Dive Brief:
-
Coca-Cola rolled out two soda flavors last week — Georgia Peach and California Raspberry. The company announced that it was "returning to its artisanal roots" with the debut of these 12-ounce bottled products, which it noted contain natural peach flavor from Georgia-grown peaches and natural raspberry flavor from California-grown raspberries.
-
Coke said it hopes to capitalize on the growing popularity of craft sodas and "unique local flavor." The company also wants to build on the success of Coca-Cola from Mexico, the cane sugar-sweetened product sold in glass bottles, which the company said has seen solid growth since being intriduced to the U.S. in 2006.
-
For its first flavor innovations since Vanilla Coke in 2002, Coke said its R&D team worked with nearly 9,500 consumers and explored more than 30 flavor options.
Dive Insight:
Coke is trying to hit a number of goals with these soda flavors, which arrive on the heels of its recently released Diet Coke lineup of four fruity flavors. For one thing, the company wants to appeal to millennials, who have been turning away from soda and toward healthier beverages such as water, tea and juices.
Coke also knows that natural fruit flavors and fresh tastes are on-trend. Add in the iconic brand — and a new bottle and packaging design targeting authenticity and nostalgia — and chances are better that consumers will try the products. Two out of three non-Coke drinkers who tasted peach and raspberry said they would buy them, the company noted.
On the marketing side, Coke is joining with local artists and artisans in California and Georgia to create murals, installations and street art reflecting their home towns and tying into the new soda flavors. At the same time, these people will be discussing and showing their work on social media to help build buzz.
As soda sales continue to slide, other major beverage companies have developed new flavors and made acquisitions to try and win over millennial consumers. PepsiCo launched a limited-edition cinnamon-flavored cola called Pepsi Fire last year, while Dr Pepper Snapple diversified into antioxidant superfruit power drinks by acquiring Bai Brands in early 2017.
Craft sodas have been impacting the soft drink market for the past couple of years. Wholesale sales hit $541 million in 2016, compared to $428 million in 2011, while volumes jumped 5% from 2015 to 2016. The trend allows for experimentation with interesting new flavor combinations, while also providing a chance to hike prices.
It's no surprise that new revenue streams are a major reason why the big beverage players such as Coke and PepsiCo have been jumping on the craft soda bandwagon. In addition, Coke has further diversified by entering the cold-processed juice, drinking vinegars and kombucha markets through partnerships with Suja Juice, Honest Tea and Fairlife dairy, and is exploring more M&A activity outside the U.S.