Has the obesity and sugar debate turned Coca-Cola into the company we all love to hate? asks Karen Connell.
Coca-Cola is the giant of the soft drinks industry, yet the original mass marketer has received quite a bit of negative press lately: carbonated soft drinks are losing their fizz with volumes down and profits harder to maintain. On top of this, the obesity and sugar debate appears to have turned Coca-Cola into the company we all love to hate. Big bad Coca-Cola.
It’s not just Coke that is suffering from being big or being viewed as bad, multinationals everywhere are under constant threat of diminishing returns, lacklustre results and bad press. However, it’s the effect these have on organisations’ behaviour that is the real threat. When big organisations feel threatened, introspection and fear are familiar by-products, and this translates into companies not doing what they need to do but rather what they can do; in other words, creating “stuff”.
Stuff that on the surface appears innovative but is no more than a cosmetic enhancement. Stuff with strategies that struggle to be executed. Stuff born from pressure groups that ultimately lack a market. Stuff that keeps everyone busy, but in truth is little more than an expensive distraction.
Enter Coke Life. Less calories, less sugar, more natural and tastes just like the real thing. But, is Coke Life just “stuff”, as some have suggested?
To fully understand this, we need to go back to 1899 When Coca-Cola first decided to separate its manufacturing and distribution from its brand and marketing function. Then, retailers were still relatively small, and their commercial power was influenced by what consumers wanted and what suppliers wanted to deliver. “The System”, as it is known, allowed one entity to influence the masses of consumers and the other to influence masses of small retailers.
Today that picture is very different, with huge retailers with ferocious buying power and shrinking shelf space threatening profits. On top of that, new forms of media have made the world both smaller and bigger at the same time. Mass markets have become masses of niches; clusters of consumer groups and ‘friends’ who accept or reject a brand’s messaging in a click.
Building a successful brand is determined by engaging and delighting a small group of brand advocates who, over time will support the brand until eventually a serious (mass) market evolves. This is exactly the model that Coca-Cola arguably invented to build brand Coke, but paradoxically is no longer available to Coke Life.
Coca-Cola is caught in a power struggle with itself and the market. It needs to stay big enough to maintain the economies of scale that keep prices down and service a customer more powerful than itself. Yet, it needs to be able to think small enough to innovate and compete in new categories, while engaging with and satisfying the needs of individuals that are more powerful than itself.
Coca-Cola is neither bad nor stupid, it’s just big. And unless Coke Life gets big quick, it will be too small to survive, and will, indeed, simply become “stuff”.
Karen Connell is founder of The SMALLmighty consultancy