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One Big Idea - Your Strategy is Showing

January 26,2018

Strategy is only as good as it's execution. All too often, we see brands taking a very heavy handed, overt approach to bringing a strategy to life. This week, we look at the recent Diet Coke expansion and how this strategy is directly linked to the brand's initiative to reach millennials. If you like our podcast, please subscribe and leave us a rating!

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Transcription:

Bill Gullan: Greetings, one and all. This is Real-World Branding. I'm Bill Gullan, President of Finch Brands, a premier boutique branding agency. Thank you for joining us. This is One Big Idea, and today we're going to talk about big news out of Atlanta and everywhere else that sells Diet Coke, within the last couple of weeks.

Some changes to the lineup, and this comes on the heels of sort of a rebrand and, I guess, reformulation of a beverage I love called Coke Zero over the summer. It was beloved. They said, "We're changing it, we're discontinuing it, we're changing it and relaunching it. It's now called Coke Zero Sugar." It tastes the same to me, which is wonderful, but in any case, it's apparently different. But that was the, I guess, preparation for what seems to be even a bigger deal, which is major changes to Diet Coke.

Here's a bit of the backstory, at least as it's been reported. We all know that there are continual changes in tastes and preferences and beliefs around health and nutrition, and obviously when diet sodas became, over the several decades that they've risen to prominence, part of the message there is that sugar bad and artificial sweetener better. That, as well as perspectives about calories, as well as desires for authenticity, etc., etc., have sort of reshaped the way that at least some consumers, particularly younger consumers, think about what health is.

And so just to kind of fast forward to where we are here, Diet Coke, at least the data indicates that Diet Coke and the diet soda category in general is shrinking, not falling off a cliff but shrinking. In the last three months of 2017, research suggests that diet soda sales fell 2% in the US, and in that period Diet Coke fell by 4%, Diet Pepsi by 8, so presumably those who are gaining share or holding steady are not those two sort of behemoth brands but, as with many other categories, sort of craftier, smaller, sort of more authentic, quote-unquote, brands that are those that are keeping the category close to level.

But still, there's a decline, and given the way the demographic splits break down, the larger concern in Atlanta, of course, would be that this decline is going to be bigger and maybe perhaps longer-lasting, given that it is younger consumers who are rejecting the notion of artificial sweeteners in Diet Coke and everything else. You can, I think, fairly easily see some of the areas where those sales and those beverage purchases are going.

National Beverage Corp., which makes La Croix, reported that sales were up 43% in the sparkling and still flavored water category. Anywhere you look in an urban area, you can see La Croix with its colorful cans. You can see private label versions of sort of seltzer and sparkling. There's a ton of category momentum there, and the data indicates, as well as, I think, our naked eyes, that it is younger consumers, so-called millennial consumers, who are driving that.

And so here comes Diet Coke, and here's what they decided to do, and it's probably available now or pretty soon. In two weeks, at least data indicates it may be around two weeks from now, you will be able to find four new flavors of Diet Coke that are particularly focused on the millennial market. First of all, there's a general brand makeover that makes Diet Coke a little sleeker, both in terms of packaging and in terms of look and feel, though the original Diet Coke will largely stay the same. However, it will joined by four new flavors: Diet Coke Ginger Lime, Diet Coke Feisty Cherry ... I don't know why it's all pissed off ... Diet Coke Zesty Blood Orange, and Diet Coke Twisted Mango.

The company is being very overt in expressing the target and the intent behind this new launch. In addition to these flavors, these new flavors will come in a can, the dimensions of which and the look and feel very similar to Red Bull. You know, the skinnier, taller, colorful can that maybe Red Bull pioneered but has become de rigueur, at least for energy drinks and for other drinks that are sort of youth-focused and youth-targeted.

North American Group Director for Diet Coke, Rafael Acevedo, says, "We're modernizing what has made Diet Coke so special for a new generation. Millennials are now thirstier than ever for adventures and new experiences, and we want to be right by their side." What a brand manager thing to say. I in some ways sort of respect that, but I think it gets to the point of our discussion here.

