After a controversial brand revamp, Coke Zero Sugar is on the rise. Meanwhile, Diet Coke's downward spiral continues.
After a controversial brand revamp, Coke Zero Sugar is on the rise. Meanwhile, Diet Coke's downward spiral continues — and its sister brand's success isn't helping.
On Wednesday, Coca-Cola reported better-than-expected earnings, with a 3% increase in North American sales.
Digging into the sales figures reveals how customers' approach to soda is changing — and which beverages are lagging behind.
In August, Coca-Cola stopped selling Coke Zero in the US, replacing it with a beverage with a different recipe, design, and name: Coke Zero Sugar. The company previously made a similar change in other countries, including the UK.
While people immediately freaked out when the change was announced, the adjustments are already paying off.
After the new recipe rolled out in the US, unit case volume doubled compared to the prior quarter. In the UK, where Coke Zero Sugar rollout began in 2016, growth continues in the double-digits.
Meanwhile, Diet Coke's sales slump continues as the weakest link in the company's cola lineup. The brand's sales by volume declined in the mid single digits last quarter. And, executives said that Coke Zero Sugar's success is cannibalizing Diet Coke and Coca-Cola Classic sales in certain markets.
Increasingly, Diet Coke doesn't fit health-conscious customers' needs. While Coke Zero Sugar saw a sales bump by very clearly advertising that it doesn't contain sugar, many customers remain suspicious of Diet Coke's use of artificial ingredients.
However, Coca-Cola is paralyzed from significantly altering Diet Coke, in the way it tweaked Coke Zero, due to its dedicated — albeit shrinking — fan base.
"I don't think we're likely to change Diet Coke," CEO James Quincey said in a call with reporters Wednesday. "It has a large following."
"Diet Coke will be Diet Coke for a good while longer," Quincey continued.
In the US, Coke Zero sales increased by 3.5% in 2016, compared with Diet Coke's drop of 1.9% in the same period.