What you need to know

• Coca-Cola has launched its first alcoholic drink in Australia, a hard seltzer called Topo Chico. 
• The alcoholic sparkling water is a significant launch for Coca-Cola, as it seeks to gain a foothold in the booming seltzer market.
• Topo Chico – with flavours developed by bartenders – is selling well in other markets. Now it faces Australia's taste test.
• Coca-Cola has also rolled out a new look and recipe for its Coca-Cola No Sugar drink, which continues to notch double-digit growth in Australia. 

Reaching for the bottle

Coca-Cola is eyeing disruption as it launches its first alcoholic drink in Australia and chases a share of the booming hard seltzer category.

This month, Coca-Cola launched a global campaign for the alcoholic sparkling water brand Topo Chico, created by Hero + McCann and filmed in NSW.  It is the drinks giant’s first foray into alcohol in Australia, and it’s gunning straight for the millennials with a “left of mainstream” campaign that is more music video than ad.

It’s a significant shift for Coca-Cola, signalling the company's intent to disrupt, innovative and remain relevant, by pushing into new emerging segments. It's strategy has predominantly focused on re-engineering its portfolio of beverages to reduce the sugar content, but the drinks giant has also pushed into categories such as Kombucha and cold-brew coffee. Topo Chico is its first major foray into the alcohol sector.

“It's a significant launch globally for us,” said Kate Miller, marketing director – South Pacific at Coca-Cola. “Hard seltzer is a natural extension for us in terms of our strengths in flavour, innovation, and product development. Obviously, launching into alcohol is a big new space for us. We’re going cautiously but bravely into that space with a great product and a great campaign."

As Australia comes out of lockdowns and into summer, she is quietly confident.

“It's a very attractive market opportunity for us, and we think we’ve got a great product to offer Australian drinkers.”

Shaking things up

Topo Chico was a non-alcoholic premium sparkling water brand when Coca-Cola acquired it in 2017. But noticing that bartenders were using the brand to mix flavours in premium cocktails, Coca-Cola set about reengineering the seltzer as an alcoholic drink. It engaged bartenders to help create its flavours – strawberry guava, tangy lemon-lime and Pineapple twist – positioned as its USP in the crowded alcoholic seltzer category.

Coca-Cola last year launched Topo Chico as a hard seltzer in Latin America (Mexico and Brazil) and has been rolling it out worldwide with a plan to be in 28 markets by the end of 2021. Miller didn't break out numbers, but claimed Topo Chico is recording a “really good performance” around the world.

Coca-Cola is keen to use its global weight to take a major slice of the booming hard seltzer category, which has already topped $2bn in the US and is forecast to become a $300m market in Australia within the next four years.

Already a firm favourite among millennials, thanks to the preservative and gluten-free positioning, hard seltzers are also viewed as a ‘healthier' alternative to other alcohol and come in slimline cans.

While Miller admits there is still some education in the local market around the name, with seltzer more commonly known as sparkling water in Australia, consumers have welcomed the drinks as an alternative to carbonated and heavier alcoholic beverages.

“The alcohol category is huge. And there are still lots of very popular areas within that. Hard seltzers blend sparkling water with alcohol and natural flavours and [have] a much lighter, refreshing taste. Consumers are clearly demonstrating with their purchasing behaviour that that is something that they're looking for.”

“It's very much a summer drink, a light, refreshing product, and you can imagine people out and about for a picnic on the weekend.”

Meanwhile, Miller said the company will keep a keen eye on city bars to see what else people are drinking.

"We will continue to work with bartenders to help us develop more innovations for Topo Chico as well as keep looking at new trends coming through that start off in the trade, that we can then bring into the mainstream market," she said.

Coca-Cola will be using online, video, social, influencers, sampling and in-store promotion to drive awareness around the drink. While the ongoing lockdowns in some major markets have curbed the campaign activity in terms of on-premise promotion, Miller said there would be strong in-store activity and sampling where possible.

The drinks company is also taking its move into alcohol seriously, launching a global alcohol marketing policy to ensure Coca-Cola's marketing champions responsible consumption and does not appeal to people under the legal purchasing age.

“Topo Chico is the first alcohol brand we're introducing in Australia, and we acknowledge that our growth in alcohol brands comes with really significant added responsibility. We'll be adhering to all the marketing and advertising regulations in Australia. We're very cautious about the different regulations, and it's very important to us that we follow all the codes,” said Miller.

Best Coke ever?

With summer on the horizon, Coca-Cola has also kicked off a heavyweight campaign for its Coca-Cola No Sugar brand.

The $6m integrated marketing campaign will incorporate TV, online video, OOH, social, cinema, radio and PR. The campaign promotes the launch of the new Coca-Cola No Sugar recipe and rebranded look while posing the question for consumers, is this the best coke ever?  

Coca-Cola is hoping the provocative campaign will generate buzz and drive sampling among potential new drinkers.

Coca-Cola No Sugar has recorded strong revenue and volume growth since its launch in 2017 and continues to drive double-digit growth in Australia for the drinks giant. The clue is in the name, but it probably best embodies Coca-Cola's strategic shift.

“We know there continues to be a growing appetite for no sugar options – and as people’s tastes and preferences have changed, so have we," said Miller.

“We've tested it with Australians, and we saw that the majority of consumers do prefer the new recipe. We saw that with both existing Coca Cola No Sugar drinkers and Coca Cola classic drinkers. That's really encouraging, as there's a big opportunity for us there to continue to accelerate the growth of this product.”

Yet rather than cannibalising sales from its classic Coke product, Miller insisted Coca-Cola sees the No Sugar variant as complimentary.

“We want to make sure that consumers have a choice,” said Miller. “What we're seeing across the whole category is a shift with consumers looking for products with less sugar, so we wanted to give classic Coke drinkers a great tasting alternative with zero sugar, if that's what they're looking for.

“That's really important for us as a business; we've made voluntary commitments to reduce the sugar in our products, and we are well on track to meet those targets. We've done that through a mix of innovation, like the reformulation of products, and offering consumers smaller packaging," added Miller. "It’s about giving consumers a choice and offering the best tasting product that we can.”