Coca-Cola and Pepsi don’t fight for coke this time, but instead of coffee
There will be another general on the battlefield of ready-to-drink coffee. This time it is Coca-Cola who lined up. This is also the first ready-to-drink coffee launched in China after Coca-Cola acquired COSTA for $ 5.1 billion. It is reported that the new product will be officially launched at the end of this month.
Starting in late March, this new product will be launched on e-commerce platforms, major supermarkets, convenience stores, retail stores, and vending machines. From May, new products will also be seen in the COSTA China store.
Looking at China’s ready-to-drink coffee market: Mengniu and Yili have launched ready-to-drink latte coffee, and Nongfushangquan started by restoring the taste of coffee itself, and the online charcoal-free, low-sugar ready-to-drink coffee, COSTA also rushed into China Of ready-to-drink coffee market.
Why does ready-to-drink coffee attract many big brands? Let’s take a look at a set of data. According to the “Chinese Shopper 2019 Series I” jointly released by the Kantar Consumer Index and Bain: ready-to-drink coffee has been among the top ten high-growth categories. From 2016 to 2018, the annual sales of ready-to-drink coffee increased by an average of 17%. One in three Chinese consumers has bought ready-to-drink coffee. Choosing ready-to-drink coffee has become a habit label for more and more domestic consumers.
Where there are opportunities for beverage innovation and growth, there are “two cokes”. Coca-Cola and Pepsi have fought for most of their lives and faced such a large piece of “cake” as ready-to-drink coffee. How did “two cokes” exert force in this fast-growing category market?
I @Pepsi Café, Coca-Cola + COSTA Instant Coffee is here!
Coca-Cola’s new coffee game starts with COSTA instant coffee. The new ready-to-drink coffee product launched by COSTA is called “New England Classic Series Espresso Drink”, and there are two types-pure American and pure Latte. This series of products use the same Mocha Italian coffee beans from the COSTA coffee store. The ready-to-drink coffee in the bottle can also retain the flavor of the coffee brewed in the store. The low-sugar and low-fat formula is also another highlight. The new product packaging is a 300mL portable bottle that can be resealed, which is convenient for consumers to drink in portions during commuting and travel.
COSTA Overseas Market Chief Operating Officer Shakir Moin said, “For several months, our Chinese R&D team has worked closely with COSTA ’s global chief coffee master Gennaro Pelliccia to use the same Mocha Italian coffee beans in coffee stores and ingeniously customize ready-to-drink to meet the needs of the Chinese coffee market.”
This new product is a brand new ready-to-drink series specially customized for the Chinese market following the launch of ready-to-drink coffee in the United Kingdom in June last year. At the same time, it marks the official entry of COSTA into this category (ready-to-drink coffee) first core international market.
Since joining the Coca-Cola family, COSTA’s every move has attracted the attention of the food and beverage industry. What kind of sparks will the powerful team collide? Start with the story of Coca-Cola and COSTA.
In August 2018, Coca-Cola acquired the coffee chain brand COSTA at a high price of US $ 5.1 billion, which sensationalized the entire acquisition circle. This bold throw allowed Coca-Cola to formally build a global coffee business platform.
Coca-Cola is not interested in the COSTA retail store business, but the global coffee supply chain owned by COSTA. COSTA can provide professional technical support, including procurement, vending and distribution channels, as well as scenario-based combination and matching, which fully lays out Coca-Cola’s full-category beverage strategy.
According to Renub Research data, by 2025, the global ready-to-drink tea and coffee market will reach US $ 122.88 billion, and ready-to-drink canned beverages will become the fastest-growing beverage segment in the world. Coca-Cola said that expanding its coffee business platform, ready-to-drink coffee is the first step. In April last year, Coca-Cola announced plans to launch COSTA ready-to-drink coffee. Then, in June last year, the canned ready-to-drink coffee was launched in the UK, which was the first product released after COSTA was acquired.
COSTA canned ready-to-drink coffee chooses three of COSTA’s most popular flavors: classic latte, caramel latte and American black coffee, allowing consumers to enjoy the familiar and favorite COSTA coffee anytime, anywhere. In addition, its sugar content is 30% less than most similar products on the British market. The calories of 250mL coffee are only between 95 and 120 calories, and each pot of coffee contains twice as much espresso.
COSTA canned ready-to-drink coffee is planned to be launched in the UK first, followed by Poland and China. But what is interesting is that Chinese consumers have not yet waited for the moment when their fingers opened the pull ring, but ushered in a customized version of COSTA bottled instant coffee.
II Beverage giant + coffee tycoon opens a new situation in the ready-to-drink coffee market
As an old opponent of Coca-Cola, Pepsi has not stopped attacking in the field of ready-to-drink coffee. It’s not difficult to find that Pepsi’s coffee journey seems to be accompanied by a coffee boss. Starbucks and Lavazza are both Pepsi’s partners. Through win-win cooperation, they continue to expand the layout of ready-to-drink coffee and also provide new ones for their own brand coffee research and development direction.
Less than a year after Coca-Cola acquired COSTA, Pepsi started to find teammates around the world, and Italian coffee giant Lavazza became Pepsi’s new strategic partner. The determination of the partnership accelerated the development of new products. Last summer ushered in the first round of Pepsi response in the coffee war situation, Lavazza launched a nationwide ice cappuccino ready-to-drink coffee in the UK.
Of course, in order to accelerate innovation in this fast-growing market segment, Lavazza Ice Cappuccino’s new product release is just the first step in the cooperation between the two giants. The quality of coffee products is controlled by Lavazza, and Pepsi has made plans to improve the professionalism of canned drinks. The two complement each other and launch canned coffee that caters to the needs of consumers.
