Consumers look to brands they "love and trust" - Warc News

News: October 22, 2009

Consumers look to brands they "love and trust"

ATLANTA: Consumers typically "gravitate toward and reward the brands they know" and look to the products they "love and trust" during periods of financial uncertainty, according to Muhtar Kent, ceo of The Coca-Cola Company.

Coke's profits rose slightly, to $1.9 billion (€1.3bn; £1.1bn), during the last quarter, but its total revenues declined by 4%, to $8bn, in the same period, largely as a result of unfavourable exchange rates.

In several key markets, including North America, Europe, Japan and Russia, Kent suggested that a "different kind of consumer" is emerging, with new spending priorities.

"We believe it is going to take a while for the consumers psyche to settle to a new normal. In these markets, we are focused on sustaining our brands as the most relevant and valuable proposition for consumers," he said.

In a more positive development, the soft drinks giants' volume sales rose by 3% in Brazil, 9% in Mexico, 15% in China, and 37% in India, and in these areas the Atlanta-based firm is "maximising value and building consumer loyalty."

Despite this improved performance in many fast-growing economies, Kent argued the recession has "impacted people in every market around the world," a trend that will continue next year.

In response, the owner of Fanta and Dansai has rolled out a global advertising platform, Open Happiness, as well as placing a greater emphasis on digital media, with its ceo heralding its success.

"Cultivating love for our brand is translating into winning in the marketplace," Kent argued. "In fact, we continue to outperform the industry across many of our key categories and geographies."

"We can confidently state that we continue to invest heavily in building our brands with consumers."

With regard to its communications strategy, the beverage maker has moved to commit greater resources to reaching shoppers during the final stages of the purchase process.

"We have sustained our overall direct marketing spend in 2009, while also increasing our overall marketing effectiveness," said Kent.

"Specifically, we are increasingly spending more in point-of-sale marketing and activation programs," he added.

This includes running more promotions, shopper marketing initiatives, sampling and loyalty programmes in Europe, and diverting more funds to in-store materials in North America.

Sponsorship is another area of heightened activity, be it through partnerships with the FIFA World Cup and Winter Olympics, or its recent tie-up with Live Nation, the concert promoter.

In its home market, Coke is also aiming to continue the "horizontal expansion" of its still beverage portfolio, a move that may be further encouraged by the possible introduction of a "soda tax" in America.

Simply, the company's juice brand, is also on course to become its next billion-dollar asset by sales, according to Kent.

More broadly, he predicted "the US is going to have to pull the general consumer sentiment up in the world … But I just don't have an idea about the timing and how that's going to occur."

China is another country attracting a high level of attention from the American multinational, which launchedMinute Maid Pulpy in the world's most populous nation earlier this month.

"We are consistently growing faster than our nearest global competitor and we are now more than twice their size and volume. We are the clear sparkling category leader in China," said Kent.

Data sourced from Seeking Alpha; additional content by Warc staff, 22 October 2009

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