Diet Sodas Are Out. Zero Sugar Sodas Are In

WellnessPulse

 "A brand is a promise. A good brand is a promise kept."

—Muhtar Kent, former CEO, The Coca-Cola Company

What are your favorite brands? 

The three most popular consumer brands, based on public approval and consumer tracking in America, are Dawn dishwashing liquid, Band-Aid, and M&M's. When measured by overall corporate financial worth and global brand value rather than consumer polling, technology giants Apple, Microsoft, and Google dominate the top spots globally.

What's a brand?

Andrew Dobbie, founder of a branding agency, says, "A brand is the unique perception, feeling, and reputation that a customer has when they think of a company, product, or service."

A better way to understand a brand is to think of it as another term for your reputation.

A YouTube interview with brand designer Rocky Roark suggests that three components of a brand are perception, or what people say about a business when no one from the company is in the room; the visuals- logos, colors, fonts, and slogans that help people recognize the brand quickly but are not the brand; and each experience or interaction, from customer service and product quality to advertising and website design, which shapes the overall brand. 

A better way to understand a brand is to think of it as another term for your reputation.

When does a brand get underway? On day one.  

Shifting loyalties

Customer and loyalty retention platform Growave reports that loyalty changes when a company, collectively, or any of its employees in physical or remote locations individually, fails to meet expectations, offers less value than competitors, or loses trust. This includes AI voice bots that are supposed to be assisting with customer care.  

Rising costs and inflation make shoppers focus on price, deals, and overall value rather than emotional ties to a favorite label. 

Zeta Global Platforms says that a silent shift in brand loyalty is quietly transforming the retail landscape. "Consumers, particularly millennials and Gen Z, are moving away from long-established brand allegiances, driven by changing expectations around value, personalization, and convenience."

Even the cola wars are getting caught in this transition. Diet is out; Zero Sugar is in. 

Both Diet and Zero Sugar are calorie-free, artificially sweetened imitations of their sugary counterparts, Bloomberg News says. "Yet the latter's branding resonates more with younger, well-ness-minded consumers, who shun sugar but don't vibe with calorie counting or diet culture."

The word "diet" is from a different era. "For a lot of younger consumers, it's radioactive," said Kevin Ryan, chief executive officer of Malachite Strategy and Research. 

Zero-sugar sodas are a small but growing part of U.S. soft drink sales. Last year they accounted for 52% of the category's sales growth, according to Circana data. Sales of both Pepsi and Coke Zero Sugar are up; sales of full-sugar Pepsi and Coke are declining, while Diet Coke is up slightly.

Bloomberg says that Keurig Dr. Pepper had no Zero Sugar offering in 2020. Now it has more than 40. Our favorite is Zero Sugar A&W Cream Soda, which is also caffeine-free.

Keep your promises

Here's a change assessment from Zeta Global Platforms:

"Historically, brand loyalty was built on trust, familiarity, and consistent quality. Consumers often stuck with the same brand for years, influenced by family traditions, regional availability, or limited choice. This was especially true before Amazon. 

Adding social media and artificial intelligence to the marketing mix brings powerful influencers into the picture ...

"Today's consumers, especially younger generations, are showing less loyalty and are more open to experimenting with new products, companies, and experiences."

Adding social media and artificial intelligence to the marketing mix brings powerful influencers into the picture, one that's without historical precedent.

Under these circumstances, the best stance is to recognize and prepare for major generational change — customers and employees. For many, the differences are a present reality. McKinsey & Company spotlights small- and medium-sized family-owned businesses. "These Main Street businesses face the greatest disruption because of retirement and succession voids."  

As AI becomes less costly and readily available, and good help is harder to find, there will be a strong incentive to move in that direction, liabilities and all. 

However, in certain areas where responsiveness and empathy matter, a human connection remains superior. 

More importantly, guard your enterprise's brand as you guard your life. And encourage colleagues to do the same. 

Classical Greek philosopher Socrates, writing in the 5th Century BCE, observed: "The way to gain a good reputation is to endeavor to be what you desire to appear." 

Strategist.com

©  Bredholt & Co.

