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The State of Brands: Cola Wars

A little competition never hurt anyone. Many even say it brings out the best in the parties involved. When it comes to brand loyalty, companies are always competing for consumers’ attention, time, and money to keep them committed to their brand. This is more apparent than ever in the soft drink industry as the two soda behemoths of the market, The Coca-Cola Company and PepsiCo Inc., prepare to square off in the single serving, make-your-own-beverage arena. Welcome to the reignited “Cola Wars.”

On February 5th of 2014, Coca-Cola agreed to purchase a 10-percent stake in Keurig Green Mountain, which is working on a single serving, do-it-yourself product that competes with SodaStream’s products. This is a very necessary strategic move for Coke as the carbonated soft drink market in the U.S. has declined over the last decade. This move by Coke shows their determination to keep their loyal consumers engaged, as well as attract new K-cups users. This partnership allows Keurig Green Mountain and Coke to tap into each other’s consumer base to expand their brand recognition and loyalty.

The significant investment Coke made in the single serve, do-it-yourself soft drink market is a strong indicator that they believe that in-home, self-serve soda and sparkling beverage machines will be a major distribution channel for this industry.  It is not yet clear how PepsiCo will enter this arena. There was speculation that PepsiCo wanted to acquire SodaStream even prior to the news of the Coca-Cola’s $1.25 billion investment in Keurig Green Mountain. Now, this bold move by Coke is certainly putting pressure on Pepsi to take action. These two soft drink companies have been competing for consumer affection and loyalty for decades, and it now appears as though the fight wages on in this new arena of make-your-own, single-serve products.

As previously stated in this “State of Brands” blog series, personalizing the consumer experience is key to keeping consumers engaged and committed to your brand. Companies are doing more than just producing quality goods and hoping for consumer purchases. They are allowing the consumer to have significant input via social media and surveys, and have even taken it a step further, by actually letting them create their own product. We all remember how fun it was as a child to pour our own fountain sodas at a restaurant, sometimes mixing every flavor of soda just because we could. Coke is now tapping into that feeling with its entry into the do-it-yourself beverage market via Keurig Green Mountain. Now that Coke has taken the step to personalize soda in the home, Pepsi will have to make a similar move to keep their status in the “Cola War.” Will SodaStream and Pepsi succumb to the market pressure and industry trend and partner, or will Pepsi be even more innovative and come up with a completely different strategy? Time will tell.

Healthy Competition is not only good but necessary at times to keep the consumer engaged. What is your company doing to stay in the game?

Read the next blog in this series, State of Brands: Consumer Touchpoints in Focus.

Tags: Services