Please ensure Javascript is enabled for purposes of website accessibility

Would You Share a Coke With Your BFF?

By William Bias - Jul 10, 2014 at 5:34PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The "Share a Coke" marketing campaign met with great success in Western Europe. Can its success be duplicated here?

Source: Motley Fool Flickr

On June 10, Coca-Cola (KO 1.88%) introduced the "Share a Coke" marketing campaign to the U.S. markets where consumers can find their names and the names of friends on 20 ounce bottles of Coca-Cola. In addition, consumers can find common millennial nicknames like "Wingman" and "BFF" on larger bottles. Also consumers can use QR Codes on Coca-Cola Freestyle machines to send friends coupons for a free 20 ounce bottle of Coca-Cola. Let's check out why Coca-Cola expanded this marketing campaign and what it means for investors. 

Declining sparkling beverage volume
Coca-Cola hopes that encouraging people to give each other Cokes will help raise brand awareness enticing more consumers to purchase Coca-Cola in North America. North American sparkling beverage volume has declined steadily since 2012 (see table below). Seeing this pattern, Coca-Cola decided to bring the highly successful "Share a Coke" program to the United States.

Year

North American Sparkling Volume Change

YTD 2014

-1% 

2013

-2% 

2012

-1% 

Source: Sec Filings

Positive precedent
The "Share a Coke" program saw much success across the globe. Coca-Cola's Western European bottler Coca-Cola Enterprises (NYSE: CCE) credited the program with the 1% volume increase in its sparkling flavors and energy segment and the 0.5% increase in its Coca-Cola trademark volume in 2013. Sparkling beverages actually performed better with non-sparkling beverages declining for Coca-Cola Enterprises. Overall Coca-Cola Enterprises saw its 2013 volume remain even with 2012 thanks to the increase in sparkling volume. 

Will it work?
Coca-Cola faces headwinds in the form of the healthy lifestyles movement. Increasingly, many consumers want beverages perceived to be healthy. The "Share a Coke" program will most likely turn carbonated soda volume around in the short term. However, once the program ends and the novelty wears off people may go back to buying bottled water and juices. Also Coca-Cola could incur significant marketing costs if enough people utilize the free 20 ounce coupon counteracting any positive impact from the campaign.

What's the better alternative?
Coca-Cola is trying to come up with long-term innovations like the stevia flavored Coca-Cola Life. Coca-Cola hopes that the healthier perception of its naturally flavored sweetener will turn around beverage volume, specifically its diet soda volume. However, fellow Fool Rich Duprey argues that stevia goes through a manufacturing process that dilutes its natural appeal and that it will do nothing for soda volume in the long run.

Coca-Cola's entry into the home beverage market could spur carbonated beverage volume over the long-term if a person doesn't get turned off by the lack of convenience. Mixing Coca-Cola may make sense in areas of the world that lack convenience stores and street vendors.

Perhaps Coca-Cola could make this "Share a Coke" program more permanent? Maybe even allow people with uncommon names to specially order Coca-Cola bottles or create a machine that could personalize bottles on the spot. This represents the only way the campaign could make a long-term impact on beverage volumes.

Foolish takeaway
Coca-Cola and Coca-Cola Enterprises' investors should expect a volume boost in carbonated beverages as the campaign remains in full swing in North America and Western Europe. However, Coca-Cola still needs significant product innovation on the carbonated soda front to combat declining volume over the long-term. Moreover, Coca-Cola needs to figure out more ways to differentiate its non-sparkling portfolio giving its juice, tea, and water products the moat the Coca-Cola brand enjoys. 

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$63.04 (1.88%) $1.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.