Lynne Kiesling
When you sell products globally with the volume that Coca-Cola does, how much additional profit do they really think they can earn from restaurant-customized beverages?
Coca-Cola has partnered with the Culinary Institute of America, the nation’s preeminent culinary school, to develop specialty drinks for restaurants using Coke products and other sweet and savory ingredients, such as fruit juice, hot sauce and soda water.
I mean, restaurant-customized beverages aren’t really “scalable”, so to speak, so this is not a low-cost strategy. And I can’t see much upside. Still, I’d like to try a Pomegranate Fresca; I have been powering through the Black Cherry Fresca at home now that the weather’s toasty and humid.
So you, too, have taken to the Black Cherry Fresca. Welcome aboard! 😉
Speaking of Fresca, and of buying lots of it, I find the pricing of soft drinks to be really confounding. There seems to be a weak inverted seasonal pattern; its average price is lower in the warmer seasons. But the pricing is highly oscillatory in all seasons. When shopping, I always check the Fresca to see if it is priced up or down. Once recently it was $5 for a 12-pack. But on the next trip it was 5 12-packs for $10. If my observations hold up, the price will most often be in the $2-$3.5 range for the summer, but in the winter months the low prices will appear less frequently, and the $4-$5 range will dominate. I’ve never quite understood what was going on there. Perhaps it’s not strategic at all, but what it makes me do is buy a big supply when the price is right. Maybe that’s the point.
Something I remember from a distant-past case study in business school is that getting the product into the house in quantity is key to a high consumption rate. This was the idea behind the 3-liter bottles as I recall, but a 3-liter bottle of a carbonated beverage is not practical for typical home consumption. Even a 2-liter bottle of Fresca is going to die too quickly. So maybe the oscillatory pricing of canned drinks is geared toward getting us to buy in quantity. Works that way with me!
Think of it instead as a decentralized strategy to explore for new flavor combinations. The idea for new flavors are scalable: once someone discovers that Fresca Pomegranate pairs well with, say, grilled tuna steak in mustard sauce, the idea can be used anywhere. (Knowledge is nonrival in consumption.)
Also, the approach opens up an upscale soft drink market, and promises to allow consumers to choose a soft drink rather than, say, wine, to go with an upscale dinner.
It is true that benefits of the knowledge created will only partially be captures by Coca Cola, but they are positioned to benefit more from it than anyone else, both by the role they are playing and by virtue of there overall size. (I’ve been reading David Warsh’s Knowledge and the Wealth of Nations. Can you tell?)
Looks like a great idea for TCCC, I wonder what Grant McCracken thinks?
Yummmmm, pomengranate Fresca. It sounds like I need to try the black cherry version?
All the Frescas are great, and I buy all three. For me, there’s nothing better than the original when coming in from hard exercise or yard work in the heat. The black cherry has a nice dark flavor while still being light and highly effervescent. The pomegranate idea sounds very nice as well! Anti-oxidants…