Coke adapts US approach

20 September 2011

ATLANTA: Coca-Cola, the soft drinks giant, is adopting innovative solutions as it seeks to attract price-conscious shoppers in the US.

The company is launching a new 12.5 ounce bottle of Coke, costing only 89¢, targeted directly at this audience, having rolled out a 16 ounce bottle, commanding 99¢, in convenience stores last year.

Introducing these smaller alternatives to the typical 20 ounce bottle constitutes one key part of the firm's attempts to reach consumers who are facing an increased squeeze on their finances.

Similarly, the drinks specialist is cutting prices on packs of eight "mini-cans", another recent addition to its portfolio weighing 7.5 ounces each, by roughly 20%, to $2.99.

Such moves represent a significant shift in the company's strategy, after previously focusing on 20 ounce bottles in C-stores, alongside two-litre bottles and 12 ounce cans in bigger outlets like Wal-Mart.

Coca-Cola's approach is based on tactics first used in Mexico in response to an economic crisis during the mid-1990s, following which its trademark brand was made available in more than 30 sizes, between 6.75 ounces and three litres.

"In the USA, we're really just at the beginning,'' Sandy Douglas, president of Coca-Cola North America, told the Wall Street Journal.

Coca-Cola, Sprite and Fanta are all set to witness similar innovations, meaning customers actually pay more money per ounce than on larger packs, where prices are being increased.

Lying behind this model is the idea of "Occasion, Brand, Price, Pack, Channel", with the company seeking to serve over 30 different need-states, like "family home meal" and "gotta have it to go."

A further potential advantage is using cheaper offerings to attract shoppers, who then buy a more expensive Coke product in stores. Glen Walter, Coke's chief regional sales officer, described this goal as "bring 'em in and then trade them up."

PepsiCo, the main rival to Coca-Cola, has also started selling 16 ounce bottles of some drinks, alongside a reduced 1.5 litre bottle, rivalling the 1.25 litre line rolled out by Coke in 2010.

"Price-package architecture is absolutely core to what we do," said Simon Lowden, PepsiCo's chief marketing officer for North American beverages.

Data sourced from Wall Street Journal; additional content by Warc staff