Cola?s Still a Hit ? No Myth

Even though the shift away from soft drinks towards other beverages is transforming Australia?s ?stomach?, cola remains the most popular drink in the fridge.

According to a guy called Rob (www.angelfire.com), you can use cola to clean your toilet bowl, remove rust spots from a chrome bumper bar and relieve jelly fish stings. Although Mythbusters (www.mythbustersfanclub.com) debunked many of these, and other, claims made for cola (it does shine pennies better than phosphoric acid), cola?s reputation as the most important beverage in the convenience store fridge is no myth.

Share of stomach

If you think of convenience channel beverage sales as one big stomach ? full to the gunnels with soft drinks, flavoured milks, fruit juices, energy drinks sports drinks and waters ? cola makes up 24% of the volume and 28% of the dollars. This is quite a bit lower than only three years ago (32% of the dollars).

Cola sales are still growing (3% by volume), but sales of other drinks such as energy drinks, juice and water are growing much faster. In particular, energy drinks have increased their share of stomach from 12% to 15% with sales growth over 30%.

?Consumers are not totally trading out of cola,? says Kate Wilson, Coca-Cola.

?They are adding other beverages to their repertoire. Five years ago, the average number of beverage brands was eight; now there are 13.

?Coca-Cola?s marketing strategies reflect this trend. We introduced flavoured Coke to create a ?Coke for everyone?. Vanilla sold well and now has a loyal consumer group; Cherry did not attract the same loyal following and has been replaced by Lime. Coke with Lime was introduced in June 2005 for this summer.

?The ?original? Coke drinker is typically a 19 year old male. Vanilla Coke appeals to younger teens around 13 years, and Coke with Lime appeals to young adults ? the 25 year olds.?

New flavours refresh the market and generate incremental cola drinking occasions. And cola is the preferred soft drink by far. Not only are the top 10 single carbonated drinks colas but the 10 account for 80% of total cola sales.

COLA UNITS	% COLA SALES
Coca-Cola 600 ML PET	24%
Coca-Cola 1.25 L PET	12%
Coca-Cola 2 L PET	11%
Coca-Cola 390 ML PET	7%
Coca-Cola 375 ML CAN	7%
Diet Coke 600 ML PET	7%
Pepsi Max Diet 600 ML PET	3%
Diet Coke 1.25 L PET	3%
Diet Coke 390 ML PET	2%
Vanilla Coke 800 ML PET	2%
Diet Coke 2 L PET	2%

Coca-Cola continues to dominate the cola market in convenience, particularly sugar cola.

Pepsi Max accounts for over 20% of the non-sugar cola segment which is the fastest growing. The growing popularity of non-sugar cola is in keeping with the overall trend towards healthier, as well as more functional, beverages. These trends need to be reflected in fridge space allocation between non-sugar and sugar colas.

?Non-sugar cola volumes are growing 12.5%,? says Mark Smith, Managing Director, Cadbury Schweppes. ?Pepsi Max and Pepsi Light are driving the segment with double-digit growth.

?When consumers are asked to identify a cola with no sugar, 46% recall Pepsi Max, according to the Millward Brown Tracking data.?

The biggest shift in the soft drink category ? from sugar to sugar-free ? reflects the changing demographic.

?Diet Coke appeals to the over thirties,? says Kate Wilson. ?The increase in interest in health, wellness and life stages is partly driving growth in diet Coke, but also accounts for the appeal of other beverages such as water.?

Demographic change also means that cola needs to extend its appeal to the over forties who do not want to be treated as old but do want products to suit their life stages.

?The brands that do well are emotionally appealing and functionally relevant to people,? adds Kate Wilson.

Summer promotions

The major campaigns to stimulate sales this summer are underway.

Coke Live 05, which began rolling out on 1 May, builds on the successful Coca-Cola Live ?n Local Tour in 2004. This year, there will be five months of music giveaways, an extensive online music hub, music rewards, access to live gigs for under 18s and a major concert tour featuring Australian bands.

