A COCA-COLA CRUSADE

Published on .

After waging war with Pepsi-Cola for supermarket dominance for years now, Coca-Cola Co. has decided it wants to make more profit from its efforts in the retail business. That's good news for brand marketing, and for advertising, too.

At InterBev, the beverage industry's annual gathering, Coca-Cola President Doug Ivester said the cola war was being widened to include private label products, those pesky low-price lines that have forced the brands to slash their profit margins in all too many markets.

Those companies that produce store brands are "parasites" on the industry, the Coca-Cola exec proclaimed, and he charged national brand marketers have been reacting like "sheep."

Is it just another fighting speech about "unfair" private label competition? Or something more significant?

If it's more than rhetoric, and Coca-Cola is serious about building brand power in soft-drink aisles, it is brand advertising that will be in the spotlight.

"Advertising's going to become much more important again," an industry consultant predicted after the speech. "Coke will force Pepsi into better advertising." And more of it, if other observers are correct.

Pepsi-Cola President Craig Weatherup even said he approved of Mr. Ivester's speech, noting that private label was also his No. 1 concern.

Since more of Pepsi's total soft drink volume is through supermarkets than Coke's, Mr. Weatherup may be the big winner if Mr. Ivester can reduce private label share.

What does this assault mean for retailers?

In between hurling invectives at private labels, Mr. Ivester argued that brand marketers are retailers' friends, providing such benefits as free delivery and beverage-aisle management.

Today's hard-eyed retailers may not be easily impressed by such familiar services. Less of a mixed blessing for them-just as for all brand advocates and advertising in general-will be the added marketing weight needed to back up Mr. Ivester's bold speech.

In this article:
Most Popular