Coca-Cola to ride Ocean Spray wave with juice launch

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Coca-Cola Co. has its sights on yet another supermarket aisle.

The $18.9 billion beverage giant is developing a new line of shelf-stable blended juices to go up against category leader Ocean Spray Cranberries, said an executive familiar with the plans. "The goal is to compete with Ocean Spray, like Coke vs. Pepsi."

A senior product manager from the company's Minute Maid division and executives from Coca-Cola's headquarters have held several meetings in recent months to iron out details for the line of large-size, multiple-serving bottles.

The product, still under development, has yet to be named.


Coca-Cola wants the new bottled juices to be "hip blends of different kinds of fruit," with standout packaging, the person familiar with the project said.

The product team is examining the colorful, shrink-wrap packaging of Arizona Tea, the trendy iced tea brand from Ferolito, Vultaggio & Sons, that recently decorated one bottle with a design from pop artist Peter Max.

A spokeswoman for Minute Maid Co. said she was unaware of the project, noting it's company policy not to discuss new-product initiatives.

An Ocean Spray spokesman said he was unfamiliar with Coca-Cola's plans. "We'll continue to defend our franchise and do what we do, which is make top-quality healthful products that answer consumer needs," he said. "Anytime that a company with the sophistication of Coke gets into any category, it's certainly something all competitors are going to take note of. They are a very sophisticated marketing organization."

"I think the whole juice arena is going to heat up because of Pepsi's purchase of Tropicana," the Ocean Spray spokesman added.


PepsiCo's purchase last month of Tropicana, the juice industry leader, intensified supermarket juice-aisle competition and added a major weapon against Coca-Cola's Minute Maid offerings in the refrigerated section.

For now, Coca-Cola's Hi-C and PepsiCo's Tropicana Twister brands are not major players in the shelf-stable segment of the $16 billion U.S. juice business.

Shelf-stable juice accounts for 39.7% of the overall market, according to consultancy Beverage Marketing Corp. Ocean Spray dominates the segment, followed by private-label brands.

Tropicana and Minute Maid are the No. 2 and No. 3 brands in the refrigerated-juice segment after private-label, according to industry newsletter Beverage Digest.

Both Coca-Cola and PepsiCo dwarf Ocean Spray in size and marketing dollars. But privately held Ocean Spray, with sales of $1.4 billion last year, is an unusually aggressive competitor, said consultant Burt Flickinger, managing director of Reach Marketing.

"I haven't seen another company defend its franchise as aggressively and as well as Ocean Spray has whenever there is a major intrusion in one of its core categories," Mr. Flickinger said.


He predicts an entry from Coca-Cola would eat into sales of private-label juices and niche brands, rather than Ocean Spray.

It's not clear which ad agency would handle the line. Leo Burnett USA, Chicago, is agency of record for Minute Maid, but Coca-Cola is well-known for splitting assignments among shops.

Salomon Bros. analyst Jennifer Solomon said it makes sense for Coca-Cola to develop the line.

"You have got to get your growth where you can," she said, referring to the brutally competitive beverage business. "I think Coke's all about share-of-stomach."

Copyright September 1998, Crain Communications Inc.

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