OMEN
09-02-2006, 03:13 PM
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Competition in caffeinated drinks is about to heat up, with Coca-Cola's planned launch of premium brewed tea and coffee, a move it plans to announce next week in Toronto.
The world's biggest drink company, which derives the majority of its revenue from carbonated beverages, has been experiencing sluggish sales in developed markets, as consumers shift from sugary sodas to healthier low- or no-calorie drinks such as flavored waters.
Coke on Thursday invited reporters to preview the hot drinks brand, confirming reports earlier this year that said the soft drink maker was planning to launch a brand called Far Coast that would offer hot drinks such as coffee, tea and lattes.
Coke spokesmen were not available on Friday (local time) to comment.
John Sicher, editor and publisher of industry newsletter Beverage Digest, told Reuters that sources said Coke will target restaurants and foodservice outlets. He said it made sense since Coke is already the restaurant industry's biggest beverage supplier, mainly through sales of fountain drinks.
"I don't see Coke opening chains of retail stores," which would compete directly with Starbucks, Sicher said. "I see them opening a bunch of stores to showcase the brand, but long-term I think it will be more of a brand and service they provide to restaurants."
He said it was an untapped area of significant growth which could eventually be a several-billion-dollar business.
In an e-mail, Coke said it chose Toronto as the launch site for its entry into the hot beverage category. Sicher said other likely markets include Norway and Singapore.
Rival PepsiCo. has been lauded by investors for its success at reducing its dependency on carbonated drinks by increasing its snack offerings. Pepsi owns Frito-Lay snacks, Quaker cereals, and Gatorade sports drink.
Marc Heilweil, president of Spectrum Advisory Services, which owns 126,080 Coke shares, said Coke's anticipated entrance into the java business was not at all surprising.
"Coke has been slow and not had the strongest offerings in noncarbs. That's part of where they have been going for the last few years," Heilweil said.
"The negative is that they've got to put enough marketing muscle behind these products and I don't think they have done that in some of their offerings in the noncarb business," Heilweil said.
Jack Trout, president of marketing strategy firm Trout & Partners, said that in terms of marketing it would not be smart for Coke to associate its coffee and tea with the fizzy black soft-drink.
"This has to be handled like a separate brand or a separate company," Trout said. Consumers "would never line up Coke with coffee. They're the cold guys."
Earlier this year Coke introduced a coffee-infused drink, Coca-Cola Blak, in North America and France, but analysts have likened it more to an energy drink than a coffee concoction.
Coke also stumbled several years ago when it acquired a bottled coffee brand called Planet Java and folded it into a joint venture with giant Swiss food company Nestle AG. The drink floundered and it was shelved.
Reuters
Competition in caffeinated drinks is about to heat up, with Coca-Cola's planned launch of premium brewed tea and coffee, a move it plans to announce next week in Toronto.
The world's biggest drink company, which derives the majority of its revenue from carbonated beverages, has been experiencing sluggish sales in developed markets, as consumers shift from sugary sodas to healthier low- or no-calorie drinks such as flavored waters.
Coke on Thursday invited reporters to preview the hot drinks brand, confirming reports earlier this year that said the soft drink maker was planning to launch a brand called Far Coast that would offer hot drinks such as coffee, tea and lattes.
Coke spokesmen were not available on Friday (local time) to comment.
John Sicher, editor and publisher of industry newsletter Beverage Digest, told Reuters that sources said Coke will target restaurants and foodservice outlets. He said it made sense since Coke is already the restaurant industry's biggest beverage supplier, mainly through sales of fountain drinks.
"I don't see Coke opening chains of retail stores," which would compete directly with Starbucks, Sicher said. "I see them opening a bunch of stores to showcase the brand, but long-term I think it will be more of a brand and service they provide to restaurants."
He said it was an untapped area of significant growth which could eventually be a several-billion-dollar business.
In an e-mail, Coke said it chose Toronto as the launch site for its entry into the hot beverage category. Sicher said other likely markets include Norway and Singapore.
Rival PepsiCo. has been lauded by investors for its success at reducing its dependency on carbonated drinks by increasing its snack offerings. Pepsi owns Frito-Lay snacks, Quaker cereals, and Gatorade sports drink.
Marc Heilweil, president of Spectrum Advisory Services, which owns 126,080 Coke shares, said Coke's anticipated entrance into the java business was not at all surprising.
"Coke has been slow and not had the strongest offerings in noncarbs. That's part of where they have been going for the last few years," Heilweil said.
"The negative is that they've got to put enough marketing muscle behind these products and I don't think they have done that in some of their offerings in the noncarb business," Heilweil said.
Jack Trout, president of marketing strategy firm Trout & Partners, said that in terms of marketing it would not be smart for Coke to associate its coffee and tea with the fizzy black soft-drink.
"This has to be handled like a separate brand or a separate company," Trout said. Consumers "would never line up Coke with coffee. They're the cold guys."
Earlier this year Coke introduced a coffee-infused drink, Coca-Cola Blak, in North America and France, but analysts have likened it more to an energy drink than a coffee concoction.
Coke also stumbled several years ago when it acquired a bottled coffee brand called Planet Java and folded it into a joint venture with giant Swiss food company Nestle AG. The drink floundered and it was shelved.
Reuters