Brand Diversification: What you can learn from Coca-Cola

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beverage-marketingWhat can one brand’s market shift teach you about managing your career? Quite a bit, actually. Looking at how a major brand transitions in the marketplace reveals a lot about current trends, and how to change without losing your identity and sacrificing your current branding and market presence.

Coca-Cola has always been about diversification. From Sprite to Diet to various versions of “The Real Thing,” Coke has always been about expanding to capture new markets … or changing to respond to market trends. But its most recent expansion is probably the company’s most telling. Recently, the company acquired 17 percent of Monster Beverage for the reported price of $2.15 billion.

It’s no secret that soft drinks have been losing ground to “energy” drinks in recent years. Millennials are much more apt to grab a Monster than just about anything else when they want a cold blast of caffeine. Plus, these days caffeine is much less feared in the general marketplace than corn syrup. The growing health stigma attached to the corn-based sweetener has many soft drink manufacturers testing the waters and considering changes.

Coke’s rival, Pepsi, has responded by releasing its “Throwback” line or “real sugar” beverages. To date, Coke has been reluctant to do so, even though it sells tons of “real sugar” beverages in certain markets.

That’s not to say Coke isn’t working in “healthier” markets already. With Dasani, the company was an early adopter of the bottled water trend, which is now a mainstream staple wherever soft drinks are sold. Then, Coke bought VitaminWater in 2007 and Honest Tea in 2011.

So why Monster?Because energy drinks not only have the potential to change consumer culture with regard to soft drinks, they have begun to do so. Coke tried to compete using brands such as NOS and Full Throttle, but nothing could touch energy drink industry leader Red Bull.

Worse, some in the soft drink industry – though not at Coke, at least publicly – have gone on the record concerning their worries about the carbonated beverage wars. Indra Nooyi, PepsiCo CEO was reported to have told investors that “if you let this go too long, the consumer will walk away from carbonated soft drinks.” Nooyi gave them a 3 to 5 year timeline.

Coke may not have broken the news, but they sure acted on it. So, the lesson? First and foremost, you need to understand not only where your industry is, but where it is going. You cannot afford to turn a blind eye toward trends or relatively small competitors. Energy drinks were not considered much of a threat, but they turned into a major player almost overnight.

Finally, have multiple strategies for dealing with the issue. Coke tried market saturation and artificial competition with multiple brands. Finally, it chose the third option – find an ally that needs your help against a common competitor.

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