Coca-Cola plans to launch an alcoholic drink in Japan in 2018. The soft drinks giant said on its website its Japan business has stood out as an “almost truly unique market” with its wide array of options across the beverage landscape. It continued to evolve as its US market created new products like kombucha.
“The Japanese market is incredibly dynamic, fiercely competitive and rooted in innovation. Because of this, our team is constantly looking at ways to experiment – both from a product standpoint and finding new ways to do business with our customers. Consumers here look for variety and want to experiment,” said Jorge Garduño, president of Coca-Cola’s Japan, in an interview blog post on their website.
“We also have categories that are much bigger here than in most of the world – like tea, for example. Ready-to-drink coffee is also an enormous business, and we have the leading brand in Georgia coffees. In the fourth quarter of 2017 alone, we ran dozens of new, key initiatives and programs, from launching new bottle designs to testing new products and flavors. This is how it is all the time.”
Coca-Cola spokesperson told Inside FMCG the soft drinks giant owned a subsidiary called Wine Spectrum from 1977 – 1983. It manufactured midpriced wines on the West Coast. The subsidiary also offered chablis and burgundy in 6.3 ounce aluminum cans which were made available on some United Airlines flights. But later on the soft drinks giant sold the unit to Seagram & Sons for $200 million in 1983.
The New York Times reported the new drink is the latest idea from a beverage maker that has expanded to new markets with an array of products as the sugary-soda industry, battered by concerns about its health effects, continues its multi-decade decline.
“We’re always looking for new ways to reach and please consumers, and a big part of that is introducing them to new products that we think they will love. We’re seeing more of this in other parts of the world, too, and it’s encouraging to see our portfolio expanding with new products and successful brands,” explained Garduño.
The new drink is a “highly Japan-specific approach given the complexity and richness” of Coke’s range of products in the country, Coke spokesperson Yohko Okabe told CNN on Wednesday.
“Japan is home to a research hub that specializes in tea and coffee, and products developed here are introduced around the world. We also have a concept here called FOSHU, which means Food for Specified Health Uses. This is a government-approved certification for products with health benefits. We’ve been having a lot of success with these products, like Coca-Cola with fiber, which we call Coca-Cola Plus. Japan has an aging population, and these products appeal to those consumers. Coca-Cola Plus might remain only in Japan, but functional beverages are certainly growing in popularity in much of the world,” said Garduño.
CNN Money reported Coca-Cola is set to enter a crowded market. Big Japanese beverage makers like Kirin and Suntory already produce popular “Chu-Hi” drinks. While Garduño added on their website, the Japan business unit launches an average of 100 new products a year wherein they experiment daily as they see for innovation opportunities to meet their consumers demand.
“Ayataka is a tea brand that has done really well. We’re introducing a flavor this year that creates a new option for consumers who prefer light taste yet still want to enjoy the richness of green tea. In the sparkling category, we’re introducing THE TANSAN, which features the strongest carbonation ever in our products in this country, to reach health conscious adult sparkling lovers,” Garduño said on what new products to expect in Japan this year.
“We’re also going to experiment with a product in a category known in Japan as Chu-Hi. This is a canned drink that includes alcohol; traditionally, it is made with a distilled beverage called shōchū and sparkling water, plus some flavoring. We haven’t experimented in the low alcohol category before, but it’s an example of how we continue to explore opportunities outside our core areas.”
Coca-Cola Japan’s boss said it’s unique in the soft drinks giants’ history as it always focused entirely on non-alcoholic beverages. CNN Money also reported Coca-Cola CEO James Quincey said the company needs to experiment beyond its classic soda brands. Some drinks it created specifically for Japanese consumers have found success in other markets.
“I don’t think people around the world should expect to see this kind of thing from Coca-Cola. While many markets are becoming more like Japan, I think the culture here is still very unique and special, so many products that are born here will stay here,” added Garduño.
“This is a departure for Coca-Cola but I think this reflects the way that changing consumer tastes are pushing the company into less familiar areas like premium dairy, coffee, tea and now low-alcohol flavoured drinks,” said Howard Telford, head of Soft Drinks, Euromonitor International.
“This also reflects a culture change at the company in terms of product development: company leadership have spoken recently about being less afraid to experiment in terms of innovation – and dipping a toe into this category makes particular sense in Japan where the style of beverage is more familiar to consumers and the pace of CPG innovation is faster. While I don’t think this represents a global shift in company strategy, I do think we can expect Coca-Cola and its competitors to continue looking for new opportunities as traditional category lines and beverage occasions blur.”
According to Euromonitor International, global consumption (off-trade volume) of cola carbonates decreased by -3.1% between 2012 and 2017, recording double digit decline in leading cola carbonates markets such as the USA and Brazil. Coca Cola is the top cola carbonate player with 56.5% of the global market and 78% of the Japanese market (up from 67.5% in 2012). The Japanese alcoholic drinks market is worth USD 8.8 billion in 2017.