Coca-Cola looks to stay at the forefront

In a series of interviews with Reuters at company headquarters in Atlanta, Coca-Cola executives described how they are trying to identify their next billion-dollar brands, toying with new beverage formulations that may even take the company beyond liquids.

“The thing that I get excited about is product forms and sensory experiences continuing to change,” said Mary-Ann Somers, vice president of marketing for Coke's Venturing and Emerging Brands, or VEB, unit. “Functionality will continue to evolve, but how it's delivered and how you experience a liquid beverage continues to change.”

When asked about the most unusual drinks on the market now, Somers mentioned chunky aloe vera drinks and spicy drinks like those made by Prometheus Springs, with flavors like Lychee Wasabi and Pomegranate Black Pepper.

The U.S. beverage industry has seen an explosion in drink varieties over the last generation. Bottled waters, energy drinks and sports drinks are now commonplace, with new variations popping up that claim to boost relaxation, health, beauty, anti-aging, muscle repair, mood and immunity.

This proliferation is a main reason why market-leader Coke and No. 2 player PepsiCo Inc agreed to buy their North American bottlers, as they seek to cut costs and revive the U.S. market, which has been sluggish for some time.

Recipe for Growth

Last week, Coke reported its first increase in quarterly North American sales volume in over two years, helped by World Cup promotions, but also on the strength of new drinks such as Powerade Zero and Coca-Cola Zero.

Thirteen of Coke's brands — including Fanta, Sprite, vitaminwater, Powerade, Minute Maid and Georgia Coffee — generate more than a billion dollars in annual sales. VEB, quietly formed some three-and-a-half years ago, is out to add to the list.

“We'd like to get in a little earlier this time,” the unit's president, Deryck van Rensburg, said, referring to Coke's 2007 acquisition of vitaminwater maker Glaceau, whose US$4.1-billion price tag caused a stir in the industry.

VEB has identified six new areas it thinks can give rise to future billion-dollar brands.

Coke is guarding those categories of future growth as jealously as the recipe for its own namesake cola.

“It's our secret sauce, if you like,” van Rensburg said. “We see tremendous growth in the range of benefits that consumers are looking for from a beverage. In the past, you might have got it from a food or a drug or a diet supplement.”

Bilal Kaafarani, Coke's senior vice president of research and innovation, said key areas of exploration were natural products for drinks — from sweeteners to colors to preservatives — and infusing them with healthier functionality like omega-3 fatty acids or antioxidants.

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