On the Fourth of July, when you were busy grilling burgers, struggling to tolerate family members and watching fireworks, The Coca-Cola Co., Inc. was busy operating an aggressive promotional push. Wells Fargo, a financial services company that provides market research, said that this strategy, if not excessive, could be “quite shrewd.”
Despite the weather not playing along (it was colder this year than in 2012), Coke’s beverage sales increased by 2.4 percent during the holiday, according to a Wells Fargo report.
“Coke was by far the most aggressive during Q2, particularly during the Fourth of July,” one retailer said in the report.
Wells Fargo argued that Coke’s increased promotional activity “could upset the health of the industry profit pool.” But if the activity is brief, the report said that Coke could continue to capitalize on Pepsi’s waning business and increase its market share. The report also said that both scenarios are unfavorable to Pepsi, which could be running out of ways to revitalize its business.
In a survey representing more than 10,000 C-store locations across the country, more than half of Wells Fargo’s respondents indicated that Coke promoted more this year, and 25 percent of respondents indicated that Coke had a more than 10 percent increase in promotions.
“Coke basically put their entire portfolio on promotion,” a retailer said in the report.
Considering negative sales growth and market share losses from Coke’s low- and no-calorie options, Wells Fargo remains concerned about the Diet Coke franchise.
“The company appears focused on using aggressive promotions to offset this weakness, drive volume gains and reinvigorate the franchise,” the report said, “however the scanner data suggests this is not in fact occurring.”
Other notable information from the report:
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