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Coca-Cola Co. (NYSE: KO) really needs to get things going in the North American territory. If you take a look at Coke's latest earnings report, you'll see that unit case volume moved up 1% for the fourth quarter, and down 1% for the entire fiscal year. That's well below the 6% growth in volume experienced overall. It's no wonder that the Associated Press highlighted the problem in North America in a recent article on comments made by Coke's COO Muhtar Kent (he will be the new CEO starting July 1) at a conference in Boca Raton, Florida.
Kent mentioned Coke Zero and the VitaminWater brand -- which Coke gained after acquiring Glaceau last year -- as being two key beverages to leverage to drive growth. They will probably help. I recently tried some of that VitaminWater stuff the other day -- not bad, although I suppose its appeal goes beyond the taste factor, as it basically relies on the consumer feeling healthier after drinking it (at least in terms of perception).
What Kent needs to do is figure out exactly how to relaunch the entire Coke trademark in North America. I've been a critic of Coke's recent marketing campaigns, but I think they have improved. Nevertheless, there just isn't as much of a cool factor associated with the trademark. The youth really are taken by the PepsiCo (NYSE: PEP) trademark in my opinion, and this simply has to be counteracted by Coke in as aggressive a manner as conceivable (Pepsi, by the way, has also experienced challenges in expanding North American volumes, as its latest earnings indicate). As a Coke shareholder, I am constantly asking people which soda they prefer; I find that the younger the person is, the more likely it is that they choose Pepsi over Coke (and, whenever I hear someone choosing Pepsi over Coke, I cringe inside).
I wish Kent luck in putting some energy into the North American territory. It is a priority, no doubt about that; I just hope he can devise a proper marketing solution.
Disclosure: Steven Mallas owns shares of Coca-Cola.
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