TARGETING NEW MARKETS : New Age Beckons Coke : Soft-Drink Giant to Tap Sparkling Water, Sports Drink Mania

Coca-Cola may be the real thing, but, in an increasingly competitive soft drink market, it isn’t the only thing.

That fact became even more clear Tuesday, as Coca-Cola Co.--battling flat sales in its current major brands--unveiled plans to launch a new flavored sparkling water beverage and expand distribution of its sports drink, PowerAde.

The twin announcements demonstrated the increasing emphasis that big soft-drink makers are placing on non-traditional drinks to stimulate growth in a sluggish global marketplace. The announcement followed a meeting with analysts Tuesday morning in which Coca-Cola forecast a 2% decrease in third-quarter case sales worldwide, said industry experts who attended the event. Coke, however, contends that its third-quarter sales will be even with the prior year’s results.

Nonetheless, Coca-Cola stock fell $2.50 to close at $42.25 on the New York Stock Exchange.

Coke is hoping to gain back market share with its new product, available early next month and targeted at the fickle “twentysomething” consumer, the company said. Nordic Mist, a sweetened and caffeine-free beverage, will be sold in five 100% natural flavors--black cherry, raspberry, peach, pineapple and a combination of kiwi, pineapple and guava, said Bob Bertini, a Coca-Cola USA spokesman.

“This is set up to compete against all the New Age drinks,” such as sparkling flavored-water products, said Allan Kaplan, a Merrill Lynch analyst in New York. “That’s the big key . . . 100% natural.”

While Coca-Cola considers these beverages non-traditional products, the Atlanta-based cola giant is responding to the choice of a new generation. Nordic Mist follows on the heels of Crystal Pepsi, rival Pepsico’s clear, reduced-sugar answer to the market’s traditional brown beverages. It was introduced in April.

Bertini said that the New Age beverage market has exploded, growing sevenfold since 1985 and leaving Coca-Cola behind in an increasingly popular area.

“We haven’t been represented” in that market, said a Coca-Cola USA spokesman. “We believe the timing is right.”

Along with Nordic Mist, Coca-Cola will also expand distribution of its non-carbonated sports drink, PowerAde, into New Orleans and Memphis, Tenn. PowerAde, seen as a competitor to Quaker Oats Co.’s Gatorade, was introduced last May in four other Southern markets--Savannah and Augusta, Ga.; Birmingham, Ala., and Chattanooga, Tenn.

“They’re trying to get a more significant share of the market,” Kaplan said. “Gatorade has the lion’s share of the market.”

Although the New Age beverage market represents a scant 3% of the soft-drink picture, Kaplan said it’s a market that has grown by 20% a year. “It’s taking a share away from the regular market,” he said. “They’ve got to do something about it.”

This is not the first quarter Coca-Cola has seen foreign markets buckle. Brazilian and Mexican markets both experienced losses during the second quarter. Coke said Mexico has since recovered, although Brazil is still reeling.

Coca-Cola said Nordic Mist will be distributed initially in New York City, Philadelphia, Boston and Pittsburgh. Bertini said both Nordic Mist and PowerAde will be priced similar to their rivals in respective markets.

Both analysts and Coca-Cola executives say Coke’s decision to invade non-traditional markets is in direct response to consumer demand, proving that the real thing isn’t the only thing.

It’s the Real Thing

Even though Coca-Cola is struggling to overcome soft sales and is reaching out to tap the sparkling water market, it’s still the soft-drink leader. Wholesale U.S. market share for 1991:

COCA-COLA: 41.3%

PEPSI: 32.9%

DR. PEPPER/7UP: 10.1%

OTHER: 15.7%

Source: Beverage Marketing Corp.