Coca-Cola Co.'s first-ever alcoholic drink — a canned beverage called Lemon-Do — went on sale this week in Japan. Several varieties of the product will be available featuring 3%, 5% and 7% alcohol, plus a salty lemon version and one flavored with honey and lemon, according to The Wall Street Journal.
Fizzy fruit-flavored drinks containing alcohol, known as "alcopop," are popular in Japan, especially those with citrus flavors such as lemon and grapefruit. Food Ingredients First reported the products are sold as beer alternatives.
Lemon-Do's debut took place on the southern Japanese island of Kyushu, although further Coca-Cola plans for distribution were unclear, The Wall Street Journal noted. Euromonitor Analyst Akari Utsunomiya told the newspaper that the company has tested products before in Japan and that the limited rollout might help Coca-Cola decide how to debut it elsewhere.
Coca-Cola's move into Japan's alcopop market is quite a departure for the soft drink maker, but slumping sales in some of its core areas have driven the company to look for profits in new places. However, Coca-Cola says it won't be bringing Lemon-Do to the U.S.
As Jorge Garduño, president of Coca-Cola’s Japan unit, said in a blog posted on the company's website, "It makes sense to give this a try in our market. But I don’t think people around the world should expect to see this kind of thing from Coca-Cola. While many markets are becoming more like Japan, I think the culture here is still very unique and special, so many products that are born here will stay here."
Beverage competition is tough anywhere, but it's particularly challenging in Japan where Garduño said Coca-Cola launches dozens of new products each year to find out which ones will catch fire with the public. But even though the company has stiff competition there in the alcopop category, solidly establishing this new Lemon-Do product could be a valuable source of new revenue in the area, particularly if it heads to the Tokyo market. The surprise factor alone might win new customers in Japan.
Things are a bit different in the U.S., where Coca-Cola has been revamping its longtime Fresca brand and introducing new flavors and packaging designs. Diet Coke recently added new flavors and a can redesign, and the company switched up Coke Zero with Coca-Cola Zero Sugar last summer.
Other beverage companies also have been innovating to find new revenue growth, with sparkling water products a focus for PepsiCo and Nestlé. They've also been active with M&A to expand their portfolios, with PepsiCo buying KeVita in 2016, a probiotics beverage manufacturer, and Coca-Cola acquiring Topo Chico last fall, a premium sparkling mineral water maker.
In the case of Coca-Cola, U.S. consumers aren't used to seeing the company enter the low-alcohol space, so it's unclear how a product like Lemon-Do might perform here. Despite buzz on Wall Street that it might enter the domestic alcohol space, Coca-Cola seems content to improve its position in the soda, water, tea, milks and sports drink spaces where it has the most familiarity before it considers alcohol.