Beverage giant Coca Cola Co. (KO) is trying out its first alcoholic beverage product in Japan as part of the company's larger experimentation outside of its core beverage offerings. (See also: Coca-Cola Upgraded on Alcohol Talk: Wells Fargo.)
The Atlanta-based soft drinks maker will introduce a fizzy, boozy drink in the Asian market in a product category known as chu-hai, which includes beverages made with a distilled grain-based alcohol called shochu and flavored, carbonated water. Japan has long been an experimental market for Coca Cola as it plays with various teas, coffees and health drinks—even including a laxative version of Coke called Coca-Cola Plus—many of which are not available in other regions.
"This is unique in our history. Coca-Cola has always focused entirely on nonalcoholic beverages, and this is a modest experiment for a specific slice of our market," said Jorge Garduño, president of Coca-Cola’s Japan unit, in an article posted on the company's website. He added that Japan is a fiercely competitive market, where Coke launches around 100 products a year in order to keep up with the product cycle.
Diversifying in the Face of Slumping Soda Sales
Coke's last foray into the alcoholic beverage market was from 1977 to 1983, when it owned wine subsidiary Wine Spectrum that it later sold to Joseph E. Seagram and Sons. However, this is the first time the company is developing its own alcoholic drink as it combats a steep drop-off in demand for sugary sodas and attempts to regain the favor of a more health-conscious consumer.
Coke's recent marketing campaigns, championed by chief executive officer James Quincey, have attempted to re-frame Coke as a company that offers something for everyone and every occasion, not just soft drinks. Such has been the goal of its Venturing & Emerging Brands unit, which has helped the firm expand into premium segments, grow and incubate high-growth brands domestically, and supporting smaller brands abroad. The move also follows other beverage giants into both the alcoholic and non-alcoholic categories, that have increasingly blurred the lines between the segments in efforts to boost sales. (See also: The New Plan from Coca-Cola's New CEO.)