Innovation at Frito Lay

LA Times

"Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow."

—William Pollard

In the October 20, 2003, issue of Business Week magazine, there's a picture of Steven Reinemund, CEO of PepsiCo.  He is smiling—and for good reason.  In the third quarter of that year, PepsiCo reported excellent numbers.  This was due to a 7% revenue growth from snacks and a 16% sales growth from international markets.

Profits reached $1.07 billion, a 13% gain.  New products contributed substantially to these results.

Fast forward to a different decade.  

Today PepsiCo is led by CEO Indra Nooyi.  She's guiding a much larger company, 2011 net revenue of $66 billion, in a more complex global economy. 

Founded in 1965 through the merger of Pepsi-Cola and Frito-Lay, PepsiCo went on to acquire Tropicana in 1998 and merged with the Quaker Oats Company, including Gatorade, in 2001.   

Times change and so do market positions.  According to Fortune Magazine:

• Last year between May and September Pepsi stock dropped 15%. Coke stock is up 40% in the same period. 
• Pepsi often fails to hit its profit targets—something unacceptable to the investment community.
• In 2011 Pepsi was displaced as the number two soft drink beverage losing out to Diet Coke.  Coca-Cola is No. 1.

Earlier this year Ms. Nooyi, who has a strong interest in nutritional products, outlined a new plan to support the core North American beverages business. She also removed the head of that unit in an attempt to get things moving again.

While there's a lot of back-and-forth in the cola wars perhaps PepsiCo could learn from an internal laboratory that has fueled the growth of its snack business, which a few stock analysts would like to see spun off as a separate company.

Some time ago I was allowed to go on-site and visit innovation in action at Frito-Lay, a unit of PepsiCo.

Our presenter Dwight Riskey, since retired, was a corporate vice president and chief marketing officer. In his own personable way, Riskey took the audience inside the processes of innovation at Frito-Lay. While not all business principles transfer well, there may be something on this short list of takeaways that could be helpful to your organization

All businesses get to a point where growth becomes extremely difficult.

Mr. Riskey made clear that sustained growth is hard to achieve. 

After the 90s dot com bust and the real estate debacle of recent times, we know in retrospect that much of the growth purported by many companies and market sectors was an illusion.  While high-flyers get a lot of media attention for rapid growth, the enterprise worth putting under a microscope is the one that achieves consistent results over extended periods.

Success stories like this are hard to find for two reasons.  First, these businesses tend not to draw attention to themselves.  Second, the examples are few and far between.

Growth at Frito-Lay comes through innovation.

Business leaders are in tension with themselves wanting control, creativity, and growth at the same time. This is a difficult act to pull off.

If it's true new products help PepsiCo increase revenue, how does innovation see the light of day in a large bureaucracy?   What makes the difference when it comes to identifying and implementing innovative ideas? 

It could be credible individuals such as Dwight Riskey and his talented staff.  Or as a best-selling author, Jim Collins would say, the “who.” 

Innovations don’t happen by themselves.  They need help.  There needs to be a champion pushing an idea through a system that is often quite comfortable with itself.  Product innovation is not likely to go anywhere without someone giving permission or protection to try something new. 

It’s important to understand that Riskey, in his day, had access to people who could make decisions and provide resources for innovation.  How did he get this access?  Trust.  He made time to establish solid relationships within PepsiCo.

It would be easy to look at products, advertising, and luck at Frito-Lay to conclude this is the path to profits.   These three categories are important.  However, it’s essential to give credit to the human element of successful improvisation.

It’s hard to be creative inside a mature mindset.

How we see something determines how we’re likely to respond. If your thinking and position are mature then it could limit creativity.  If so, what are ways to tap the imagination and be innovative?  

Have you ever thought of simply moving around the room to look at your idea from another angle? Or enlisting others to help you think about the product or service you’re trying to launch? What about talking to consumers who don't buy from your business and asking them why?

If it’s difficult to be creative using outmoded thinking, it’s impossible to turn on the light in a closed mind.

And that may be the most enduring lesson from our day at Frito Lay.

Strategist.com

© Bredholt & Co.