Back in 1985, the company infuriated long time consumers by replacing its signature drink with New Coke. The consumer response was so strong the company relaunched its original recipe as Coca-Cola Classic and for a time, both drinks were sold side-by-side on store shelves. Eventually, New Coke was phased out and Coca-Cola Classic reverted to simply, Coca-Cola.
Now Coca-Cola seems ready to embrace the low-carb bandwagon – a trend that has seen food and beverage companies trying to decide whether to dive in or ride it out.
Katie Bayne, Atlanta-based senior vice-president of integrated marketing for Coca-Cola North America, says the difference this time around is Coca-Cola C2 is designed to create an entire new class of beverage: "There was a different strategy around New Coke. It was meant to be a replacement product. C2 is by no means a replacement product. Coca-Cola is the favorite soft drink in the world. We have no intention of changing it one iota.”
To help drive the branding home, C2's product launch uses the Rolling Stones song "You can't always get what you want" (until now, says Coca-Cola) and Queen's "I want to break free." The commercials featuring both songs show typical imagery for soft drink advertisements: spontaneous, carefree people.
Bayne says Coca-Cola C2 is geared toward people aged 20 to 40, an older demographic than traditional Coke, which targets the 18 to 24 year old category. "Coca-Cola C2 is for people who really enjoy the taste of Coca-Cola but can't drink as many as they used to. They can't have six or seven per day. Now we've provided a solution that gives them all the taste without all of the carbs or calories," she says.
An eight-ounce serving of C2 has 45 calories and 12 grams of carbohydrates, compared with original Coke’s 100 calories and 27 grams of carbohydrates. Bayne says Coca-Cola C2 is a beverage solution that still delivers on all the elements of the brand: "It's a younger brother that very closely resembles the older brother. They look alike, taste alike, they're still in the same family but there's only one first born son.”
The packaging graphics of C2 feature the familiar Coca-Cola trademark in black on a "Coca-Cola red" background to provide a distinctive visual difference between it and the brand’s flagship.
Rob Warren, director of the Asper Centre for Entrepreneurship at the University of Manitoba in Winnipeg, says Coca-Cola is likely justified in its projections for C2: "The cola market is a slow growth industry, something like one percent per year. But the low-carb market is growing at double digit rates. There's nothing but upside."
“It doesn't look like it's a fad,” Warren says referring to the low-carb craze. “A year ago a lot of people thought it would die out but it keeps on trucking. People want to lose weight by any short cut they can."
Warren notes one potential negative aspect is that Coca-Cola doesn't have a reputation for producing healthy beverages. "Consumers might think, ‘why should I see them that way now?’ Coke doesn't have the name recognition for it. Diet Coke is low calorie but C2 is a totally different market," he says.
Bayne also notes the difference between C2 and Diet Coke. She says back when Diet Coke was launched in 1982, there was a large segment of consumers that wanted a carbonated soft drink with zero calories. In fact, the initial advertising slogan for what Bayne calls the first "really good tasting diet soft drink" was "Just for the taste of it."
"C2 is something different. It's for consumers who enjoy the taste of Coca-Cola but don't like the taste of Diet Coke and they're not prepared to change their tastes (for Diet Coke) to get the lower calories," she says.
But if C2 is basically regular Coke with fewer carbs and fewer calories, why would anyone buy Coke? Bayne says she expects there to be some cannibalization of Coke’s market by C2’s, but she also expects to source from some other cola and non-cola soft drinks. "Our research found there would be sourcing from other non-carbonated drinks, like juices and waters. But a lot of our volume we expect to be incremental," she says.
Bayne says there are 100 million people who are "straddlers." They were once very interested in full-sugar soft drinks but they don't want to go to diet varieties. "They're lost in the middle. That's where the category expansion comes from. Fifteen per cent of the volume C2 will deliver will come from water and non-carbonated drinks, like lemonade and juice. We'll bring users back into the category or up the frequency of existing users," she says.
In the past two years, Coca-Cola has introduced four new products into the cola category — Vanilla Coke (2002), Diet Vanilla Coke (2002), Diet Coke with Lemon (2001) and earlier this year, Diet Coke with Lime (2004).
She says Diet Coke Vanilla had a "great" year in 2003, and Diet Coke with Lemon was relaunched with the lime version and its sales have also improved. "We carefully monitor consumer satisfaction and when you might replace one with something else. With the space constraints of retail shelves, we want to get the biggest bang for our space," she says.
"I'm not saying all three will be around forever. Right now they're all doing pretty well, but we might have something planned next year that might have us change that," says Bayne, cryptically optimistic.