Coke in Milk Business: A Smart Move?

Coca Cola is about to launch “Fairlife”, a premium milk brand in the USA this time. In a market characterized by falling demand and fierce competition among on-the-shelf competitors, Coke’s move raised many questions as to why it has to move into this market at this time.

Coke has invested into dairy business for some years, and currently not expecting any profit from this category. However, the company has priced the brand almost twice the average price of regular milk brands that are currently available in the market, and  expecting to earn high profits in later years. The premium milk is produced through a proprietary technology using high-tech filters that yield high protein, high calcium, yet low sugar (lactose) contents in the processed milk. Interestingly, this “healthy” milk requires no addition of protein or calcium powder to increase its proportion in the milk, rather the proprietary filter does the job! Presumably, this is expected to reduce the costing part of the production that already gives Coke an advantage over competitors in this category. Making sure that the brand comes in popular flavors, this is expected to “storm” the market after an already successful test-marketing campaign in different US cities. Coke is not currently planning to roll-out the brand elsewhere in the world, which seems to be a cautious move to “wait and see” how the real-time marketing goes at home.

It appears that Fairlife may not attract new customers who would start consuming milk just because Coke has launched something new, rather make some customers switch to its brand on the plea of “healthiness”. Now it is time to see whether a high-tech and low cost advantage can be transformed into a profitable venture in a falling market.

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia, cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
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2 Responses to Coke in Milk Business: A Smart Move?

  1. INM Mohaimen Billah says:

    Prospective Customers already knows knows costing part of the production already gives Coke an advantage over competitors in this category yet the company has priced the brand almost twice the average price of regular milk brands that are currently available in the market, and expecting to earn high profits in later years. That is coke is more concerned for its own financial health at the cost of consumers wallet.Coke has exposed that they dont believe in the theory that profit is a logical sequence of business. .

    The brand will come in popular flavors, They have to make sure that these flavors are natural.

    Coke is not currently planning to roll-out the brand elsewhere in the world. Its not only a cautious move rather an intelligent move. Customers all over the world will be waiting to taste the feel 0f Fairlife and once it hits the local markets consumer will be in que for first few days to grab a bottle.
    Coke has to convince consumers that Fairlife is a high-tech and low cost product on the consumers point of view rearranging their proposed price of the goods.

    • Farshid Iftekhar says:

      If consumers get extra protein from Fairlife then they will pay extra for this product. Because, people who are health conscious they need this type of milk. If Fairlife able to capture position in the mind of health conscious people, then they can make profit from this segment.
      The number of people deciding to join a fitness center has also risen to a significant amount,
      According to the IHRSA statistics, the number of health club or gym memberships has increased from 41.3 million in 2005 to 50.2 million in 2012.The most current reports show number of people who have at least used a health club in 2012 increased those with memberships by 8 million in the same year. This means that as of January 2013, there are approximately 58.5 million Americans who are utilizing fitness center via membership or other type of status.

      So, i think this is a good move by coca cola because they can use their existing distribution channel to deliver Fairlife.
      But they have to first make people aware of this superior Product.

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