Several times during a fourth-quarter earnings call with analysts, Coca-Cola's Chairman-CEO refrained from using the tired old term for the weakening category in which his company's flagship competes. At least a dozen times during the call, the word "carbonated" was swapped with a far more friendly term, "sparkling," while the word "still" was used in place of "noncarbonated."
'Nonalcoholic sparkling brands'
"Sparkling beverages," he said at one point, are "what we simply define as nonalcoholic, ready-to-drink consumer beverages with carbonation." Coupled with a subtle change in the company's press-release boilerplate that Coke "markets four of the world's top five nonalcoholic sparkling brands," this is clearly no lip slip.
Though Coca-Cola did not return calls for comment, the beverage giant appears to be trying to reframe the way carbonated-soft drinks -- maligned for empty calories and lost share to alternative drinks -- are perceived by the financial community and consumers.
"There's been talk among industry execs for several years about changing the nomenclature from carbonated soft drinks to something else and sparkling is certainly one possibility," said John Sicher, publisher and editor of Beverage Digest. "I think the hope in some quarters is that sparkling will leave behind some of the unpleasant media attention that's attached to carbonated soft drinks."
By co-opting a term traditionally used to describe mineral waters, Coke seems to be adopting an eye-rolling marketing euphemism on the order of "pre-owned" for used cars and "active adult" for seniors. "It's about the fear that the whole soft-drink industry has become stereotyped as those people who make us fat," said John Greening, associate professor of advertising at Northwestern University's Medill Integrated Marketing Communications school.
"They've been eating at too many high-end restaurants," joked Laura Ries, president of Ries & Ries marketing-strategy firm, adding that Coke is "trying to upgrade the category."
Some think there may be a greater shift afoot. "It signals a changing marketplace," said Gary Hemphill, managing director of Beverage Marketing Corp. "Sparkling spans multiple categories like carbonated soft drinks, energy drinks, sparkling water and sparkling juice, whereas the term carbonated is mostly associated solely with carbonated soft drinks." In fact, Pepsi recently acquired Izze Beverage, known for its all-natural, sparkling fruit juices, and both Coke and Pepsi have begun marketing some sodas as sparkling, including Coke's Fresca and Enviga and Pepsi's Tava.
Whether clever portfolio management or spin, the new nomenclature appears to be working. Reports in the general press on Coke's earnings have repeated the phrases without a smidge of irony, even though the shift is unlikely to do much to change the numbers on the balance sheet.
"Despite a renaming of the carbonated soft-drink category as 'sparkling,' the category remains under pressure in several developed markets," wrote Bill Pecoriello, beverage analyst for Morgan Stanley, in a Feb. 14 note to investors. "Coke's ability to stabilize the 'sparkling' category while accelerating its diversification into noncarbs ('still') is key."
Are you listening, Neville?