Coke testing new mid-calorie cola - report

Reuters, 01.23.04, 4:10 PM ET

By Paul Simao

http://www.forbes.com/home_europe/n...rtr1225042.html

ATLANTA, Jan 23 (Reuters) - Coca-Cola Co. (nyse: KO - news - people), struggling to boost soft drink sales among an increasingly health-conscious North American market, is testing a new mid-calorie version of its flagship cola brand, a leading beverage industry newsletter reported on Friday.

The world's largest soft drink maker has been testing the product, which would have about half of the calories of its Coke Classic product, said John Sicher, editor of Beverage Digest. An 8-ounce serving of Coke Classic has 100 calories.

Coca-Cola would not confirm or deny the report, but the Atlanta-based company noted that it was continuing to develop a number of new products in various markets.

"Innovation is at the heart of everything we're doing at Coke and we're always looking for ways to strengthen and expand the franchise and we're developing a broad range of products," Coca-Cola spokeswoman Sonya Soutus said.

The possible launch of the mid-calorie cola would come at a time when Coca-Cola is working feverishly to revitalize sluggish soft drink sales in North America, the company's largest and most important market.

In 2002, the company introduced a vanilla-flavored cola drink, which proved to be a success with consumers and helped boost sales in key markets. A diet version of Vanilla Coke followed soon after.

In addition to its new Vanilla Coke brands, Coca-Cola has unveiled lime and lemon-flavored versions of its Diet Coke brand, the third most popular soft drink in the United States.

Although the introduction of a mid-calorie cola appears to make sense in a market where low-carbohydrate diets have become the rage, Coca-Cola must ensure that this potential new product does not cut into sales of Coke Classic and Diet Coke.

"Possible cannibalization of either the regular or the diet brand is a risk, but one that can be overcome with careful positioning," said Sicher. He added that Coca-Cola's rival PepsiCo. Inc. (nyse: PEP - news - people) might be considering a mid-calorie cola of its own.

Shares of Coca-Cola rose 71 cents, or 1.44 percent, to close at $50.04, and PepsiCo edged up 1 cent to $46.55, both on the New York Stock Exchange.