Last year, the campaign attracted more than 45,000 music fans to concerts, over 50,000 prizes were given away and entries were received from unsigned bands all around Australia. In 2005, the program will offer consumers more chances to get involved.

?These promotions are very popular with teenagers who do not often have the chance to experience live music because bands usually play in licensed venues,? says Kate Wilson.

Marketing support includes TV commercials, cinema and street press, radio advertising and point of sale material.

The theme for Coke and Lime promotions is ?out and about?, with a strong emphasis on mobile technology, including featuring in the video-streamed soap opera, Random Place, and in outdoor advertising ? the hypertag. There are eight outdoor locations around the Sydney CBD where you can download sounds (such as a bottle opening) and music to a mobile phone.

?Coca-Cola is one of the first companies to take advantage of this new technology,? says Kate Wilson. ?We are keeping consumers engaged with the brand in new and different ways to maintain interest.

?Everything we do has an experiential element. We are learning a lot from the online component of Coke Live 05 which drew together a community of 200,000 people. Consumers want to connect to like-minded people.?

This led to the creation of the AFL website which has 250,000 registered users.

?The appeal is that you can win something for your team,? adds Kate Wilson. ?We will be building more networks in 2006 because the market is online and mobile.?

Pepsi and Pepsi Max have strong summer support programs for 2005-06, with total brand investment of $7 million.

?The summer programs for cola brands build brand preference in the key selling period of the year,? says Mark Smith. ?Pepsi?s programs respond to consumer insights with a ?life-changing? promotion and the theme ?dare to be different?.?

In the ?Be Heaps Rich? promotion, one lucky Pepsi Max consumer will win a prize pack valued at $350,000, including an Audi TT and over $100,000 in Qantas international flights.

Supporting the Pepsi brand, the ?Dare for More? campaign adds three fresh young faces ? pop star Tammin Sursok, actress Holly Brisley, and rugby league star Sonny Bill Williams ? to billboards across Australia in the Pepsi LARGE format.

?The ?Dare For More? campaign leverages brand personality and Pepsi?s fun attitude while retaining similar cues from the previous campaign and the familiar Pepsi look,? says Mark Smith.

Cola producers put a lot of creativity, effort and money into these campaigns, and you can share in the rewards by matching your in-store (or should we say, in-fridge?) execution with point of sale and product positioning.

?In-fridge? execution

Cola contributes about 10% to convenience store sales, second only to cigarettes. That?s a lot. But the convenience and route channel retails about half of total cola sales. That?s a lot more. You could say that you are more important to cola producers than they are to you!

?Convenience retailers should demand good service from suppliers,? says Alec Wagstaff, Corporate Affairs Manager, Coca-Cola Amatil (CCA).

?We are working with retailers to discover what works, and have learned a lot. We have introduced smaller decals and call-to-action signs more suited to the space constraints in the channel.?

With more beverage brands and consumers? wider tastes, fridge space is at a premium. CCA has devised solutions for the channel including a lockable forecourt unit for bulk packs, small counter units, an in-store fridge with an air curtain instead of a door, and a shelf for new products.

Cola is an impulse purchase but you want them to pay for their purchase.

?Some service stations were experiencing problems with theft on the forecourt,? says Alec Wagstaff. ?We created a unit that locks. In store, small counter units near the point of purchase boost impulse sales, as does the air curtain on the main fridge. With the shelf dedicated to new products, there is no need to rearrange the shelves and you can monitor which products are working.?

This sort of arrangement means you can manage your shelf space to suit your store. If a new product does well, then rearrange your shelves to accommodate it. If it does not, then just remove it from the new products shelf.

?You end up with a range that suits your store,? says Alec Wagstaff. ?Fast-turning items are what generate category profit.?

?Pepsi is working with its oil and convenience partners to find the best way to represent the category to consumers, to drive growth for retailers and build category growth, all led by consumer insights,? says Mark Smith.