Coca Cola Jumps from Soft to Hard Drinks

Coca Cola is venturing into launching its first ever-alcoholic drink in Japan. Though it may look surprising as Coca Cola that in the 125 years history of the soft drink is launching a canned liquor product for the first time. But the shift from soft to hard drink is a part of the company’s expansion plan and venturing on new mode of business.

If you are thinking that the drink is going to taste like Rum and Coke, as normally you do, you would be wrong. As the main ingredient of the new drink would be vodka-like distillation of rice, barley and potatoes known as shōchū in the category of Chu-Hi drinks. Chu-Hi also typically includes sparkling water and flavoring. The product is typically between 3% and 8% alcohol by volume.

So as a first step Coca Cola is planning to grow with Japan’s growing Chu-Hi category of beverages gradually tapping into a growing trend in Japan for mildly intoxicating drink mixes. It is also liked by many because of its wide range of flavors from strawberry, kiwi, grape to white peach, but the most popular flavors are strong citrus ones such as grapefruit or lemon.

Chu-Hi drinks is marketed by Japan’s leading beverage companies such as Asahi, Kirin and Takara, who are especially popular with young consumers and women.

Coca-Cola Japan president Jorge Garduno, said in a recent interview posted to the company's website. “This is a canned drink that includes alcohol; traditionally, it is made with a distilled beverage called shōchū and sparkling water, plus some flavoring”, he said.

Coca Cola has never experimented on the low alcohol category before, but this launch clearly indicates the company’s intention to grow and explore opportunities outside their core areas in soft drink.

But Jorge Garduno made it clear that the launch of Chu-Hi drinks should not affect the image of the company otherwise. He said, “It makes sense to give this a try in our market, but I don't think people around the world should expect to see this kind of thing from Coca-Cola. I think the culture here in Japan is still very unique and special, so many products that are born here will stay here.”

The idea to add alcohol to its profile is a very important part of a broader campaign by Coca-Cola which is to diversify the market beyond sodas at a time when consumers in the US and other developed markets are withdrawing sweet drinks and colas because of health reasons is itself a big challenge. Coca Cola is still the market leader also leading in the non-cola products such as Honest tea, Dasani bottled water, the flavored Vitamin Water and the Powerade sports drink.

This is not the first time Coca Cola dared to venture into hard drinks. In the year 1977 Coca-Cola first attempted to diversify from soft drink to wine, buying Taylor Wines of New York and establishing Wine Spectrum that comprised Sterling Vineyards and Monterey Vineyard. But 6 years after Coca Cola came out of the venture-selling Spectrum for $200 million.

In Japan, Coca Cola has a good base, as it also owns Georgia Coffee in Japan, which is the world's highest-grossing canned coffee drink, making more than $1 billion in annual sales. The drink is very much popular among the ageing population of Japan and fiber-fortified drink Coca-Cola Plus was Food for Specified Health Uses (FOSHU) -approved in 2017.

According to a survey it was found that Coca Cola’s sodas only capture 25 percent of product sales by volume in Japan in 2016, while tea made up 27 percent of Japan's overall beverage consumption in the same year.

Traditionally, the people of Japan have preference of having specific drinks at particular times of day and therefore it is more of an entrenched ritual in Japan than in other part of the world. For example people may drink green tea with sushi, but go for oolong tea with fattier Chinese food.

That’s why Coca Cola believes that the different drinking habits of Japanese people is going to help the new drink to share its space among the people very soon. So as of now the drink is for Japan, gradually it may expand to the rest of the world.

Chu-Hi has been marketed as an alternative to beer thereby making it popular among the female drinkers. Japan's popular drinks firms which includes Asahi, Kirin and Suntory have all the varieties of the drink and they continues to experiment with flavors.

This year Coca Cola is also launching three new drinks in the United Kingdom, such as Fuzetea, the ice tea drink, Honest Coffee, ready-to-drink cold coffee, and the dairy-free smoothies brand AdeZ.

According to a survey by market research company, Euromonitor International, the global consumption of fizzy cola drinks has fallen to 3.1% between 2012 and 2017, with double-digit declines in the US and Brazil. Coca-Cola controls 56.5% of the global cold drinks market.

A version of Coke with added fiber called Coca-Cola Plus with Japan's ageing population in mind was also launched last year. Though the alcohol based is soon to arrive in the market, but there is no word yet on what the new product will be called or when it will be launched.