It's obviously too early to pass judgment one way or the other on the strategy. I think it's probably fairly clear that Diet Coke and sort of old line manufacturers and brands like that needed to do something. These trends, which appear to be more durable than just season-by-season, are upsetting and shaking up the balance.

Now, one could make the point about whether Coca-Cola Company can get there with Diet Coke, or whether it made sense to launch a diffusion concept, just as some beer manufacturers did with things like Shock Top and Blue Moon, that felt a little craftier but came from sort of macro-brew types of labels. But anyway, they decided to do it. There's a limited option set, and they chose one that they think is best for them, and so good for them. T

hey also learned from the mistakes, I guess, of New Coke back then, and the original Diet Coke, the Diet Coke that many millions of consumers, even if the category's declining, still love and rely on, isn't changing in a material way, even if the overall brand has a bit of new energy and focus. So we can still get our squat silver can Diet Coke as we so desire.

I think the question, ultimately, that we'll see the answer to as they go to market is, is this cool? Will their target embrace it? The overt way in which they're proclaiming how they got there and what they're doing really is what lends to us the title of this podcast episode. Long-lost friend and creative director emeritus at Finch Brands, Jordan Goldenberg, liked to say, "Ooh, careful. Your strategy's showing." And what he meant by that is, I think, a variation of a couple things. One, how brands are judged is how they act, not what they say, A.

And B, if you've gone through a process to identify a strategic direction that is promising, you need to deliver it in a way that is received and perceived by the target as authentic and real and sort of connected, and to basically say, "We did a bunch of research on millennials," as if we're studying them in the zoo, "we learned the flavors that they're drinking, and so we replicated them, and then we're using more or less cosmetic changes to the brand, in terms of the can and other things, and we're going right after them. We want to be by their side as they seek out new adventures," raises the question of whether or not Diet Coke's strategy is showing just a little too much here.

I went to the social media pages for Diet Coke, and all of a sudden ... maybe not all of a sudden, but it certainly seems palpable and prominent ... that Twitter is using all millennial-speak now for Diet Coke. You know, "Who dis?" and other things that are sort of part of how younger people communicate on Twitter, and it's just like you wonder whether or not this is real or whether or not it's sort of cringy. And I guess ultimately that will be one of the determining factors in how successful this move is. You also wonder whether flavor-level changes and/or cosmetic changes to the brand and the packaging and everything else really addresses the concern that millennials have with Diet Coke.

I don't know that it's that Diet Coke's brand image was uncool as much as it is that the sort of sweetening process and the overall ingredient profile and nutritional profile of diet soda in general does not align with the tastes and preferences and sort of emerging belief system of today's millennial consumer. This relaunch or rebrand or brand extension or whatever you want to call it has nothing to address that. It's possible that these flavors may, in how colorful they are rendered and how they taste, may win some fans, and that's obviously what they're hoping for in Atlanta, but I think the jury's still out as to the degree to which ... of course, it hasn't even launched, but the jury's out as to how effective this ultimately will be. I think, as noted, the concern about it is whether or not this is so transparent as to become a little bit cringy.

It's like, you know, I have kids. I make dad jokes. Dad jokes are sort of recognized as a subsection of humor that's not really all that funny, maybe a little bit endearing, I hope. But if you're a brand that's communicating at a level of sort of trying so hard to be millennial, that's kind of anti-millennial in the first place. So we'll see. It's going to be worth watching. Definitely going to try these flavors. Feisty Cherry's got to be awesome, and Twisted Mango, I'm not sure what's twisted about it, but can't wait. Can't wait to try it. We'll certainly be watching. It's rare and interesting that a brand of this size and heft has made a zig or a zag that is this significant, and for that reason alone, super-interesting for our industry, and we wish them all the best.

Signing off from the Cradle of Liberty.

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