Coca-Cola's decision to cut its bottle size, while also increasing its prices, to counter the forthcoming UK sugar tax, should be watched by other brands that may be considering a range review and/or the introduction of new products, Engage Research has said.
The customer insight agency commented following the news that given the impending introduction of the sugar tax, a 1.75 litre bottle of Coke is to be reduced to 1.5 litres and increased in price by 20 pence in the UK, while the price of a 500ml bottle has also risen from £1.09 to £1.25.
The drinks firm is also introducing an ice tea drink called Fuzetea, a ready-to-drink cold coffee, Honest Coffee, and a dairy-alternative smoothies brand called AdeZ.
The sugar tax is to be set at 18p on drinks containing 5g of sugar or more per 100ml and a higher 24p rate on those with more than 8g per 100ml.
Ireland Moves
In Ireland, too, Coca-Cola has announced it plans to engage in a range review, introducing a 250ml slimline can, as well as 375ml and 1.5l PET bottles.
Commenting last week, Matthieu Seguin, general manager of Coca-Cola HBC Ireland and Northern Ireland said, "We have consistently diversified our portfolio and reduced the sugar across our range. The majority of the drinks we sell are now lower in sugar - except for the much-loved Coca-Cola Classic and some of our energy drinks and mixers, which remain unchanged."
'Stay True To The Recipe'
“Notwithstanding the fact that Coca-Cola has extended its range into new areas, the core of the Coke brand needs to stay true to the recipe that has made it what it is,” commented Lyndsay Peck, Director, Engage Research.
“With this in mind, other tactics such as reviewing bottle sizes and changing prices are often a sensible option. However, whether such changes have a less adverse impact on sales and brand perception than, for example, changing the recipe by reducing sugar content really depends on your category and brand position.”
Peck says that this is exactly why brands need to better understand both their consumers and the markets in which they operate in order to make the best choices.
“By using research, brands are in a strong position to simulate different options with consumers in order to understand which offer the best long term option or opportunity,” she continues.
“We work with many brands who want to review their ranges and offer new options, whether in the form of a line extension, reformulation or offering new pack sizes or types. Understanding how attractive these options are to current brand buyers as well as those who might be returning to the brand or trying it for the first time is crucial."
Sales Performance
Last week, Coca-Cola HBC announced its full year sales were up 4.9% to €6.52 billion, with volumes up 2.2%.
"This was an exceptional year for us, and we are delighted to have delivered strong growth in volume, revenue and margin, overall demonstrating significant progress towards our 2020 objectives," commented Zoran Bogdanovic, chief executive of Coca-Cola HBC.
"We are excited about the year ahead, which has a particularly strong pipeline of product innovation and commercial activity around our route to market and in-store execution."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
