Coca-Cola Enterprises (NYSE: CCE), the big bottler for Coca-Cola (NYSE: KO), and a competitor of both PepsiCo (NYSE: PEP) and Pepsi Bottling Group (NYSE: PBG), is trying, like every company out there, to grapple with the recession. Sure, sodas and waters might seem like an attractive business to be in since people will still buy them in a down economy, but make no mistake about it -- Coca-Cola Enterprises needs to be on top of its game to protect those margins.
This leads me to this: According to Beverage World, Coca-Cola Enterprises wants a little more efficiency in its system. What corporate structure doesn't, right? So, management is taking a fresh look at the supply chain and the packaging it uses. Already, the company has shed 1,000 jobs and combined some units. Becoming leaner and working in a smarter fashion is key to keeping the bottom line steady and, hopefully, growing. It's only part of the picture, though. The logistics of distribution should be looked at, don't get me wrong. That obviously is the bottler's main function. Marketing, however, has to be stepped up as well. And that's Coca-Cola's job.
The company should take a look at its ad-campaign development process and make that more efficient as well. More importantly, it should strive to up the creativity quotient. Actually, Coke has made improvements over the years in its marketing efforts, and admittedly, I've been rather curmudgeonly from time to time toward Coke's commercials. They haven't always been overly exciting (I do like, however, how Coke has hooked up with American Idol to reach the youth, an important demographic that PepsiCo seems to attract). And I do have to say that money is obviously tight and it would be understandable if Coke decided to pull back on some of its promotions. Still, one would have to believe that now is the time to become aggressive about taking share from the other guy. Consumers have to be convinced that Coke's portfolio is the best way to obtain refreshment, forget the PepsiCo portfolio and all those boring private labels.
Growth in case volume in the United States is of particular importance. The domestic market has been a challenge, especially for the carbonated-soda category. Putting money behind energetic campaigns supporting the flagship trademark Coca-Cola is vital. Putting the best intellectual capital behind creating those campaigns is even more crucial. You can squeeze out as much efficiency as you want (and, believe me, I'm all for that), but at the end of the day, efficiency does not sell soda. The consumer does not care about efficiency (well, the consumer does through price, of course, but you know what I'm getting at, I'm sure). The consumer reacts to image and branding. So, get out there, Coca-Cola, and do your branding job!
Disclosure: I own Coke; positions can change at any time.
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Reader Comments (Page 1 of 1)
12-13-2008 @ 6:51PM
Jessy Scholl said...
Coca-Cola is doing ok, but I would cut spending in two areas and increase it in another one.
First, I hope the CEO cuts his own salary. This would cut prices at the retail end and actually increase the total product sold.
Second, I would simply drop NASCAR sponsorship and focus on marketing for the Vancouver and London Olympics. All marketing for NASCAR would stop as of now, because there is little reason to believe that NASCAR is going anywhere in 2009. The product there is weak and it shows in terms of fan attendence at the track, and in TV ratings. In 2008, the Coca-Cola Company sponsored two major events on the NASCAR tour which include the Memorial Day Race in North Carolina and the July Daytona race. Coke is throwing money down a losing drain, but if they truly want to sponsor racing in 2009, I would suggest the IRL which has a more exciting product than NASCAR and is about to see a comeback.
Finally, I realize that Coke launched their Beijing 2008 marketing campaign at the 2008 Memorial Day Race, but they could have used the Indy 500 just as well.
12-14-2008 @ 12:11PM
steve said...
Coke spends far too much money advertising to adults (nascar, ncaa, olympics, etc). By the time someone reaches adulthood their consumption of soft drinks generally is declining. Coke needs to target the 13-24 yr old set more aggressively. And more TV spots are not the answer. Digital is where these consumers are spending their time. Coke needs to meet them there in a way that's meaningful.