Coca-Cola taps into disruptive categories with new focus on “breakthrough beverages”

27 Feb 2020 --- A team of technical experts is helping Coca-Cola North America launch “breakthrough beverages” in emerging categories – including kombuchas with less sugar, cultured ciders, keto-friendly smoothies and cold-brew coffees – in “record time.” Category blurring is now a predominant theme across industry, as large and established players quickly move into what was once considered a playing field for small businesses and new entrants. The company aims to achieve speed-to-market through leveraging an “agile, test-and-learn launch model.”

“Entrepreneurs dream of having the power of our brands and scale of our distribution network and large global companies like Coke want to be able to innovate quickly, iteratively and stay competitive in emerging spaces,” explains Susan Zaripheh, Group Director of Transformational Innovation at Coca-Cola.

Coca-Cola is rethinking beverage flavors to anticipate diverse consumer demands.Over the past ten to twenty years, the ripples of change in the global soft drinks market have risen to become “tidal waves of innovation,” with new categories emerging constantly and genuine novelty flooding the shelves. This is according to new market analysis from Innova Market Insights, which underscores rapid growth in alternative categories.

Coca-Cola’s Transformational Innovation Team partners with brands and business units to take new drinks in unfamiliar spaces to commercialization in “a handful of months,” details the company. A rotating group of R&D and regulatory specialists is helping the company “navigate uncharted territory” by challenging existing approaches to innovation – from sourcing and seeking approval on new ingredients, to producing beverages in emerging categories, to bringing new brands to market – through an “agile, test-and-learn launch model.”

However, Zaripheh insists that the team is taking steps to move quickly without compromising safety or quality, or taking due-diligence shortcuts. “Being nimble doesn’t mean cutting corners. It means approaching challenges from different angles and finding ways to parallel-path and operate with flexibility.”

Simon Yeung, SVP, Innovation and Stewardship, Coca-Cola North America, and Susan Zaripheh, Transformational Innovation Team lead, with several of the brands.“We hear a lot about speed to market these days. But speed by itself isn’t a competitive advantage – anyone can go fast. The key is identifying potential big bets, starting small and learning before making significant investments and launching at scale. That’s what we do,” she explains.

Inspiring a “mindset shift” in NPD
Challenging organizational processes and breaking down boundaries are prioritized by Coca-Cola in these latest developments. “What we’re trying to do is inspire a mindset shift and push the company into new or emerging segments, which consumers want us to explore,” says Zaripheh.

The Transformational Innovation Team has partnered with the Minute Maid Business Unit – which manages Coca-Cola North America’s juice and plant-based beverage portfolio – to develop several breakthrough products including Cidewinder, which boasts similar digestive health benefits as kombucha but with less sugar. The cultured juice brand, which leveraged a novel ingredient and process from a third-party company, is now being tested in select grocery and convenience store outlets.

“Cidewinder is an example of how we’re moving quickly, but deliberately, by running small market tests before investing significant time or resources,” Zaripheh said. “Some of the brands we’re helping to launch will not reach scale, but that’s the point of what we’re doing. We’re pushing the company to move faster than ever and to use real-time market data to make informed decisions and gain important learnings for the future.”

As consumers adapt their dietary preferences, so are companies innovating their product portfolios.Tracking dietary trends
Coca-Cola’s premium bottled smoothie producer Odwalla worked with Zaripheh’s team to help develop a zero-sugar, keto-friendly smoothie using trending ingredients like MCT oil and coconut cream – bringing the first-of-its-kind offering in the Coca-Cola portfolio to life in less than six months. The brand is also known for its role in Coca-Cola’s first foray into the dynamic kombucha segment.

“Our partnership with the Transformational Innovation Team has added value to our decision making,” says John Hackett, President, Minute Maid Business Unit. “With their support, we’ve been able to test emerging spaces quickly and gain real-world learnings. Direct guidance from the market enables us to focus our investments on ideas that strongly resonate with consumers.”

The team also partnered with Honest to launch two category-crossing innovations – Honest Kombucha and Honest Cold Brew Coffee. Honest is building a brand beyond its core tea business and decided in 2019 to enter the fast-growing kombucha segment. Notably, Innova Market Insights reports 29 percent global average annual growth of food and beverages tracked with kombucha (CAGR 2015 to 2019).

“Part of the Honest brand’s strategy is to ‘own the fridge’ of the Millennial family by offering lower-sugar, organic beverages for all occasions,” says Rafael Acevedo, Vice President, Tea Portfolio, Coca-Cola North America. “Given the rising popularity of kombucha, it made sense for a brand known for making tea to enter this space.”

By Benjamin Ferrer