Here's something to read while sipping your morning coffee! Coca-Cola simply refuses to be KO'd. The company got a bit of good press recently when an Indian newspaper reported pesticide levels in Pepsi products three times over the limit, while Coca-Cola passed the tests. I'm still dizzy from wondering why pesticides were found in the first place! This may be the nail in the coffin for some faithful consumers out there.But, maybe Coca-Cola doesn't want you drinking carbonated beverages anymore. As my colleague Michael Canfield covered Sept 1, as baby boomers move towards healthier choices, Coca-Cola is eying Starbuck's lucrative territory. Coca-Cola is going premium with high-end retail outlets offering a variety of freshly brewed espressos, chai teas, cappuccinos and lattes. A recent press release announced the launching of the "Far Coast" brand to fill this niche market. After all, if you're willing to hand over $4, $5 to buy a plastic cup (my theory), why not hand it over to Coca-Cola? Are the coffees really that different?
Coca-Cola chose the multicultural city of Toronto, Canada (where I currently live) to be the launching pad for its "concept store" on Bloor Street yesterday. In a country fanatical about its Tim Horton's coffee, the premium market place has seen much competition. Starbucks has been able to carve out a very respectable market share. Therefore, Far Coast will have to do some serious catching up! Coca-Cola revealed that more stores will be opening soon in Oslo and Singapore (coincidently my birth country!).
Coca-Cola also announced a different strategy with its new CHAQWA label. Though the name looks weird, its market niche was developed to serve on-the-go consumers, allowing customers like convenience stores and quick service restaurants to serve cappuccinos and chai teas to their patrons. Coca-Cola can leverage restaurants that currently serve Coke products to serve their brand of coffee and tea. After all, why be the world's largest beverage distribution system if you cannot make good use of it?
Investors have been patiently waiting since these new products were first announced in a New York meeting on December 17th 2005. Their common concerns about KO have been about its lack of successful new products while rival Pepsi continues to gain market share.
Will this be a home-run? Or a flop? At least this move is a small step towards appeasing investors. Success will depend on Coca-Cola's execution and marketing. These Far Coast retail stores don't pose a threat to Starbucks... yet!
Vince Chan is an InvestorGeek, and blogs about investment / financial media at Investorial.com.
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Reader Comments (Page 1 of 1)
9-25-2006 @ 2:38PM
dodacrazy said...
Good post but one thing that cocerns me Coke is a American drink with alot of loyal custmers and growth at any bussiness happens but if I was Coke I would not expand unless needed for the time being there is to much unrest in other parts of the world towards America .policys