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I'd Like to Buy the World a Milk

2/21/2015

 
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It’s been almost 45 years since Coca-Cola’s iconic television commercial wished to “Buy the World a Coke.”  Since then the global soft drink supplier has done well, growing its brands to over 500, its revenues to $46 billion, and its market presence to over 200 countries.

Times have changed, though.  People are increasingly concerned about consuming high-calorie, sugary drinks.  Similarly, soft drinks face stiff competition from many other beverage categories, including functional water: nutrient-infused H2O.  As a result, fewer and fewer people are having “a Coke and a Smile.”

What’s a multi-billion-dollar soda seller to do?  For any firm facing such formidable market-share erosion, innovation is usually key.  Already boasting many brands in juice and bottled water categories, the Coca-Cola Company has responded with a very different new product development that’s as old as cows--milk.

From even a casual observers’ perspective, the milk market seems well-saturated.  Local dairies hold a firm grip on the garden-variety leche.  Likewise, there’s ample supply of other types of milk, e.g., almond and soy.  So, how can even a big player like Coca-Cola gain entry into this crowded space?

Coca-Cola appears to have learned from the functional water trend that people are willing to pay a premium for beverages that bundle extra good ingredients.  So Coca-Cola’s milk, which it’s branded “Fairlife,”contains “50 percent more ‘natural’ protein and calcium than regular milk and 30 percent less sugar thanks to a special filtration process.”

Making a milk that gives people more of what they want (calcium and protein), and less of what they don’t (fat), seems like a social good—one that supports healthier lifestyles; although, not everyone agrees.  Of course, people also can be very particular when it comes to taste. While many of us want to eat more healthily, we won’t do so unless the food tastes good, i.e., we want the best of both.

I terms of taste, the reviews of Fairlife are mixed.  The brand comes in several varieties, including 2%, fat-free, and chocolate, the latter being the most popular.  While some love the flavor, others find the thicker consistency and milkier taste overpowering. The super milk also commands a super price, costing about twice as much as regular milk.

What should we make of Coca-Cola’s milk?  The mixed reviews of Fairlife’s taste certainly are cause for pause.  However, if enough of the targeted consumers find the flavor agreeable, Fairlife has potential to meet a market need for a high-end, high- quality milk.  The large number of prominent retailers that have agreed to carry the brand, e.g., Target, Kroger, Wal-Mart, Safeway, seems to support this speculation.  It’s doubtful that Fairlife will become a staple beverage for a wide range of people; still, a potentially effective product that upholds societal values makes Fairlife a likely case of “Mindful Marketing.”

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Benji
3/4/2015 11:22:00 am

Although time can only tell if Fairlife will take off for Coke, I believe that it is a smart business move. Coke's sales have been on the decline as of late, mostly as a result of consumers' desires for healthy alternatives to soft drinks. Coke is trying to capitalize on the fact that plant-based products, such as almond, soy, and even walnut milk, are becoming more and more popular amongst consumers. It will be interesting to see whether Coca-Cola, made famous by its soda, will be able to separate itself from an unhealthy image and have success in the dairy market.

Emily H
3/4/2015 12:04:55 pm

I think that Coke's decision to sell a healthier product was wise as people are searching for healthier and cleaner products. However, I think the higher price and the mixed reviews on taste potentially may cause sales to be less than expected. I am wondering if this product may just be glorified, over-priced milk. Will people actually pay a higher price for a staple product like milk?

Taylor H
3/4/2015 02:47:32 pm

It's interesting to me that Coke's milk is being marketed as high-quality, and high-end yet it's being sold at low end, commonplace stores. I'm surprised they are not trying to get in at Trader Joe's, Whole Foods or other high-end grocery stores. I will be curious to see if this Fairlife milk takes off, or if people will get sticker shock. If Coca-Cola was smart, they wouldn't put their branding as a large part of the label. Most people do not look at the fine print of who is the actual producers of my drinks or food, so most would probably not even know Coca-Cola was the backer behind Fairlife. This is a move that Coke needs to take in order to stay on top of the market, but i'm not so sure it will pay off for them.

Andy G
3/4/2015 06:31:00 pm

Milk seems an unlikely route for a beverage giant like Coca-Cola, but maybe it's time to give the leche another look. Despite being drastically different from most of Coke's other drink offerings, milk has plenty going for it, like natural appeal, significant health benefits, and wide acceptance in places like schools and sports. However, Coke will have to work around new challenges like decreased shelf life, a less predictable supply chain, and confusion from consumers at the radical new direction. But look on the bright side-- it can't be worse than New Coke!

