COLA: FINALLY UNDER THREAT The naked truth is that the cola market is in difficulties. What are the suppliers doing to reverse the decline? No product, however iconic, is invincible. This is the hard lesson that everyone in the cola market, from Coca-Cola, Pepsi and other secondary brands, to the retailers who sell these products, has been learning recently. The cola market is under threat, arguably for the first time in its long history. The crunch point was last summer when figures for the year ending August 1999 showed cola's very first year on year decrease in volume market share [Taylor Nelson Sofres]. Coca-Cola's global profits plunged more than 30% following two years of declining earnings, causing it to shed thousands of jobs worldwide this year. Princes Soft Drinks,which makes branded and own label cola, pins cola's sorry performance on increased competition on all fronts. Says carbonates marketing controller Bernard Maher: "Though cola's value share is positive, it is increasingly under pressure from other carbonate variants, particularly fruit flavours. It's market position is also threatened by the growth of other soft drink sectors targeted at the same consumer, and the immense improvement in retailer brand offerings. Despite the increased competition, cola still commands a dominant 46% of the entire UK carbonates market." Virgin Cola attributes the volume fall to the failure of the cola giants to innovate. Says md Swag Mukerji: "Coke and Pepsi have been around for a long time, but haven't done much that's new. In depth consumer research we've done recently shows that consumers of all ages find the category dull, boring and unexciting. Consumers want innovations that are new and relevant to them. They're more sensitive to innovation than to price, which is currently driving the market, but only because there's little else to promote sales." Aggressive promotions have been the main weapons in Coca-Cola and Pepsi's battle for sales in the last 18 months. This approach has kept Coca-Cola's UK sales afloat. Last year they bucked the global trend, rising 3.5%, according to trading director Paul Gordon. This year Gordon says the aim is to grow Coke's volumes 7% and the category's 5%. Its hopes are pinned on a range of promotional activites, the key one being a collector scheme for a mobile phone, one of the most desirable consumer products at the moment. For 60 promotional ringpulls and/or tokens, plus £30, consumers can get a Coca-Cola branded Ericsson phone and connection to One 2 One's pay as you go service. It's continuing with sports sponsorship, the main events this year being Euro 2000 and Wimbledon tennis. Advertising has been completely overhauled, with a new global campaign slogan enjoy', and a fresh campaign to promote the taste of ice cold Coke. Advertising is also being tailored to local markets for the first time, the UK's initial offering being a diet Coke TV campaign. Pepsi's promotional activity this year is centred on its new global Ask For More campaign which harnesses music and sport to reflect the lifestyles and aspirations of its target audience of teenage consumers. Singers Robbie Williams and Ricky Martin have been signed up for year long contracts, while footballers David Beckham and Michael Owen are being brought into the Pepsi UK team for 2000 and will be featured in a range of sales initiatives, include on pack promotions. Britvic is spending £3.5m on the Pepsi Ask For More Football campaign alone. Despite its tiny 3.9% volume share of the cola category, Virgin Cola's mission this year is to rejuvenate the market with a range of innovations that it says consumers are crying out for. Last week it announced three developments which make their debut in June. These include a two litre version of the iconic CurV bottle which Mukerji says is easier to pour than competitive products, and mini-V, a chunky 250ml resealable bottle designed for children. Caffeine free, it contains 30% less sugar than other colas. "This meets children's needs for something small and resealable. They don't want 500ml bottles. Parents will like it because of the reduced sugar. We expect to sell 1m cases this year," says Mukerji. It is also launching its biggest ever loyalty scheme, i-CAN, giving Virgin Cola drinkers a total £15m off products across the group. "Consumers can access the whole of the Virgin brand at vastly reduced costs and at a very low entry point. For only six ringpulls or tokens, consumers can start to get a range of offers, which range from £1.50 off a CD in one of our music stores to a £100 off a holiday with Virgin Sun. There will also be a range of exclusive offers on the Virgin Cola web site, such as last minute deals on flights and holidays, plus special prices on host of additional Virgin brands," says Mukerji. {{FOCUS SPECIALS }}