The new, smaller Coke can is momentous: the End of Cola is Nigh.

In Australia, Coke is launching a 250mL coke can with a big hullaballoo. Spin it all you want, but this is an admission the industry is in giant trouble.

The normal procedure for shrinking portion sizes is to be damn sneaky about it. Toilet paper companies shrink the number of squares per roll, chocolate bar companies shrink the grams per Snickers, detergent companies shrink the bottles and put the words “ultra concentrate” on the front.

But Coke is upfront.

““The 250ml pack size provides Australians with a perfect serve of their favourite beverage from the COCA-COLA range. Priced at a maximum of $2, the 250ml can is expected to be popular with consumers,” said Antoinette Tyrrell, Marketing Manager COCA-COLA South Pacific.

After decades of watching Pepsi stalking them, Coca Cola got hit by a different sort of market change. Functional drinks have slashed the market share of soft drink. Energy drinks, sports drinks, juices, water etc. are all in the space. Coke has bought and built these brands up when it could, but when consumers are not choosing cola, Coke can’t ever hope to control the market like it did once.

Coke brands

The rise of functional drinks means people are thinking about what their drinks will do to them. That can never help Coke.

Aware of the perception that Coke is not that good for you, Coke manages it by giving you less!

They don’t even pretend to hope people will buy more of the smaller cans. They just hope people will buy them at all.

The last great marketing campaign Coke had was “share a coke with“. Now that was brilliant, completely. But its link with the underlying product is very weak, and it can’t overcome the long-run trend.

The global soft drink market is growing far more slowly than global economic growth (2 per cent vs 5 per cent) Coca Cola’s reported net revenues are down 3 per cent in the year to date, and Australia’s Coca Cola Amatil is a shambles. The share price has fallen from $15 to $9.

The end of Cola is a good thing. Much of Coca Cola’s revenue growth now come from the poorer parts of the world. But the model is there for them to follow – when they grow rich they will likely also no longer “Enjoy” Coke.

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

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