The Reinvention of Coke

First Published In: B&T Magazine Date: July 21, 2005 Author: Camille Alarcon Comment by: Karl Treacher

In a history which dates back to 1886 when pharmacist Dr John Pemberton from Atlanta, Georgia, first concocted a carbonated drink called Coca-Cola, selling it for five cents a glass at the local chemist, little did he realise it would be the beginning of an enterprise that would see the creation of 400 brands in over 200 countries.

But it hasn't all been a fairytale ride for the iconic brand, with changing consumer tastes resulting in the proliferation of beverage brands in markets around the world, at the expense of the Coke brand and the general soft-drink market.

While the 1970s and 80s were the heyday for the company which was able to further entrench its dominance with big budget iconic advertising, it has more recently had to do some quiet self-reflection, with its global chairman and CEO, Neville Isdell, at the end of last year revealing that the company had been under-performing since 1997, and needed to address the fact that it had become both "people deficient and skills deficient".

He announced an increase in the company's global marketing budget, from $300m to $400m, to be deployed predominantly in markets outside the US.

For Coca-Cola South Pacific and Korea's division marketing director, John Wardley, who first began his 12-year career with Coke in the US, the Australian market has been a much easier sell, with last year's sales of the Coke brand variant Diet Coke increasing 8%.

"Historically, advertising the Coke brand was a very simple proposition, if you look back in the 'SkySurfer' [TVC] day, we'd make a big budget commercial, we'd put it on air in September to October of any given year and it would herald the start of summer to many consumers, which was terrific," Wardley said.

But today, it's a very different story, with branded content, the internet and the development of big events now the norm rather than the exception.

Wardley added that in terms of creative, Coca-Cola has tried to stick more with locally-produced content and last year launched a new initiative to re-invigorate the brand's association with the Australian music industry.

He said the Coke-branded 'Live and Local' competition and concerts held in 2004 have been brought back this year as 'Live 05'-an even bigger music campaign again aimed at focusing on "teen recruitment".

"I like to consider Coke as a really successful rock star that re-invents himself or herself every couple of years and that's what Coke needs to do to keep connecting to new generations of consumers," Wardley said.

"I think Live 05 is the most tangible example as to how we have evolved our communications strategy."

One new component of the Live 05 event is the use of the internet, which Wardley said was the missing link last year.

"This year we have the concerts, and more of them, we have the advertising, we have the promotion, but we also have what we call the network, which is an online music community. It basically pulls all the elements together which is really set up to be an on-going community for young people interested in music in this country... Getting that kind of connection with consumers has become more important to us because it provides a two-way dialogue which traditional advertising can't," Wardley said.

He admitted, however, that the firm's sponsorship and branded content activities have not always been met with the success it has hoped for, with the low-rating The X Factor on Network Ten earlier this year failing to meet expectations.

Founder of Brand Behaviour, Karl Treacher, said despite the recent challenges Coke has faced with the anti-obesity push, it's generally a brand which has "gotten it right for a long time...except of course when it tried change its formula in the 80s.

"It's definitely carved out good niche in music, so much so that you expect to see Coke on music-related sponsorship lists. And Pepsi may still be the challenger brand but I don't think it's too unhappy with that...in the FMCG world there's enough room for everyone, especially the number twos."

Wardley conceded that while the health and wellness trend has impacted on all sugar, carbonated drinks, what it is doing is making sure that its entire portfolio of products "continues to offer consumers the choices they're looking for"-in the water, juice, low-calorie and energy drink categories.

"I guess there's been a realisation in our company that one person's Coca-Cola is not necessarily another's. So for a 16-year-old, their Coke is Coke, while for a 25-year-old, their Coke is Diet Coke and if that's how our consumers are accepting our brand, then that's fine with us," he said.