Coca-Cola Puts Major Marketing Push Behind Fuze

Coca-Cola isn't used to trailing the competition. Yet that 's the position the beverage giant is in when it comes to the fast-growing ready-to-drink tea category–and it's gearing up to do something about it. Its weapon is Fuze, the juice-and-tea brand Coca-Cola acquired in 2007 for an estimated $250 million. The marketer is planning a major first-quarter marketing campaign for Fuze, which is also getting a new-product infusion. This summer Fuze rolled out five new flavors that will be available at fountains and in a variety of packages by year's end. Still, Coca-Cola has its work cut out for it. Fuze had less than a 0.1% share of the tea category in the first half of 2012, according to Beverage Digest. And Coca-Cola will get weaker before it gets stronger. Come New Year's Eve, Coca-Cola and Nestle's licensing agreement for Nestea will be terminated in the U.S., though the companies will continue to partner outside the U.S. Even with that 20-year arrangement in place, Coca-Cola still lagged as the No. 4 player in the space as it focused on larger categories such as soft drinks, sports drinks and juice. When partner Nestea becomes foe in January, Coca-Cola will slide to the No. 5 slot, according to Beverage Digest figures, behind Arizona, PepsiCo, Dr Pepper Snapple Group and Nestle. "The Fuze initiative is critically important for Coke," said John Sicher, editor and publisher of Beverage Digest. "Tea, because of its health and wellness imagery, and because it works well with diet sweeteners, has huge potential over the next five years." According to Beverage Marketing Corp., the ready-to-drink tea category grew almost 5% last year to $5.5 billion in retail dollar sales. It's expected the category will experience rapid growth in the next few years, something Coca-Cola hopes to capitalize on. This summer, Fuze rolled out five new flavors that will be available at fountains and in a variety of packages by year's end. And a major campaign is planned for the brand in the first quarter of 2013, though the company isn't ready to discuss details. "We have pretty lofty awareness goals," said Chris Johnston, director-tea at Coca-Cola North America, of the company's planned investments in Fuze. "It's fair to say the tea segment is increasingly important on the radar screen of the company." Coca-Cola's tea business in the U.S. has been weak for years, prompting the Coca-Cola system to long call for the company to address the issue. Seeing Arizona, an independent company, skyrocket to prominence in recent years has been a wakeup call for the industry, Mr. Sicher said. The 20-year-old brand now controls 40% of the ready-to-drink tea category. Mr. Johnston admits that , from an outside perspective at least, it does appear Coca-Cola is late to the game. He argues the company has been "choiceful, patient and deliberate" when it comes to the tea category, however, highlighting the recent success of its homegrown Gold Peak brand and the acquisition of Honest Tea. Now, he says, the company is turning its attention to building the Fuze trademark. Fuze has had a relatively small marketing budget for a Coke brand. In 2011, the brand launched its first TV campaign, boosting measured spending to $8 million from $3 million the two years prior, according to Kantar Media. Then again, Arizona's budget has hovered in the tens of thousands each of the last several years. Fuze has already brought several agencies on board, including Ammirati and Engauge. The brand is also working with David, an agency that launched in January and is backed by Ogilvy & Mather. David is billed as a global shop born out of the creative strength of Latin America, with offices in Sao Paulo and Buenos Aires. "Unlike other brands in the segment, we'll have a stronger multicultural approach to marketing," Mr. Johnston said. He noted that there are plenty of "white spaces" in the category. He said he sees opportunities for new price points and packages. And he indicated there's an opportunity to target consumers interested in "active energy" beyond caffeine.

Coca-Cola Puts Major Marketing Push Behind Fuze

Featured Stories