael Jackson, Madonna, Michael J. Fox and others made Pepsi the “cool” soda choice. Today, however, their much-publicized “creative partnership” with Beyonce is proving to be a multi-million dollar dud. What’s more, the brand’s big-money forays into social media promotion have yet to cause a sales ripple (more on that in this post).
Coca Cola on the other hand is taking a different tact. They are associating the brand with the mantra of “happiness.” The brand’s advertising is “including” users, not talking (or performing) at them. Associating a brand with a positive emotion is going to be more effective every time.
Another interesting tact Coke is taking is its attempt to be more transparent, and actually address the obesity issue head on. The world’s most valuable brand has openly acknowledged obesity as “the issue of this generation.” It launched an ad campaign aimed at “reinforcing (its commitment) to finding meaningful solutions to the complex challenge of obesity.”
Will this approach work? It definitely has proven to be somewhat controversial. Critics claim it’s no more than an attempt to distract from the real issue. My view is that it never hurts to acknowledge the truth (at least the truth most people accept). So long as there is a meaningful commitment to improve things.
We’ve yet to see how Coke intends to follow up its ad campaign. As a next step, I’d implore Coke to put its money where its mouth is, by creating and supporting events and promotions that reward people for lifestyle changes. Even if it means they drink a few less cans of Coke a week. Don’t simply treat this as a “health initiative.” Tie the health aspect into the whole “happiness” hook the brand has latched on to.
Even if effective, will such a program work to reverse the trend of faltering soda sales? Highly unlikely. However, even declining categories have their “good guys,” and Coke is primed to be that company.
Committing to help people address the “challenge of a generation” will, I believe, do more to promote the brand that a halftime concert at the Super Bowl.
Posted by Mickey
