With Much To Be Unhappy About, Coke Is Dropping Its ‘happiness’ Ad Campaign

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Even though they’ve spent tens of millions of dollars on it over six years; even though they’ve run it in print, broadcast and digital media in more than 200 markets worldwide; and even though they went so far as to record a single of its theme song (just as they did in 1971 for their “I’d like to buy the world a Coke” campaign), it appears that Coca-Cola’s no longer happy with its  “Open Happiness” ad campaign. “The brand has asked 10 roster agencies to pitch ideas for Coke’s next global campaign: Wieden+Kennedy in Portland, Ore.; David; Dentsu; FCB in South Africa; Martin Mercado; McCann in Madrid; Ogilvy; Santo; Sra Rushmore; and The Cyranos,” Adweek reported March 23.

Maybe it’s because their new (five months on the job) chief marketing officer, Marcos de Quinto, had a case of the New Broom Syndrome. (It’s not unheard of; in 2012, a new CMO eager to make her mark not only fired Avis Rent A Car’s advertising agency, but trashed the iconic “We try harder” slogan that had saved the company from bankruptcy and served them well for half a century.)

Maybe it was because Coke actually means what a representative told Adweek, that Coke was looking for a new campaign “to ensure it continues to have global appeal, engages and entertains consumers, and drives business growth.” Sure.

Or maybe it was because of a reported worldwide implosion of soda sales, particularly diet sodas. As the maker of the biggest diet and non-diet soda brands, Coke would be the biggest loser.

Coca-Cola failed to hit its 2014 long-term growth target; as of the third quarter, profits were down 14 percent. That’s overall. But what’s worse is the continuing decline in diet soda sales and profits. “Sales of low calorie soft drinks in the United States have tumbled by almost 20 percent over the past five years,” writes Roberto A. Ferdman in the Washington Post. “This year, diet soda sales are on pace to drop another 5 percent. By 2019, they are projected to have fallen off by roughly a third since their peak in 2009.”

Sales of Diet Coke, the number-three soda brand (after regular Coke and Pepsi), dropped 15 percent in the past two years and almost a third since 2005.  But Diet Coke’s doing pretty well compared to its competitors. Diet Pepsi sales are down 35 percent, Diet 7-Up 33 percent and Diet Dr. Pepper 25 percent. That’s in the US. Worldwide, diet soda sales were down 20 percent over the decade ending last year, according to Euromonitor. Howard Telford, an industry analyst at the marketing data firm, blames it on consumer fears of artificial sweeteners. “Consumer’s [sic] attitudes towards sweeteners have really changed,” he says. “There’s a very negative perception about artificial sweeteners. The industry is still trying to get its head around this.”

Okay, but that fails to explain what Pepsico Chairman Indra Nooyi called “a fundamental shift in consumer habits and behaviors” away from sodas in general – diet and non-diet alike.

“Soda, once marketed as an everyday staple, is now seen as an occasional treat, especially among younger demographics” Ferdman notes. “More than a third of consumers aged 18 to 36 years old consider the drink a treat, according to market research firm Mintel.” So if folks are going to treat themselves to sodas only every now and then, why not go for hi-test instead of unleaded?

But that’s only part of the answer. Another part may be that the soda industry is falling victim to what the beer industry has been suffering through for over a quarter-century. Budweiser, for example, has seen shrinking sales year after year since 1988. One factor in this steady decline has been the proliferation of alternatives – in Budweiser’s case, the growth of craft beers, which in 2013 shipped 100,000 more barrels than Bud did. If Coke is the Budweiser of the soda industry, then a whole variety of of beverages – bottled waters, energy drinks, iced teas, vitamin waters, all kinds of fruit juices, you name it – are the craft beers.

Whether Mr. de Quinto’s replacement for the “Happiness” campaign can overcome that trend, nobody knows. But it’s safe to say he definitely has something to be unhappy about.

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