Coca-Cola innovation: Beverage giant thinks global, acts local

Staff Writer
Columbus CEO

ATLANTA -- Imagine sitting on a beach on a scorching hot summer day. A slight breeze is doing little to stop the sweat from rolling down your face. You want relief, you want something to drink.

If you were in Cartagena, Colombia, this past summer, you might have been able to cool off with a Coke in a contour bottle made of ice.

The South American nation is one of many countries around the world where Coca-Cola is using product and packaging innovations in promotions that are not seen in the United States.

The reason: As the U.S. market matures, much of the Atlanta-based company's new growth is in places such as India, China and South America. To grab consumers' attention there and create buzz, the company is using hyper-local marketing tactics to introduce products.

That contrasts with marketing in the United States, which is mostly focused on supporting established products.

The numbers tell the story. While North American volume grew 2 percent in the third quarter of this year, volume was up 9 percent in China, 6 percent in India, 5 percent in the Pacific and 4 percent in Eurasia and Africa, according to the company. Only Europe and Latin America lagged, with volume down 1 percent or flat, respectively.

So in Singapore, Coca-Cola introduced a machine that encouraged consumers to hug it in exchange for a free bottle of Coke. The company also offered a "sharable" can promotion where a full-sized Coke can could be "unscrewed" to reveal two separate smaller cans.

In 2011, Coca-Cola launched a "happiness truck" that dispensed bottles of Coke, teddy bears, ice skates, soccer balls, surfboards and even a guitar as it cruised neighborhoods in cities in Russia, Brazil and India.

The company stresses that the foreign innovations are limited-time promotions designed to spur sales. The ideas behind them started with bottlers or distributors in those countries -- not at the company's Atlanta headquarters.

''At the end of the day we're a local business," said Joe Tripodi, Coca-Cola's chief marketing and commercial officer. "We have to focus on what resonates on a local level."

But John Sicher, editor and publisher of Beverage Digest, an industry publication, said the local can become the global when it's a good idea.

''Coke does some great marketing inside the U.S. and outside the U.S.," Sicher said. "I believe over time, more of its international marketing will find its way into the North American market."

That's what happened in the energy-drink industry. The industry was incubated in Asia, exported to Europe and eventually landed in the states where Coca-Cola and rival Pepsi had to play catch-up.

But before you think Coke has left American innovation at the door, don't. Company leaders point out that North America has seen innovation, too. Dasani Drops, aluminum bottles of various Coca-Cola brands and the popular Freestyle machine, which dispenses more than 100 flavors of the company's drinks, are available only stateside or in limited supply abroad.

In addition, the "happiness" machines are a variation of a vending machine the company first tested at St. John's University in New York.

''Because of the scale and the size of the U.S. market, you've got to be really certain about the things you do because of the magnitude here," Tripodi said.

Coca-Cola is not alone in keeping products local. Pepsi has several drink products that haven't made it to America, including Tropicana Pulp Sacs juice drinks, the coconut water Tropicana CoCo Quench and sour plum and peach flavors of Mirinda, one of the world's largest flavored soft drink brands. The lineup is sold in China and the Philippines.

Pepsi's snack division includes chips not sold in North America, including Lay's Red Caviar chips in Russia, Smith's Vegemite chips in Australia and Lay's Magic Masala chips in India.

''A key driver of PepsiCo's success is our ability to build powerful global brands that also connect with consumers in locally relevant ways all over the world," said Pepsi spokesman Jeff Dahncke. "One way we drive local relevance is by tailoring our brands to appeal to distinct consumer taste preferences everywhere we do business."

Appealing to local tastes has helped Coca-Cola add to its list of billion-dollar brands. Of the 16 brands in the company's portfolio, six of them, including Minute Maid Pulpy, are distributed in foreign markets but not available in North America.

Tim Mescon, an economist and president of Columbus State University, said it's critical that companies have feet on the ground to understand what consumers want. What appeals to and motivates a consumer to make a purchase is not universal.

For instance, fans of U.S. barbecue often disagree on what makes a good sauce based on regional differences on ingredients. Coke has to do the same, but on an international scale, Mescon said.

''The strategies they are undertaking are reflective of the long-term prospects Coke has outside the United States," he said.

Tripodi said there is no reason Coca-Cola couldn't serve Coke in an ice bottle in North America. But don't expect it anytime soon in your grocery store freezer.

''The nature of producing that is fairly sophisticated," he said. "Whether you can scale that is fairly limited because of the requirements of the ice. I'm not precluding the fact that that could come here, but it's not something you would find on every beach in Florida."

Leon Stafford writes for The Atlanta Journal-Constitution. E-mail: lstafford(at)ajc.com.

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