Big food troubles and the cola wars

Just over a week ago Coca-Cola announced measures to to deal with the social issue of obesity. It was an interesting move and on the surface of it a victory for pressure groups looking to tackle ‘Big Food’ related issues. The less charitable could also argue that Coca-Cola is trying to make a CSR (corporate and social responsiblity) silver lining out of likely future regulation. There is a policy tide against soft drinks companies, an example of this is the recent proposed legislation to ban  sugary drinks in individual servings of 16 fluid ounces (just under 1/2 litre) by Michael Bloomberg’s administration in New York.

The European Union has looked at ensuring consumers are better informed about the calorific values of soft drinks by changing labeling.

To be fair Coca-Cola has a reputation of doing things that are both good for business and good for the wider society. From using its extensive distribution network to get vaccines into far flung parts of the developing world to a relentless approach to drive down the use of packaging increase recycling.

The timing of these changes is well-chosen as it puts blue ocean between Coca-Cola and competitors, in particular PepsiCo. PepsiCo is trying to regain ground that it had lost under the leadership of Indra Noovi.

Pepsi had a mis-balanced business that focused too much on the developed world. It also tried to change too many things within its business at once. Pepsi has tried to move to be a healthy food provider and invest (often too expensively) in developing world markets. Which increased the amount of debt that the company carries.

One noticeable miss-step from a marketing point of view was that PepsiCo misunderstood and miss-used social media marketing in its efforts. It did many tactical things right, like the Gatorade listening room but it made some crucial errors. In particular, the Refresh campaign which diverted TV advertising money into a social-led CSR programme. PepsiCo put too much trust in social media marketing to shift product and cut spend in traditional marketing techniques. Eventually the company had to make redundancies to cobble together 500 million dollars from the savings in order to try and get its marketing back on track.

I can see signs that other groups focusing on the bleeding edge of social business such as snack food group Mondelēz International could make as well unless pragmatism gets to trump visionary zeal.

In the same way that Proctor & Gamble came out of the great depression stronger by building a competitive advantage through advertising, Coca-Cola is likely to get a similar advantage by setting the bar higher for competitors.

More information
Coca-Cola says it will drive obesity battle with calorie counts | The Guardian
NYC soda ban would lead customers to consume more sugary drinks, study suggests | CBS News
Judge Blocks New York City’s Limits on Big Sugary Drinks | New York Times
UK Soft Drinks Report 2012 | British Soft Drinks Association (PDF)
Sodas on the Defensive – WPP
Indra Nooyi’s Pepsi challenge – Fortune Management
Pepsi Pours Fortune Into Marketing Drinks, Indulgent Snacks | News – Advertising Age
PepsiCo, A-B InBev Strengthen Ties with Joint In-Store Marketing Program | Advertising Age