Sometimes, we are just on the wrong side of history. The population in most western democracies is aging. They are weight conscious and acutely health conscious. The majority of Boomers have crossed over beyond the Big Six- Oh. They know what's coming and they have absolutely no intention of going gently into that good night.
So when credible reports emerge - repeatedly - that diet drinks a) do not do all that much to reduce weight and may even add to it by inducing more drinking of said beverages and b) that the artificial sweeteners making them ostensibly less caloric have the unfortunate side-effect of potentially enhancing the risk of cancer, well, even the average consumer just a tad concerned about self-preservation can be forgiven for thinking it might be a good time to check out iced green tea.
Soft drink consumption volume is down, even or perhaps especially in the diet category. And nothing much seems to be working to change consumers' minds. Facts about health will do that to a business, which is why they are do darned inconvenient and why so many business people think science is such a nuisance.
The people paying the price are senior executives at Coke and Pepsi who can not seem to convince their boards, investors or the analysts who cover their stocks that this may be a sustained secular event rather than a cyclical turn which can be maneuvered around with promotions and discounts. Some, like Indra Nooyi, the CEO at Pepsi have tried, subtly, to suggest that it might be a good idea to experiment with alternatives, a reasonable strategic suggestion for which she was flamed to the extent that she looked like one of those cartoon characters who gets blown up by a fake bomb. The President of Coke USA simply got canned (as it were...), as if removing one hapless victim of a global trend is going to change deep-seated consumer preferences.
The larger issue is that just as people changed their communications habits as new waves of technology became available, so they are going to change their dietary habits as new and compelling information becomes available, in yes, an information age which puts a premium on data. Sometimes executives need to pay attention to their own rhetoric. JL
Dale Buss reports in Brand Channel:
Soft drinks generate about 60 percent of Coke's revenue in its home market, but lately consumers have been backing away from diet sodas amid concerns about artificial sweeteners.
Steve Cahillane has been sidelined in the horserace to succeed Coca-Cola CEO Muhtar Kent, with the president of Coca-Cola Americas leaving the company as Coke restructures management yet again. It appears that slowing soda sales in the US nixed Cahillane's chances for the company's top job.
It was just a year ago that Coke streamlined its management to set up an apparent contest between Cahillane and the new head of the rest of the world, Ahmet Bozer, to succeed Kent someday; he's been CEO since 2008. Bozer now has been installed as a clear No. 2 to Kent, according to the Wall Street Journal.
In its moves this week, Coke also said that it would divide North American duties into a job overseeing corporate North American operations that will be occupied by Sandy Douglas, who will also continue as global chief customer officer, and a North American bottling portion that will be overseen by Paul Mulligan, who had been in charge of bottling investments in Japan and Latin America.
The reason Coke jumbled its org chart again was being attributed by the Journal, Bloomberg and other close followers of the company to Kent's growing frustration with the continued slide in soda sales and profits in the US market. Growth also slowed in Latin America under Cahillane's oversight.
That has only added to the pressures of the last several years from a general slide in sales of full-calorie soda as health-conscious consumers and younger Americans, increasingly turn to other beverages. Many of these products also are sold by Coke, but not from the dominant position that it enjoys in soft drinks.
PepsiCo's problems with soda are even bigger in some ways, but at least Coke's rival has the option of supercharging its snack businesses such as Frito-Lay and Quaker Oats. Some activist investors would like to see PepsiCo split into beverages and its better-performing snacks business, but so far PepsiCo CEO Indra Nooyi has resisted such a move.
It may be that no one can reverse Coke's traditional soft-drink business in the United States. But it surely won't be Cahillane.
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