Virgin opens premium front in US cola war

- Last updated on GMT

Related tags: Coca-cola

The US cola wars have traditionally been fought on just two fronts
- Coca-Cola holding one and PepsiCo the other. But now a new player
is about to join the fray, and Britain's Virgin Cola is hoping that
its decision to focus on the premium end of the market will allow
it quickly win territory from the perennial rivals.

Virgin Cola has been successfully competing with the major US cola brands in the UK for many years, but taking them on in their own back yard marks a distinct shift in policy for the brand, part of Sir Richard Branson's Virgin Group which also includes a record label, an airline and mobile phone operations.

But it is precisely Virgin's name and reputation State-side which the company hopes will help it carve a niche for itself in a market long dominated by just two players.

The British group has joined forces with a US group called The Firm to create a 50-50 joint venture called Virgin Drinks North America, which began distributing Virgin Cola this week to 7-Eleven stores in Southern California, with a nationwide rollout of the brand planned for early next year, starting with a second launch, in Florida, in August.

The choice of partners in the US reveals a great deal about the strategy Virgin will employ as it tackles the home of cola.

The Firm has a reputation for successfully marketing a wide range of products to the core 15-30 year-old demographic, representing clients as diverse as film stars Leonardo DiCaprio and Cameron Diaz, pop groups Linkin Park and Korn, and footwear brand, PONY, which it partially owns.

Moreover, The Firm is located in Beverly Hills and has a strong hold on the Southern California marketplace, traditionally the home of style and glamour in the US.

"Virgin and The Firm have their roots in music and rock 'n' roll and are perceived as young, fun and more irreverent brands. The two companies have great synchronicity because of this shared base,"​ said Ranjit Singh, chief operating officer of Virgin Drinks North America.

"One could argue that the same kid that listens to Korn, wears PONY sneakers, and goes to a Cameron Diaz movie, drinks soda...why not Virgin?"​ said Marc Pollack, director of corporate communications at The Firm.

This is not the first time Virgin Cola has been launched in the US - indeed, the brand has been around there since 1988 - but it does mark a distinct change in the way the drink is marketed there. After failing to make much of a mark on the US cola market for more than a decade, Virgin teamed up with The Firm almost two years ago, with the time being used to "perfect the product from the beverage flavours, to the beverage names, to the bottles,"​ according to Marissa Knies of the companies' PR agency.

"The Firm has had a lot of success in marketing and reaching a key demographic of celebrities and trendsetters,"​ Knies told FoodandDrinkEurope.com​."It was also essential that The Firm and Virgin Colas figure out who their strategic partners would be,"​ she added, and this was why 7-Eleven was selected as the launch chain, she explained.

"7-Eleven saw the need for a premium cola and The Firm and Virgin saw them as a perfect partner in the cola's launch. They were chosen as the launching outlet because of their accessibility and desire to meet consumer needs,"​ Knies said, adding that the groups had plans to have Virgin Colas in other stores, in particular mass retail outlets.

While Virgin Colas will go head-to-head with Coca-Cola and Pepsi in stores, the products are not positioned at the same level. Virgin Colas will sell at 7-Eleven for $1.49 (about 30 cents higher than Coke or Pepsi at the same stores) and will count particularly on the "quality and trend"​ image of Virgin in the US, according to Knies.

The premium colas will initially be offered in four flavours: Black (cola), Cherry Lee (black cherry cola), Blonde (vanilla) and Jade (lime), with a diet cola launch planned by the end of the summer. The company is also expected to launch Virgin's water, energy drink and other soft drinks brands, should the initial cola launch prove to be a success.

.The choice of names for the various drinks was also deliberate. "Virgin Colas are a fun and hip alternative to the normal sodas on the marketplace,"​ Knies said.

Teaming up with The Firm could well prove to be the key to success for Virgin, especially as focusing on the premium end of the market will see it target a distinctly different type of consumer than the mainstream cola brands. But whether there is enough of a market for a premium cola outside the refined market of Southern California remains to be seen.

Related topics: Premium Indulgence, Markets

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