Fiddling While Coke Burns

I hate to be the Coke basher – I usually leave that to Craven – but this was just too much of a coincidence to let him feast on it.

There have been two major pieces of news released in the past couple of days concerning the beverage industry, and it’s an interesting contrast that needs to be explored here. First, the New York Times took the healthy soda story – you know what we’re talking about; Diet Coke with Vitamins, Diet Pepsi Max, etc. — and ran with it, dropping it onto the front page (below the fold, though….) The story featured this baldly ostentatious assertion/unbelievable money quote! from Coke’s CEO, E. Neville Isdell:

“Diet and light brands are actually health and wellness brands.”

as well as the usual analysis from Tom Pirko (“Coke is full of it.”), John Sicher (“Coke is full of it.”) and consumer advocate Michael Jacobson from CSPI (“Coke is full of it, but hey, for once, vitamins! By the way, have you gotten our lawsuit of the week yet?”).

(Quick note to the NY Times: it’s not that these guys aren’t good and quotable. They are. But come on. Freshen up that Rolodex. Give us a ring – we’re always here, and we’re damned handsome.)

Now, let’s fold this madness into another report, from Sicher himself (see, we agree, the dude is good, but – with all do respect, mon ami, – we’re MUCH prettier), who released numbers that indicate that last year’s decline in soda sales wasn’t a blip but is likely a trend, and might be a snowball – the drop went from .65 percent to 1.5 percent – and Morgan Stanley’s Bill Pecoriello is predicting another doubling of the decrease in 2007.

What’s grabbing the share, and what’s going to keep on eating the lunch of the sodas? Health and Wellness brands: enhanced waters, teas, sports drinks, even energy drinks, which have their own physiologically-oriented functionality.

Look, Neville – can I call you “Neville?” what about “E?” – you guys can’t have it both ways. Diet Coke was one of the most successful brand extensions in history, but it was big for what it wasn’t (fattening, like the original) rather than for what it was (fizzy liquid with artificial sweeteners). And pouring a little vitamin fortification into the stuff isn’t going to turn things around, because it’s not building on the core strength of Diet Coke. You think John Daly (solely responsible for at least one percent of Coke’s operating budget) drinks Diet Coke ‘cause it’s healthy?

Now that we’ve cleared that up, we still have the problem of what to do about CSD’s, because they’re still basically the heart of the American economy, the blood pumping through Uncle Sam, etc. And here, I think, we’ve got to accept some reality. (Ahem, that hasn’t been our strong suit lately.)

The reality is this: We love soda, we’ll always have a place for it, but it’s on the decline. We think it’s a treat, and while it’s a really yummy treat, we’re finally listening to our parents (or Michael Jacobson) and we’re drinking less of it. Neville, face it, you’re not going to bring us back just by putting the same vitamins that we get from cereal into a can of Coke. You’re going in the wrong direction.

So let’s market it as a treat. Let’s get used to Coke being number two, or number three, and try to shore things up that way, rather than claiming we’ve unlocked the fountain of youth. Let’s concentrate on our core business before the snowball turns into an avalanche.

Think about Nero, another CEO of a major corporation, of sorts. Sure, he fiddled while Rome burned, but he didn’t say, something like “burned houses are excellent in the summer,” or “hey, nothing like a convertible chariot!” Some people like fiddling. Fibbing, not so much.