Size matters for Coke, as firm shifts global pack sizes - analyst

By Ben Bouckley

- Last updated on GMT

Coca-Cola Mini was launched in 8-packs last year in the US, evidence of the firm's success with novel can sizes
Coca-Cola Mini was launched in 8-packs last year in the US, evidence of the firm's success with novel can sizes

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The Coca-Cola Company is striving to diversify its global packaging offer to reach as many consumers as possible, address health and affordability concerns and grow value sales.

That’s according to Euromonitor International, and packaging research manager Rosemarie Downey told that consumer concerns on health grounds within developed markets represented a “big challenge for Coke, especially as regards their regular carbonates”.

She added: “It is the same for all carbonate players, particularly in the US and Western Europe, where carbonates consumption growth is much weaker compared to Latin America or the Asia Pacific.”

Downey said that Coke was well aware of the limitations of its flagship Coke brand, with issues such as obesity and Type 2 diabetes affecting so-called ‘red cap’ CSD consumption in such markets, and that the firm had developed its wellness brands and low-calorie carbonates over the past few years.

Even within Coke’s biggest market for cola carbonates, Mexico, its bottled water brand was seeing strong growth, Downey said: “There too the Mexican government has been trying to push water as opposed to carbonates, so Coke can still win on that line with some of their other beverages.”

Coca-Cola Mini success

In terms of pack sizing for health, affordability, Downey said Coke’s recent strategy had seen it diversify. “Looking at the health trend, they launched the 7.5oz Coca Cola Mini in the US in March 2010, much smaller than any other cans you’d see. Remember that in the US, 98% of CSD sales are in standard 12oz can.”

She added: “Also, this was very much labeled as a 90-calorie can, so they’re really aiming at that health conscious, calorie-conscious consumer.

“In 2011 they launched this in multipacks of eight, so it’s obviously going well for them. But with multipacks they’re going for at-home consumption as well, and affordability.”

Such products were targeted at women Downey agreed, or those consumers who would otherwise buy bottled water or juice, and (especially in the US) ready-to-drink tea.

She said: “Historically in the US, Coke has been quite standard in terms of pack sizes, the 12oz can, but as Coke’s second largest retail market (5bn litres per year) but we’ve really seen them expand beyond this can over the past few years.”

Within Latin America, where several countries have high per capita cola carbonate consumption, Downey said that Coca-Cola preferred larger pack sizes to Europe, where she said health grounds deterred such a trend, even in successful low-calorie carbonate segments.

She said: “Mexico leads, if we look globally, with around 87 litres per head consumption in 2011, and it’s still growing. And this lends itself well to bigger bottles in Argentina, Chile, Uruguay as well, although value also enters into it.”

Coke’s Indian promise

Discussing Coca-Cola Enterprises’ recent announcement that it planned to launch a 375ml PET bottle onto the UK market​, Downey said: “Coke’s strategy is about diversifying through as many pack sizes as possible to reach consumers on affordability grounds, smaller sizes, lower unit prices and on health grounds as well.

“Whereas you think of carbonates in standards sizes, we’re now seeing a lot more cross-country variation, quite a lot in the US for instance,” ​she added.

Downey said that any 375ml offering would have a lower unit price than the existing 500ml bottle, and with health conscious consumers seeking to reduce intake – there would perhaps be an impact on volume sales, but that value sales were likely to rise due a higher price per litre compared to the 500ml PET bottle.

She added: “That’s a big strategy of Coca-Cola’s – to pursue value sales. Volume is good but value is better. I think we will see more sizes like that, targeting those consumers who don’t necessarily want to drink 500ml of Coke.”

“Look at India, for instance. It’s a low consumption market for cola carbonates, so they want to introduce an idea that has massive potential as a BRIC market, but a 500ml bottle won’t necessarily perform the best, it could well be a smaller size.”

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