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BEVSCAPE BuSINESS • The latest news on the brands you sell.
Real Brand News: Coca-Cola is still on top. According to the Omnicom Group's subsidiary, Interbrand, the company is still the world’s top performing brand – coming out above companies like IBM (ranked second) McDonald’s (in sixth place) and Disney (ninth). This marks the 11th consecutive year that Coke has achieved the positioning in Interbrand’s Best Global Brands report. The study applauded Coke for its “ability to adapt to whatever changes the marketplace throws its way” – a strategy perhaps best illustrated by the fact that the company now has a brand value of $70.4 billion. Coca-Cola was further recognized by Interbrand for its presence at the recent FIFA world cup, where its brand ubiquity and attention to giving back. For instance, the profits from downloads of its “Coca-Cola Celebration Mix” of the song “Waving Flag” were donated to Coca-Cola’s Replenish Africa Initiative. Coca-Cola also received recognition for its use of social media, amassing 11 million Facebook fans and 96,385 Twitter followers as of August 2010. Yet Interbrand writes that “the brand is likely to face challenges as consumers grow more health conscious in the coming years” but cites Coca-Cola’s Healthy Active Living as a way to speak to consumer preferences. •
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Gatorade Set free Major news came out of PepsiCo recently when the company decided to allow about 25 percent of its Gatorade distribution to go into its DSD system. Consumer products analyst Bill Pecoriello called the switch from warehouse to DSD one that “made sense” for both PepsiCo and its bottlers. It means that both PepsiCo’s own bottlers and its network of independent wholesalers will be able to sell the category-leading sports drink to “small format” retailers like convenience stores, dollar stores, and other up-and-down-the-street accounts. Bottlers have long wanted access to Gatorade, which has been distributed up until now through larger-format, warehouse networks along with other Pepsi-owned brands like Naked Juice and Tropicana. The move to DSD networks, expected to begin around January 1, comes with another trade-off: the removal of case-packed bottled water from the DSD system and into ware8.BEVERAGESPECTRUM.SEPTEMBER.2010
house. The trade is another one that distributors should like, according to Pecoriello. “Exchanging negative margin case pack water (a very ugly business in decline) and a more attractive on-premise delivery business in exchange for a high margin Gatorade business in which PEP appears ready to invest in heavily over the coming years is a good trade off,” he stated in a release. That investment became apparent earlier this year as PepsiCo began a major re-launch of the Gatorade brand, its second in an 18-month period. The company has been active in revamping its entire sports drink portfolio, as well, adding Muscle Milk and now O.N.E. coconut water to its distribution system. The move into the DSD system for Gatorade will provide a single sales force for all its brands in small channels and will allow PepsiCo to reap approximately $150 million in previously unanticipated savings, according to Pecoriello. •