Bloomberg recently reported that the Coca-Cola Company is possibly looking into the cannabis drinks market. This will likely be a new chapter in the history of the 126-year old beverage maker that launched and ceased to produce the infamous ‘New Coke’ almost 33 years back.
The Atlanta-based company’s reinvention strategy comes in the wake of declining profits amidst mixed responses from households that are now rising vocally against sugary sodas. Company executives feel that their target consumers’ reactions towards cannabis-based drinks (in markets where the sale of such products is legal), will be more accepting and rewarding. In 1906, The Coca Cola Company advertised its flagship drink as “The Great National Temperance Beverage” and in 1927, they adopted the tagline “Pure As Sunlight”, both notions that the beverage giant definitely seems to have outgrown.
The US-based trade journal ‘Beverage Journal’ has reported that sales (of carbonated drinks) have declined over the last 12 consecutive years. More specifically, sales of such drinks were at an all-time low for 31 years in 2017. Consequently, the company has been trying its best to woo audiences that are not necessarily impressed by the availability of drinks such as Sprite, Diet Coke, or ‘Coke Zero’.
In May this year, The Coca Cola Company spun off (sold) the ‘Wine Spectrum’ brand that it had bought 40 years ago to sell alcoholic beverages. Almost immediately, they launched an alcoholic drink called Lemon-Do in the Japanese market. And in September, they announced intentions to acquire Costa Coffee, the UK-based coffee lounge chain. This brings the expanded Coca-Cola portfolio to include carbonated beverages, bottled water, coconut water, tea, coffee, health drinks, and bottled juices.
The company’s new plans (as per reports) are to launch a drink that is infused with cannabidiol (CBD), which is the non-psychoactive ingredient of marijuana. With such a drink, the company is aiming for a seminal shift from its original brand message that used to resonate with family values, and with “all things good, decent and honest about America”.
In Coca-Cola’s latest financial quarter (ending on June 2018), they reported $2.32 billion in profits against $8.90 billion in revenue, despite a massive decline in organic sales in the United States. The future of the company still appears vulnerable, because 70% of its sales are still attributed to soda – the ‘endangered’ product category.
It is notable that Coca-Cola’s primary rival Pepsico had managed to develop a much more diversified product portfolio under the guidance and management of its former CEO (Indra Nooyi) – such as packaged foods and non-carbonated drinks, which functioned as a better buffer against the decline in carbonated drink-sales.