Coca-Cola wants to sell more non-carbonated beverages, since that's a quickly growing market. The soft-drink giant is looking at ways to market milk products to kids, and is reportedly buying P.J. Bean, a maker of Planet Java bottled coffees. PepsiCo already sells bottled coffees through a joint venture with Starbucks and has recently snatched up SoBe teas and Gatorade. For Coke, the challenge will now be to develop and market strong brands in the non-carbonated drink market with its milk drinks and coffees.
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Coca-Cola (NYSE: KO), the world's largest soft-drink company, is adding to its non-carbonated beverages line-up, according to The Wall Street Journal. Coke's reportedly getting into the coffee business by buying up private company P.J. Bean, maker of roasted coffee and ready-to-drink bottled coffees under the brand Planet Java. (That's, like, so out of this world, dude.) This move, along with the company's desire to develop milk products, will hopefully help Coke expand more into the market for non-carbonated beverages. The non-carbonated beverages market, while not as big overall as the market for good ol' fizzy drinks, is growing around three times as quickly as the carbonated market is. Coke already has several non-carbonated products on the market, including bottled water Dasani, juices by Minute Maid and Fruitopia, and the sports drink Powerade. Recent actions find the company trying to grow its presence even more, in the face of a few frustrated opportunities. Coke missed out on grabbing the herbally spiked teas and drinks offered by Sobe and the tremendously popular sportsdrink Gatorade when PepsiCo (NYSE: PEP) bought the South Beach Beverage Company and Gatorade daddy Quaker Oats (NYSE: OAT). Pepsi is already in the bottled coffee market through its marketing of Frappuccinos and its joint venture with Starbucks (Nasdaq: SBUX). Mmm, there may be nothing so satisfying as a chilly Mocha Frappuccino... but I digress. Coke and milk Coke reportedly has an initiative called "Project Mother" that, aside from sounding oddly Orwellian, is trying to figure out just the right milk blends for kids that will make them -- and their moms -- happy. The end result will probably be flavored milks, and the company plans to start testing the idea early next year. I've always loved that strawberry-flavored NesQuik stuff, so it sounds like a swell idea to me. Coke certainly hopes so: The 8-to-12-year-old demographic it's targeting has an average per capita income of between $200 and $600 a year. About 30-40% of that goes to food and drinks, and 75% of the beverages kids drink are milk and juices. Coke and coffee Branding will be key What remains to be seen, though, is if the company can pull off the growth and introduction of new brands into the market. Everyone's heard of Gatorade, and lots of people have heard of SoBe. Planet Java will be new to many, as will whatever brand the company chooses for its cow juice.
So what's Coke done lately to juice up the drinks it sells without bubbles? For one thing, Coke is looking to add Coke-backed milk mustaches to kids between the ages of 8 and 12. That's right -- the real thing wants to sell milk-based drinks and is exploring ways to do that. It makes sense, too, when you think about it: Milk in the U.S. is a $30-billion-a-year business. Moms would much prefer that their kids drink milk than sodas. The key now is to figure out ways to make milk hip to kids.
And now Coke wants to sell coffee. Currently, Planet Java's bottled coffees are only sold in New Jersey and New York, through a distribution deal with Coke bottler, Coca-Cola Enterprises (NYSE: CCE). Now, Coke will expand the reach of Planet Java across the country, and will also expand the flavors offered by Planet Java. Grabbing market share from Starbucks (which I own shares of) and its Vanilla, Caramel, Coffee, and Mocha Frappuccinos probably won't be an easy task, though. Coke's a little late to the game here, so it will have to do a good job at marketing Planet Java coffees if it hopes to compete against the 'Bucks.
Milk and coffee, two things most people definitely don't associate with Coca-Cola right now, may turn out to be important growth drivers for the old-school soft drink company in the future. As sales of fizzy drinks stagnate, Coke clearly realizes the importance of innovation, as particularly evidenced by the milk initiative. Though it may have missed out on Gatorade and SoBe, Coke doesn't want to be left out of the non-carbonated market growth altogether.
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