Coca-Cola (NYSE:KO) is trying to pop into the booze market in an approach never before used by the company.
Continue Reading Below
The global beverage company said it would experiment with the alcoholic drink in Japan’s budding market for Chu-Hi, a canned drink made with shochu, a Japanese spirit made from distilled grains, sparkling water and flavoring.
This would be the first time Coke sells an alcoholic beverage, breaking away from its typical business model of non-alcoholic beverages.
“We haven’t experimented in the low alcohol category before, but it’s an example of how we continue to explore opportunities outside our core areas,” Jorge Garduno, president of Coca-Cola’s Japan business unit, said in a blog post.
In Japan, Coke will compete with Suntory, one of the world’s largest premium spirits companies, which currently makes a Chu-Hi beverage with a 3% alcohol content called Horoyoi, as well as Kirin and Ashai.
“Company leadership have spoken recently about being less afraid to experiment in terms of innovation – and dipping a toe into this category makes particular sense in Japan where the style of beverage is more familiar to consumers and the pace of CPG [consumer packaged goods] innovation is faster,” Howard Telford, head of soft drinks at Euromonitor International, told FOX Business.
Garduno said the product is likely to remain in the Japanese market, though “globally, it’s not uncommon for non-alcoholic beverages to be sold in the same system as alcoholic beverages.” Coke’s Japan business unit launches an average of 100 new products each year.
“This is a departure for Coca-Cola but I think this reflects the way that changing consumer tastes are pushing the company into less familiar areas like premium dairy, coffee, tea and now low-alcohol flavored drinks,” Telford said.
The move isn’t the first foray into the alcoholic beverage market for Coca-Cola. The company purchased Wine Spectrum in 1977, but sold the business a few years later to Joseph E. Seagram & Sons Inc. for more than $200 million.