Opinion / Taste the Feeling
Last week Coke announced the retirement of its award-conquering Open Happiness campaign to be replaced by the rather more prosaic line Taste the Feeling. In response to a number of Insider consultancy clients asking for our view, I put my ex-PepsiCo head together with the ex-Coca Cola head of our lady in South America, Janaina Borges. Here’s our take on the news:
First off the announcement needs to be seen in the context of the company failing to grow over the past five years and with little expectation to grow that much in 2016 either, mainly due to its past success and size. As the company already sells its products in more than 200 countries at a rate of 1.9 billion servings per day, it is hard to see where further meaningful growth might come from. Coke recognises this of course, hence the renewed focus away from volume growth and towards value growth via smaller pack sizes, which yield better margins. It’s worth noting that Coke has always been an industry leader in pack/portfolio strategy so the headroom for future growth might be less than expected from its competitors.
But a bigger headwind it faces is the consumer trend away from carbonated soft drinks (CSDs) due to health concerns. This trend is not only about people wanting to consume less sugar, the more worrying thing for the category is that even no-sugar variants may be being rejected by the very consumers they are targeted to. These health conscious drinkers no longer see diet soft drinks as a healthy option, due to concerns regarding the safety of aspartame for example. This led to the recent launch of Coke Life, a low calorie variant that contains the naturally derived sweetener stevia rather than aspartame – although the jury is out on whether this will provide a long term healthy source of revenue.
And to compound the problem, the key historical need state driver for soft drink consumption – a tasty refreshing pick-me-up – is no longer free of competition. Today, shops sell a variety of products that are seen as tasty/refreshing/restorative and are also perceived as positively healthy, something soft drinks have never been. Just think about emergent product categories that use coconut water or aloe vera, or the growth of ‘green’ juices and it’s easy to see why today’s consumers are spoilt for choice in the area that soft drinks used to dominate. It also explains why boring old fizzy cola seems like a far less appealing proposition than it used to. For the past 15 years the industry has come to accept that diet/light drinkers are actually consumers who are transitioning out of the entire carbonated soft drinks category on the way to healthier or newer, more exciting categories.
The bottom line is that carbonated soft drinks have little chance of long term growth – the world is starting to show serious signs of moving on – goodbye, sayonara, it was fun while it lasted. Coca-Cola (which is far more reliant on carbonated soft drinks for its revenue than for example PepsiCo) knows this and so one could see the recent announcement as a move to squeeze the last drop of value from a category that is on its way out for good. No sugar variants will not grow the category in the long term for the reasons outlined above, so Coca-Cola quite reasonably doesn’t want to invest its advertising money to continue to build Coke Zero and Coke Light equity. Far better to switch it to other brands with more positive future prospects where marketing money can make more of a difference, such as Glaceau Smartwater, Minute Maid or Monster (energy drinks have bucked the wider CSD decline because they have a clearly understood functional benefit). This explains the move away from the ‘House of Brands’ approach that so successfully established Diet Coke as an iconic brand in its own right, and towards a ‘Branded House’ strategy that sees it demoted to merely a variant of the main Coke brand. This is also a big shift for Coke Zero, considering the ten years the company has spent establishing that brand to take on the well-established Pepsi Max.
So, what about the new positioning – away from ‘Open Happiness’ to ‘Taste the Feeling’? With this move, Coke is reaching for its last big weapon. For those who grew up in Coke-dominated markets, the taste of Coke is still unbeatable. For people of certain generations drinking a Coke is a powerful and subconscious emotional experience – for a subliminal split second the taste and mouthfeel of the product transports the drinker back to their youth: to birthday parties, summer holidays and weekend treats. This remains a key driver of why consumers continue to drink it, even if they are doing so less than they used to. So the brand is trying to reinvigorate that powerful memory for lapsed users – ‘Hey remember how good it was!?’
Open Happiness also made it look as if Coke saw itself as a lifestyle brand that could enjoy an elevated emotional position like other mega-brands it considers as its equals, e.g. Apple, Nike, etc. But the truth is Coke is not a lifestyle brand (maybe it never was). Janaina told me about people in Brazil who love the Coke brand (wearing Coke-branded clothing, for example) but would never drink the product. The re-focus back on Taste is back to what Coke knows sells product –the company knows it won’t sell forever, but wants to maximise how long that might be. It wants to say – no matter what variant, Coke stands for the one thing it thinks it can still compete on – taste.
It’s clear from the global CMO Marcos de Quinto’s comments last week that the truth about Open Happiness is what many suspected all along. While it was a rich creative territory, it failed to drive sales. The brand seemed to be disconnected from its product. In fact, Open Happiness could be seen as Coca-Cola’s way of distracting us away from the product itself, perhaps because it was embarrassed to talk about it too much amid concerns about sugar and aspartame. In this context, the new approach could be seen as an admission of reality – ‘Ok carbonated soft drinks are dead in the long term, let’s squeeze every last drop of money from the category before it disappears completely by using the one thing we KNOW that everyone still likes about our product – the TASTE.’ Either way the brand’s emotional ‘head in the clouds’ Cannes-baiting era seems to be over, in favour of a more product-focused ‘feet on the ground’ approach.