Can the craft movement do for cola what it’s done for beer?

This week Pepsi launched a new craft cola brand in the US named Pepsi 1893, a premium craft drink to appeal to millennial drinkers who are more focused on heritage and provenance, at a time when brands are experiencing a long-term decline in sales of the fizzy stuff.

Consisting of two craft beverages – 1983 Original Cola and 1983 Ginger Cola – the drinks are named after the year when Pepsi was founded and their ingredients include Kola nuts, fairtrade sugar and sparkling water, which are some of the original cola ingredients. The drinks are another arsenal in Pepsi’s craft portfolio: in 2014 the company introduced Caleb’s Cola, a naturally sweetened drink named after Pepsi founder Caleb Bradham.

Unusually, the new 1893 brand is targeted at consumers frequenting bars. In a video posted on Pepsi’s Twitter feed, the drinks are shown being served by a barman in a slick cocktail bar, in a nod to healthier drinking trends and the rise in appetite for premium products.

The range will debut in a TV ad across the US in April and features a ‘Soda Sommelier’ played by actor Jeff Galfer. “We were energised by the food revolution, and inspired by consumer interest in bold and interesting taste combinations,” Chad Stubbs, the brand’s vice-president of marketing, said in a press release yesterday (31 March).

According to a Mintel study released last year, six in 10 consumers are willing to pay more for premium non-alcoholic soft drinks that have a clear difference in taste to cheaper alternatives. It also showed that over half (54 per cent) of craft drinkers find ‘natural’ or ‘real’ attributes most appealing or important. In the US, ‘natural’ beverages are growing 12.7 per cent annually according to Nielsen Databank.

Pepsi isn’t alone in its craft beverage endeavours. In June last year Coca-Cola acquired Hansen’s and Blue Sky’s ‘natural beverages’ as part of a play by its newly formed craft beverages team, a move that Jeremy Faa, senior vice-president and general manager for craft beverages at Coca-Cola said comes as “Consumers today, especially millennials, want products that are new and different and reflect their lifestyles. They want to know how their beverages are made and where the ingredients come from, and they want to embrace both the founder’s story and the brand’s personality”.

The deal has benefits for both sides: Hansen’s can enjoy the marketing muscle and reach of Coke, while the latter is able to benefit from Hansen’s followers who enjoy drinks with natural ingredients.

“Craft feels a little bit like a luxury and comes with the popularity inevitably driven by exclusivity and limited reach,” Jane Bloomfield, head of UK marketing at Millward Brown told The Drum. “It’s classic disruption – small players doing little things. Craft brands may not always drive a lot of volume, [Beverage Digest estimates that craft fizzy drinks only have one per cent share of the US soda market] at least not yet. But they’re an early warning that something is in the air, which of course leads to the bigger players watching with interest!

“While some may take some convincing about big brands like PepsiCo producing their own craft versions, it is undeniable that they will produce some interesting flavours and help push forward healthier choices and quality across the whole soft drinks category – which is a great thing.”

The moves by the big players in the drinks industry resonate with the current trend in beer and gin categories, where craft and artisanal brands are fizzing and distilling their way to the top, unlike their conglomerate counterparts who are failing to win over consumers.

“The cola category is experiencing the same change in consumer behaviour as other ‘oligopolistic’ categories such as juices, beer and chocolate. A desire for greater authenticity and individuality in categories dominated by a small number of dominant brands,” Roger Perowne, managing director at brand consultancy Morar told The Drum.

Jones Soda is one of the most popular craft brands in the US, selling naturally sweetened drinks and zero-calorie fizzy beverages, marketed through quirky campaigns and an innovative labelling technique that incorporates always-changing photos sent in from its consumers. In contrast to its conglomerate counterparts Jones Soda this month reported a 10.9 per cent increase revenue to $2.7m in its fourth quarter. It has also inked a new private label partnership with 7-Eleven and launched a new brand, Lemoncocco.

And it’s not just the US seeing the trend. In the UK Dalston Cola, made in East London, is just one brand waving the craft crest. Launched in 2012 the brand has gone from strength to strength, appearing just last week at a Stella McCartney event in Harrods. Founder Duncan O’Brien told The Drum there are several reasons why consumer appetite for craft soft beverages is popping.

“People – especially young people – are drinking less alcohol but they still want to go out and socialise and that means having a bit of a treat. People are drinking better quality alcohol, and increasingly don’t want to mix a premium spirit with decidedly non-premium mixers. There also seems to be an amazing generation of hyper-creative bartenders pushing ever creative cocktails.”

So with the likes of Pepsi and Coca-Cola hopping on the trend, is O’Brien worried about conglomerates getting in on the craft movement as we’ve seen in the beer industry?

“No, squaring up to the large companies was part of the motivation to start making Dalston Cola; they seem to be making it easier by popping their toes in the craft puddle before it’s even become a pond.

“Personally I think the soft drinks market is not quite going to go the same way as it has with craft beer, but you can’t blame them for getting nervous and sticking out a product launch or two. I think what Coca-Cola is doing with Coke-Life is a bit more interesting than Pepsi’s latest launch – which just blatantly co-opts the visual language of craft.”

 

Source: http://www.thedrum.com/news/2016/04/01/can-craft-movement-do-cola-what-it-s-done-beer (1 APRIL 2016 | BY NATALIE MORTIMER )

 

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