The internet is in a frenzy after a July 26 announcement from Coca-Cola Co. that Coke Zero will be replaced in the U.S. with a new diet soda brand called Coca-Cola Zero Sugar. The new drink has already been released with great success in Europe, the Middle East, and Latin America.
Coke Zero Sugar is less of an entirely new recipe (like Coke Zero, it will be sweetened with aspartame) and more about repackaging the concept of a diet soda. According to Coke’s new CEO James Quincey, Zero Sugar is about making it clear to customers that the drink contains no sugar. This is particularly important as more countries impose a tax on sugar-sweetened drinks.
Coke Zero was launched in 2006, but it hasn’t been able to compensate for the drop in Diet Coke sales. Low- and no-calorie soda sales fell 5 percent by volume in North America last year, according to market research firm Euromonitor. Coke Zero was the number-10 soda brand in the U.S. last year, with sales growth of 3.5 percent. Diet Coke was number three but experienced a drop of 2 percent in sales. Worldwide, sales were flat and often weakest in Latin American markets. Coke’s reported earnings were $1.37 billion, or 32 cents per share—down from $3.45 billion, or 79 cents per share, in 2015.
Despite a social media outcry at the news, Quincey isn’t particularly concerned about a backlash for the new product. “Obviously any change has some degree of risk,” he admitted in a call with reporters. But as the initial reception worldwide has been positive, Coke is relying on Zero Sugar to return sales to previous levels of growth.
Quincey, who was previously the company’s chief operating officer, became the new CEO of Coke in May, when Muhtar Kent stepped down. The second quarter earnings are Quincey’s first as CEO.
For now, Coke appears to be on an upward trend, despite some dismay at the news of Coke Zero’s retirement. Last reported earnings and revenue were above analysts’ expectations, and the company forecasts bigger and better earnings for the full 2017 year.
The replacement of Coke Zero in the U.S. goes into effect in August.
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