Last week, Coke reported third-quarter earnings that, while they beat expectations, represented a steep drop compared with the same period in 2003. Case volume revenues have stagnated and are not expected to see significant gains. Sales of its heavily promoted C2 mid-calorie cola have been lackluster, a fact the company blames on overly ambitious pricing. Perhaps most disconcerting, though, is that the firm's share of the U.S. soft-drink market is on course for its fourth drop in five years, according to Bloomberg.com. All of these facts make Fool contributor's Steven Mallas' assertion that there is something wrong with Coke's brand seem very much on target.
Unfortunately, Coke's latest initiative has nothing to do with its core brand. Instead, the company plans to launch a new energy drink named Full Throttle. Of course, it's not that energy drinks are a bad business; in fact, it's a fast-growing area. Red Bull, a product from privately held Red Bull GmbH of Austria, has reportedly enjoyed explosive sales. However, Coke has already tried the energy drink game with a beverage called KMX, and the results were less than impressive. Its new offering could perform better, but it's going to be hard to chip away at Red Bull's lead.
Certainly diversification is a good thing. Coke's archrival PepsiCo
Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.