Can Coke Product Managers Make Their New Alcoholic Drink A Success?

Chu-Hai is big in Japan. Can Coke join the crowd?
Chu-Hai is big in Japan. Can Coke join the crowd?
Image Credit: Tim

So for just a moment, picture yourself as a product manager for one of the most iconic products out there: Coke-Cola. You’ve done a great job – Coke is one of the most popular drinks available and no matter what country you go to, it is very well known. The company makes an enormous amount of money from your soft drink product every year and in all honesty, traditionally you’ve only had one real competitor – Pepsi. However, in the past few years, things have started to become a bit more challenging for you. More and more of your customers are staring to reject the sugary beverage that you are offering them and instead they are choosing to drink water and sports drinks. What’s a product manager to do?

New Plans For Coke

One thing that you need to realize is that Coke-Cola, the company, is a large international company. They have operations in just about every country. What Coke has decided to do about the slowing sales of their premier product is to change their product development definition and do an experiment in a most unusual place: Japan. In Japan, Coke-Cola plans on introducing a new beverage: a fizzy alcoholic drink. This should look interesting on some someone’s product manager resume. Although you might think that this is something that they have probably tried before, the truth is that this is a first for the company. In the past, the company has owned a wine subsidiary that they had acquired as a part of another purchase. However, the company had never done that much with this resource.

What makes this proposed new drink so revolutionary is that it represents a first for the product managers at Coka-Cola. This will be the first alcoholic offering created by the company. The product managers are well aware that they are venturing into new territory with this new product. That’s why they are telling the world that it is going to be an “experiment”. The product is going to be a canned drink that contains alcohol. This type of product already exists in Japan. These products are called “chu-hai”.

Chu-hai is sold in Japan as a canned alcoholic drink. Traditional chu-hai is made with a Japanese distilled beverage that is less than 45% alcohol by volume and carbonated water flavored with lemon. Some modern commercial varieties use vodka in place of the distilled beverage. The flavors available have recently multiplied, including lime, grapefruit, apple, orange, pineapple, grape, peach, strawberry cream, cream soda, and kiwi. For the chu-hai sold in bars and restaurants, the alcohol content can be quite low, allowing those with a low tolerance for alcohol to drink safely. Canned chūhai, however, can have alcohol levels as high as 9% (18 proof) and is often sold in convenience stores and vending machines.

Will This New Plan Work?

Although this will be a new venture for Coke, the Japan unit of the company has often been a leader in introducing new varieties of drinks. Coke’s Japan branch has sold a number of drinks that the company has not made available elsewhere including coffees, teas, and even a laxative version of Coke. The product managers at Coke realize that their customer’s tastes are changing and that they are going to have to change what they offer in order to keep sales going. These changes are some of the reasons that the product managers at Coke have been willing to expand into new market segments including coffee and smoothies. The goal is to find a way to deal with diminishing soda sales.

In order to keep their customers, the Coke product managers want to start to send a different message to their customers. Specifically, what they would like to be able to tell them is that Coke has a beverage that will go with their every occasion and that Coke is not all about soft drinks. The people who watch the beverage market have believed for a long time that the walls between non-alcoholic and alcoholic drinks would eventually come tumbling down. The reason for this is that more stores and websites that sell drinks have been selling both types of drinks.

As an example of another company that has been exploring the offering of different types of drinks, beer maker Anheuser-Bush has been selling a number of non-alcoholic drinks; however, the majority of them have been sold outside of the United States. Clearly Coke-Cola has made the decision to enter into the selling of Alcoholic drinks. This should be considered to be a trial run as the company determines how its product offerings are received by its customer base. If the product offering in Japan takes off and becomes popular, then there is a very good chance that we could see the Coke product managers take this idea and start to roll it out in other countries over time.

What All Of This Means For You

Coke-Cola is a well known brand name. Everyone knows that they offer one of the most popular soft drinks. However, as their customer’s tastes start to change and sales of soft drinks start to decrease, the product managers at Coke have taken a look at their product manager job description and decided that it is time to start to experiment with offering different types of beverages. In their Japan unit they are now planning on rolling out a brand new product: a fizzy alcoholic drink.

The introduction of a beverage with alcohol in it is going to be a first for Coke. The company did own a winery at one point in time, but they have never offered alcohol based drinks in a can before. Because this is so new for Coke, the company is billing it as being an “experiment”. In Japan, products like this are already being offered by other companies. These products are called “chu-hai”. Traditional chūhai is made with a Japanese distilled beverage that is less than 45% alcohol by volume and carbonated water flavored with lemon. Canned chu-hai can have alcohol contents as high as 9% (18 proof). Soda sales have started to slip and this is why the Coke product managers are willing to investigate new types of product offerings. Coke would like to let their customers know that Coke has a beverage for every occasion. If this product turns out to be successful in Japan, then there is a very good chance that Coke could introduce it into other countries.

The product managers at Coke have been riding high for a long time. Their product is one of the most successful soft drink products on the market. However, as customer tastes start to change, sales of sugary soft drinks are starting to decease. In order to make up for the losses that they are seeing, the product managers are willing to try out new types of products in places like Japan. If it turns out that their customers like fizzy alcoholic drinks, then perhaps we’ll be seeing them on store shelves near us soon!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Offering an alcoholic drink is a big departure for Coke, do you think that is a good idea for them?

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What We’ll Be Talking About Next Time

As I’m sure that we all know by now, Amazon is a very large company that does a lot of different things: they ship books and products, offer cloud computing resources, and even run an internet based television channel. The product managers at Amazon are under an enormous amount of pressure to always be looking for ways for the company to keep on growing. This is why they have expanded in to such diverse areas as grocery stores. However, now the Amazon product managers are taking a closer look at how they run their business and they’ve decided that it’s time for some of the firms that they have been relying on to go away. Now Amazon is getting ready to update their product development definition in order to take on UPS and start its own delivery business.