Phoebe Chua
3/5/2015 02:23:39 am

As a minor in statistics, I am curious of whether Coca-cola is manipulating the reported statistics to coerce consumers into thinking that Fairlife is indeed a healthier alternative. It would be interesting to know what their baseline is for the protein, calcium, and sugar content. In addition, I would like to know if there are any negative side effects to the consumers' health if they regularly consume Fairlife since there is a significant boost in protein and calcium content (anything consumed in excess is generally bad).

Grace H
3/23/2015 08:48:31 am

I would argue that this advertisment would lean more toward simple-minded on the mindful marketing scale. I don't see how it creates stockholder value, especially if this new high-end milk tanks. I don't think Coca-cola will be able to gain a significant portion of the market share with their over priced milk because most people shopping at the prominent retailers that have aggreed to shelve this product (Wal-Mart, Safeway, Target) are concerned primarily with price and taste.

David link
3/28/2015 04:19:42 am

Grace, I think you may be right. Since I wrote this piece, I've talked with some people who have tried the milk and didn't care for it. Fairlife is looking more Simple-Minded to me now too.

Courtney Schmitt
3/28/2015 08:35:15 am

I am curious as to whether people will actually pay more for milk. Because milk is such a common need, I don't see a lot of customers willing to pay more for it. I would say that this product is more Simple-minded on the mindful marketing scale and will fail to benefit Coca-cola.

David Hagenbuch link
3/28/2015 01:02:59 pm

That's a good question, Courtney. I think some people will pay more, as they've shown they'll do for other premium products, including certain milk (e.g., soy, almond). However, as I mentioned in my response to Grace above, taste will be key. If the milk doesn't taste good, people won't buy it no matter how little or much it costs. I'm also leaning now toward calling Fairlife "Simple-Minded."

Sherrilyn Basri link
3/30/2015 10:39:48 pm

This posting is very interesting to me. I love milk and I would love to try any product that is convincing. However, I have never heard about "Fairlife" product. In terms of societal value, I think "Fairlife" is good because it gives its customers what they want; high calcium and protein and low fat. At first, I think that this marketing strategy is Mindful because a product or a firm needs to have a sustainable competitive advantage by having higher calcium and protein than other products so it is okay to have a double price. However, "Fairlife" does not seem to have sustainable competitive advantage after reading the review of "Fairlife" product because the milk flavors is not really good except the Chocolate one. Therefore, I agree with other's comment that this marketing strategy should be Simple Minded because with charging higher price and not having a good taste of the milk, "Fairlife" does not bring a stakeholder value in this point. The fact that it is not popular as well, as I do not know this brand, is one of the reasons that it does not bring a good stakeholder value.

Jason Muehlhoff
4/1/2015 01:23:42 pm

I think that it is a smart move by Coca-Cola to diversify their offerings by moving into the milk market. Milk is a staple in america that is clearly not going to go anywhere anytime soon. Milk is also seen as a healthy choice, which is where the consumer mindset is shifting to. A healthier option than normal milk is another good idea, despite the increased price. Many health-oriented products have done well despite being more costly. I agree with the "mindful" assessment, and overall its a good move by Coca-Cola.

Breanna Klett
4/1/2015 05:08:06 pm

I recently tried this product over the weekend at Walmart. I am a fan of chocolate milk, so I was interested to see what Coca Cola had to offer. After trying the chocolate milk, I was delighted, it was delicious. When the employee informed me that they designed it in a way so there was more protein and less fat, I knew that this product was for me. I can understand the other side of the coin, not liking the price, but that is where you have to make a decision for yourself. Sometimes healthier options are more expensive, if it is important to you and you have the money, you will spend it. I think their product is mindful as it takes into account healthy standards of living as well as a focus on quality. It is too early to tell if this will do well, but if Coca Cola continues to market it appropriately, there is no reason it shouldn't drive up stakeholder value.

Kasey Hormel
4/1/2015 05:59:36 pm

I think this move by Coca-Cola is smart. Going to the milk product definitely fits the assumed desire for healthier drinks by the consumers. I think that getting their product in the milk market was wise for Coca-Cola. The popularity may be a slow process, but if they make some profit on the milk they are good. Getting the word out there that they have a milk product is key, they need to get shelf space in stores and make the milk not just appealing in packaging but also in taste.

Corey Houck
4/2/2015 03:28:05 am

It will be interesting to see how Coke's milk decision plays out. Marketing it as a health conscious choice could position it for success, or do the opposite. While it is true that water companies and juice companies have been able to find success offering premium, health benefiting products, milk may differ. While milk has been seen as a healthy drink in the past, current health trends lean more towards fruits and veggies, and away from dairy products. Some radical dieters even hold conspiracy theories on the food pyramid and big dairy companies. Will this company be able to achieve its goal of being perceived as a healthy drink alternative? Will it be able to differentiate itself from other protein shake type drinks?


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