In our present era of digital commercial interfaces and impersonal, transnational corporations it is often all too easy to forget that behind every company – even the biggest and the most bureaucratic – lie human beings, and that said human beings, notwithstanding the exceptional market intelligence at their fingertips, are capable of making perplexing and illogical decisions. Such was the line of thinking that our Creative Director & CSO (‘CD&CSO’) found himself being seduced by upon reading that no less an entity than Coca-Cola itself is planning to enter the alcoholic beverages business.
To be precise, Coca-Cola (Japan) Company Limited is working on an iteration of Chu-Hi, a drink containing distilled shōchū. Chu-Hi alcopops – which typically contain between 3% and 8% alcohol – is a relatively new market which has experienced between 5% and 25% year-on-year growth since 2013 within Japan. Prima facie, there would appear to be a strong case for what Jorge Garduño – president of Coca-Cola’s Japanese business unit – has termed ‘experimentation in the low-alcohol category‘.
However – and after some reflection – we at Mediolana cannot help thinking that this project is one of the most specious we have ever come across, especially given the bigger picture of the Coca-Cola Company’s recent diversification drive: the Atlanta-based soft-drinks giant is confronting a seismic shift in consumer tastes as citizens in increasingly obese populations point the stubby finger of blame at purveyors of sugar-defined sodas. Coca-Cola has therefore invested massively – with varying degrees of success – in tea and water products which enjoy an apparently more benign popular image.
But by moving into alcohol – particularly at this juncture in history – Coca-Cola risks flying from the frying pan straight into the flammable, carcinogenic liquid. The alcohol industry is confronting the kinds of challenges which make the prospect of sugar taxes and concerned parents seem like negligible irritations: alarming sales declines, complete advertising bans in certain jurisdictions and generational cultural changes which are difficult if not impossible to counter. Indeed, alcohol companies are diversifying out of their core business, which makes one wonder how and why Coca-Cola is failing to reading the broader market signals.
In any event, scoring a cheap short term hit from an alcopops line – and even the broader diversification process – are total distractions from what Coca-Cola should be doing: reconfiguring what is indubitably one of the world’s most iconic and best-loved drinks brands for the twenty-first century. Upgrading distribution and recycling channels, transitioning to organic and fairly-traded ingredients and expanding the range of Coke-themed beverages to cater to an increasingly globalised palate cannot be put on the back burner any longer; moreover, they will need every ounce of corporate muscle to be realised in what is becoming an insanely competitive space.