Coca-Cola: ‘The turnaround of Diet Coke is not coming at the expense of Coke Zero Sugar’

In its latest quarter, Coca-Cola attributes the growth of its North American no-sugar sparkling soft drink portfolio – up 7% in retail value growth – to the performance of Coca-Cola Zero Sugar and Diet Coke.

In January Coca-Cola announced a return to growth for Diet Coke in North America. Meanwhile Coca-Cola Zero Sugar, which was introduced in the US last summer (as well as in various markets across the globe), has seen double digit volume and revenue growth in the latest quarter. 

The taste test

Like other soft drinks manufacturers, Coca-Cola has pledged to reduce sugar across its portfolio and help reduce calorie consumption in diets. Various initiatives across its portfolio have included reformulation, smaller pack sizes, and lower calorie alternatives.

In the case of trademark Coke, lower calorie alternatives include Diet Coke, Coca-Cola Zero Sugar, and stevia/sugar sweetened Coca-Cola Life.

The difference between Diet Coke and Coca-Cola Zero Sugar is in the taste: Diet Coke is designed to have a ‘lighter taste’ while Coca-Cola Zero Sugar (also known as Coca-Cola No Sugar in some markets) has been created to have a taste more akin to that of Classic Coca-Cola (and also more akin to Classic Coca-Cola than its predecessor Coke Zero).

Launched in 2016, Coca-Cola Zero Sugar has been rolling out across markets and replacing Coca-Cola Zero, which has been in the market since 2006 (in Australia, for example, Coca-Cola has just announced that Coke Zero will be phased out entirely by the end of August after the successful launch of Coca-Cola No Sugar last year).

Change of fortunes for diet?

While the diet category has been in the doldrums for several years, Coca-Cola champions a turn-around for its Diet Coke brand in North America this year: attributing its success to its January re-brand and four new flavor launches. In February, it also revamped the brand in the UK (with a rebrand specific to this market) with two new flavor launches.

Quincey says he is optimistic that Diet Coke’s turnaround will continue.

“Clearly, we're doing better with Diet Coke the second quarter than the first quarter, the first half of this year than we've been doing for good number of years. And I think we were flat in the first quarter. We were minus 1% in the second quarter on volume. Clearly, Diet Coke was growing in terms of revenue second quarter and year to date, so it's materially better than we were doing before.

“What's it doing? Firstly, we've got packaging innovation. We've got the marketing innovation. We've got some flavor innovation. These are both allowing existing consumers to stay and continue to enjoy the franchise, and it's getting people to try it.

“It's not growing in aggregate yet, so there's still work to do. But it's certainly causing a reconsideration of the Diet Coke brand, and the flavors and the packaging and the marketing are part of that.

“The interesting thing is that the success and the turnaround of Diet Coke or at least the work in progress of a turnaround of Diet Coke is not coming at the expense of Coke Zero Sugar. Coke Zero Sugar is also growing double digits in North America volumetrically, clearly high teens, double digits in terms of revenue, such that we're getting strong first half overall revenue growth and volume growth with our Zero Diet portfolio in the US which is a part of our strategy to go forward. So, good numbers, much better than before, work left to do.”