Beverage Trend Monitor
Coke and Pepsi go hard
Coke and Pepsi’s rivalry will soon extend into
liquor stores
The first glass of Coca-Cola was sold in 1886 and for 135
years The Coca-Cola Company exclusively sold non-alcoholic
beverages in the US. Coke broke its history of
teetotalism in 2021 with the launch of Topo Chico Hard
Seltzer (produced in partnership with Molson Coors)
which quickly gained market share amongst the sea of
hard seltzer competitors. Following its release of Topo
Chico Hard Seltzer, Coca-Cola has since announced the
2022 launch of Fresca Mixed (produced in partnership
with Constellation Brands), Coca-Cola’s first spiritbased
alcoholic beverage, and Simply Spiked (produced
in partnership with Molson Coors), a ready-to-drink
(RTD) alcoholic lemonade.
Brand equity elevates products
in the hyper-competitive
RTD alcoholic beverage market
Coke and Pepsi are hoping to strike
gold within the rapidly expanding
RTD alcoholic beverage market. Total
volume sales of FMBs (flavored malt
beverages) increased an estimated
364% from 2016 to 2021 while volume
sales of RTD spirit-based cocktails increased
226% making each respective
beverage type some of the fastest
growing segments of the entire alcoholic
beverage industry.
The RTD alcoholic beverage market
may be white hot but a flurry of new
product launches, particularly hard
seltzers, cranked up the competition
and made it increasingly difficult to
grab consumers’ attention. Coke and
Pepsi’s new RTD alcoholic brands have
an immediate competitive advantage
over other RTD products due to an existing
consumer base and brand familiarity.
Consumers, especially now
during this period of high inflation,
want to spend money on drinks they
know they will enjoy; launching RTD
alcoholic beverages under an existing
brand name offers consumers a layer
of trust and familiarity. 26% of consumers
cite “well known brand” as important
when purchasing a RTD alcoholic
beverage.
All occasions all of the time
Coke and Pepsi dominate non-alcoholic
beverage occasions and were long
satisfied with their products only acting
as mixers with alcoholic beverages;
a third of CSD (carbonated soft drink)
consumers mix CSDs with alcohol.
However, the CSD market is one with
relatively few growth opportunities
and the inclusion of alcohol allows for
Pepsi and Coke to propel existing
brands into exciting new consumption
occasions.
According to Mintel Trend, Extend My
Brand, companies are bringing brands
into new categories in order to drive
sales and potentially introduce the
brand to new consumers. For instance,
Coca-Cola’s unveiling of two new alcoholic
beverages followed PepsiCo’s announcement
that it would launch its
first alcoholic beverage, Hard Mtn
Dew (produced in partnership with
Boston Brewing Company) roughly
slated for a late February/early March
2022 release. PepsiCo also filed a trademark
application indicating the company
plans to produce alcoholic beverages
under the Rockstar brand.
Coke and Pepsi’s rivalry will soon extend
into liquor stores and the companies’
launch of alcoholic drinks after
over 100 years of exclusively producing
non-alcoholic beverages portends wider
changes in the alcoholic beverage
industry.
10 BREWING AND BEVERAGE INDUSTRY · 2/2022