The big boss of the coffee industry, Starbucks, and Pepsi have been together for 26 years. As early as 1994, Pepsi and Starbucks jointly established the North American Coffee Partnership (NACP, North American Coffee Alliance) to jointly develop and sell products. Starbucks bottled ready-to-drink coffee series that is popular all over the world was created by NACP. The products are all promising, including star products such as bottled frappuccino and star benzyl alcohol. Thanks to the strong market for ready-to-drink coffee, NACP’s retail sales have exceeded US $ 2 billion.
Coca-Cola acquired COSTA, panicking Pepsi and Starbucks. In February of this year, Pepsi and Starbucks hurriedly accelerated their pace before COSTA’s shot, and announced that they were jointly launching a new ready-to-drink coffee product Nitro Cold Brew (nitrogen cold extraction), which has won appetite for cold extraction coffee lovers. The new ready-to-drink coffee has three flavors of black coffee, vanilla cream coffee and deep caramel, two of which are inspired by specialty drinks from Starbucks offline stores.
Although ready-to-drink nitrogen cold brew coffee is not a strange word in the coffee market, Starbucks is indeed one of the few coffee companies to scale this category. Having an excellent partner has also allowed Pepsi to lock in the attention of some ready-to-drink coffee lovers. The combination of the beverage giant + coffee chain brand has created a new situation in the ready-to-drink coffee market.
III Don’t fight for Coke for coffee
Although the global carbonated beverage market is accelerating the transformation, the research and development of beverages that have torn off the “carbonated” label have become a new direction, but it may be the marvelous charm of carbonic acid and coffee. What’s more interesting is that the origin of “two cokes” and coffee all started from “Coke + coffee”.
Coffee Coke’s first started 24 years ago. Pepsi launched a coffee-flavored Coke called Pepsi Kona. But in fact, Pepsi Kona is not really coffee, but a new flavor of Pepsi. Pepsi Kona was tested in May 1996 and Pepsi positioned it as a soft drink for breakfast. Unfortunately, Pepsi Kona’s life was less than a year before it was discontinued due to poor sales.
In 2004, Pepsi tried another coffee-flavored Coke Pepsi Cappuccino. As the name suggests, this Coke has a creamy taste similar to cappuccino, but it eventually retired. Although the two flavor iterations have failed, they have helped Pepsi to a greater extent understand the preferences of consumer groups. Interestingly, Pepsi’s two failures inspired the old rival Coca-Cola’s innovation in coffee + cola. For the first time, Coke, which truly allowed American consumers to taste coffee, appeared in 2006. Coca-Cola launched Coca-Cola BlāK in 2006 and sold it in France, Canada, and the United States. It is reported that this Coca-Cola BlāK is added with coffee extract, and the wrong timing has led to the tragic ending of this product. In just two years, Coca-Cola BlāK announced the suspension of production in 2008.
Coca-Cola, which has been frustrated and courageous, has never given up on the study of cola-flavored coffee. After nine years of precipitation, Coca-Cola returned strongly with Coca-Cola Plus Coffee NO Sugar in 2017. This product is launched in Australia. Unlike the previous two models, Coca-Cola Plus Coffee NO Sugar conforms to the trend of reducing sugar, and sugar-free has become the biggest highlight of this product.
Coca-Cola’s continuous breakthrough in Coke coffee, which also has a soft spot for Coke coffee, this is the passion that inspired Pepsi. After 13 years, Pepsi announced the launch of Pepsi Café at the end of last year, and the target market was directly locked in the United States.
Pepsi Café, Pepsi’s new product, planned to launch two flavors, original and vanilla, with a delicate slender can body, 12 ounces (about 355ml). This coffee is added with Arabica coffee bean extract, which has twice the caffeine content of ordinary Pepsi, and is expected to be launched in the United States in April this year.
Todd Kaplan, Pepsi’s vice president of marketing, said, “We believe that Coke fans, ice coffee drinkers, and anyone who needs caffeine supplementation will fall in love with the wonderful flavor of refreshing Pepsi and charcoal roasted coffee.”
Coca-Cola Plus Coffee NO Sugar’s first launch in Australia made Coca-Cola taste the benefits. After adjusting the original formula, Coca-Cola brought Coca-Cola Plus Coffee to the Asian market one year later, but it was not listed in the United States until last year. Pepsi has seized this opportunity, Pepsi Café will take the lead in rushing into the US market this year.
Of course, in the choice of partners, the “two cokes” contests are evenly divided. Pepsi already owns the best-selling single product Frappuccino, and Coca-Cola, which is not far behind, launched a counterattack: In 2017, Coca-Cola and McDonald’s American Company officially cooperated to release ready-to-drink McCafé Frappe bottled coffee. McCafé Frappe has three flavors: caramel, vanilla, and mocha, and is sold in PET bottles, produced, distributed, and sold by Coca-Cola.
McCafé, which has its own price advantage, has a relatively stable customer base and certain performance. Coca-Cola with absolute distribution strength is also a super assist for McDonald’s launch of McCafé ready-to-drink coffee. This cooperation marks the first time that fast-food chains have entered the bottled ready-to-drink coffee market, and it also means the further expansion of the Coca-Cola coffee layout.
IV Summary
After joining Coca-Cola, COSTA will undoubtedly become Pepsi’s competitor with considerable weight in the coffee circuit. The quality of the ready-to-drink coffee, which has always been questioned, has been supported by COSTA, coupled with Coca-Cola senior players with unique marketing “routines”.
Previously, Coca-Cola and Pepsi were competing for the Coke market, but will the Coca-Cola and Pepsi pairs of red and blue CPs open the prelude to the ready-to-drink coffee war today?
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Source: FBIF Food and Beverage Innovations
Author: Zhou Yue
Editor: Momo
English translate & Edit: Paerhati A.
