Coke’s New Real Thing
Coca-Cola has decided to leverage its industry power in the beverages business by expanding its product line from soft drinks, power drinks, juices and water products to include coffee, tea, and hot chocolate. Company executives noticed theslow-down of industry performance in soft drink sales and began looking for other venues to sell their products. Coke decided to capture some of the lucrative profits from the booming coffee market and spent five years making the arrangements to do so.
On September 6, 2006, Coke introduced its two new products to the coffee drinkers of Toronto. Far Coast is branded as a premium coffee, and Chaqwa as a convenience blend, however, both are targeted at the convenience market (Flavelle, C10, 1). Coke has provided the coffee grind, the equipment and the service for easy of use, and named this innovation café in a box (Flavelle, C10, 3).
People like Udayan Jatar, Cokes general manager for premium brewed beverages, are trying to grow the companys market share in beverages without invoking direct competition from premium coffee big-name competitors. This is being accomplished by explicitly selling the new products as convenience brews: ...the only thing holding back sales of high quality specialty brews is convenience, which Coke hopes to deliver in their new product line (Flavelle, C10, 2).
I applaud Coke for its risk-taking behaviour and for its excellence in spotting opportunities for growth in a competitive industry. They have researched the coffee market well and understand that current coffee industry leaders can use the experience of enjoying their product in luxurious surroundings to leverage sales something that comes from more than a box. Coke has therefore deliberately avoided competing directly with cafes such as Starbucks and Second Cup. At $2.59 to $3.49 for a cup of their convenience blend however, Coke is branding a truly luxury product in a convenience market (Flavelle, C10, 8). This may complicate coffee sales if customers are expecting convenience pricing.
I believe that the competitions next move will be swift in capturing new markets of their own to match the increased coffee revenues for Coke. There is no doubt that Pepsi is already looking for a means of bolstering profits especially since its consumer base is much the same as Cokes. Finally, the introduction of Far Coast and Chaqwa to the Toronto market raises the question of will these new products have any impact on existing coffee sales?. Starbucks, Second Cup and Tim Hortons are probably watching the every move of Coke strategists and making future plans of their own in the case that these new products perform well on the market.
On September 6, 2006, Coke introduced its two new products to the coffee drinkers of Toronto. Far Coast is branded as a premium coffee, and Chaqwa as a convenience blend, however, both are targeted at the convenience market (Flavelle, C10, 1). Coke has provided the coffee grind, the equipment and the service for easy of use, and named this innovation café in a box (Flavelle, C10, 3).
People like Udayan Jatar, Cokes general manager for premium brewed beverages, are trying to grow the companys market share in beverages without invoking direct competition from premium coffee big-name competitors. This is being accomplished by explicitly selling the new products as convenience brews: ...the only thing holding back sales of high quality specialty brews is convenience, which Coke hopes to deliver in their new product line (Flavelle, C10, 2).
I applaud Coke for its risk-taking behaviour and for its excellence in spotting opportunities for growth in a competitive industry. They have researched the coffee market well and understand that current coffee industry leaders can use the experience of enjoying their product in luxurious surroundings to leverage sales something that comes from more than a box. Coke has therefore deliberately avoided competing directly with cafes such as Starbucks and Second Cup. At $2.59 to $3.49 for a cup of their convenience blend however, Coke is branding a truly luxury product in a convenience market (Flavelle, C10, 8). This may complicate coffee sales if customers are expecting convenience pricing.
I believe that the competitions next move will be swift in capturing new markets of their own to match the increased coffee revenues for Coke. There is no doubt that Pepsi is already looking for a means of bolstering profits especially since its consumer base is much the same as Cokes. Finally, the introduction of Far Coast and Chaqwa to the Toronto market raises the question of will these new products have any impact on existing coffee sales?. Starbucks, Second Cup and Tim Hortons are probably watching the every move of Coke strategists and making future plans of their own in the case that these new products perform well on the market.
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