Coke and innovation
A recent article by Dean Foust in BusinessWeek ("Queen of Pop", 8/7/06) explores the issue of product innovation at Coca-Cola, as seen through the rise of Mary Miinick to head marketing at the beverage giant. Minnick has long battled against the reigning culture at Coke, which saw the carbonated beverage line as the important thing and the non-carbonated drinks as a passing fad.
But with the carbonated beverage market at standstill and a variety of other drinks growing fast, Coca-Cola has to change course, trying to keep pace with rival Pepsico, which has embraced new beverage categories and seen real growth. As the article notes:
Coca-Cola is an American icon, yet it is in danger of slipping into irrelevance. Consumers are flocking to a new breed of coffees, juices, and teas - all areas where Coke has traditionally been weak.
Innovation in a big tradition-laden company like Coca-Cola is extremely difficult. "For along time," the article notes, "Coke seemed in denial." Moreover, "too much of what passed for innovation at Coke over the years had been incremental line extensions that too often didn't really move the needle."
Minnick, who cut her teeth running Asian markets for Coke, has long been a champion of the non-carbonated beverages. That, after all, was the key to success in Japan and other countries, where soda-drinking is not a universal.
And Minnick is not just putting out me-too products. Her goal is to get into new product categories before the competition does. She wants "to redefine Coca-Cola's image as a purveyor of sugar-laden junk that you shouldn't give your kids." The key is "neutriceuticals", that is, drinks that the user perceives as conferring health, mental acuity, or beauty benefits.
Among new products recently introduced are:
- Coca Cola Blak, a caffeine-laced version of Coke
- Godiva-branded iced coffee and mocha drinks
- Bottled premium teas (Gold Peak)
- HealthWorks antioxidant-rich teas
The company is also running clinical trial on some 18 new neutriceutical products. Moreover, the idea is to develop new brands and concepts inside Coke, rather than just buying start-ups.
The company is also changing its roll-out strategies. Instead of death by a thousand focus groups and an hierarchical obstacle course before would-be innovators, they are setting up a system for getting new products on the shelves in limited areas and quickly testing what sells and what doesn't, then rolling out the winners to a wider audience. The notion is that even the winners may have a product life of only a few years, rather than an attempt to always come up with flagship products. That way, Coke can track changing fashions and even get a little ahead of them.
Miinick's rise has brought a renewed sense of urgency to a staid and slow oligopolist. It will be fascinating to see whether she can make a Coke a truly entrepreneurial company or whether the pervading culture will win out.
