Coke's Quest for Cool

By Jeremy Caplan

A multicolor prototype bottle called Love Being is hardly the kind of packaging you would expect from straitlaced Coca-Cola. But with soda sales sagging, the company is showing some new verve, assembling an international team of marketing specialists to create what it hopes will become the shiny embodiment of liquid cool. Coke is introducing a mod series of bottles called M5 to try to perk up its 119-year-old cola while launching some slick new drinks to recharge a business that has been slowly losing momentum.

Since 1999 the throw weight of conventional advertising has been ineffective at stopping a steady slide in regular-cola consumption, which is falling by more than 6% annually. "People are reaching for products they perceive to be healthier," says Gary Hemphill, director of Beverage Marketing Corp., a research firm based in New York City. So when Neville Isdell, 62, came out of retirement last year to become Coca-Cola's CEO, the 35-year Coke veteran had an understandable thirst for change.

In Isdell's brief tenure as chief, the company has already served up a range of new drinks, including three energy boosters, a Splenda-sweetened Diet Coke and a zero-calorie soda. It's diving deeper into an alternative beverage market flooded with novel brands, from energy drinks and flavored teas to fruity milk and canned coffee. And in pumping an extra $400 million into the company's global marketing budget for its 400 drinks, Isdell has made it clear that he has no intention of letting the world's most valuable nameplate (worth $67.5 billion, according to Interbrand) slip in the eyes of consumers.

Coke is taking an iPod-inspired approach to reviving its flagship cola's appeal with an experimental marketing campaign. The new bottle collection--dubbed M5 for Magnificent Five--will roll out over the next year in 50 to 60 select nightclubs around the world. The icons are intended to draw attention from trendsetters, spicing up Coke's image in the minds of cool hunters and fashionable urban consumers. Don't expect to see M5s in grocery stores; they're much too hip for that. Instead, Coke will try to position the new bottles in fashion magazine layouts and even license the designs for clothing boutiques. A music video will accompany the release of each bottle, a viral-marketing tactic the company thinks will lead to widespread--albeit selective--exposure.

The five new designs substitute a smooth aluminum surface for the contoured grooves of the classic green-glass bottle. Each model also features a "night mode" and can glow in the dark. Instead of using standard labels, the company printed graphics directly on the aluminum. "For the first time, the bottle could be reshaped," says Peter Schelstraete, global brand manager, who credits Apple with demonstrating that consumers reward radically creative design innovation.

To prepare for the M5 project, Coke's global brand manager from Mexico, Eugenio Mendez, traveled the world to see what kids are drinking and what styles and products they favor. Meanwhile, senior vice president Marc Mathieu put together a secret marketing playbook called The Manifesto, highlighting Coke's pop-cultural branding history--from the famous Santa series to its man-on-the-moon ads. Hoping for a more modern hit, the company sought out hot design firms to deliver a new image.

Coke's quest of cool began with the Designers Republic, based in Sheffield, England, which dreamed up the Love Being model. Studios from Tokyo, Sao Paulo, Brazil, and Johannesburg, South Africa, came up with other variations.

The M5s will show up first in Germany, Spain, Italy, Mexico and Brazil, among other key markets, later this year. In 15 to 20 months, after the bottles' global tour, Coke will decide whether to retire the new designs or try to produce them on a broader scale. In the U.S., Coke worked with MK12, based in Kansas City, Mo., to fashion a bottle that will get Coke noticed in the right places, as in music videos. On his blog, Matt Fraction, one of MK12's founders, described his team's artistic freedom: "They left everyone alone to do the work. No product placement, no credit. They didn't want a Coke commercial."

That's a radical departure for a company that buys advertising by the ton, but given the lagging sales line, Coke's executives realized they had better be open to experimenting with their best-selling cola's image. "There was clearly a point where we lagged behind in innovation," says Mathieu. "If we need to be an icon again, we need to understand what it takes to be an icon."

To some industry experts, Coke's innovative project may be missing the point. Diet brands, for instance, are the fastest-growing soda segment. Coke has seven low-calorie versions of its cola, ranging from Caffeine-Free Diet Coke to Diet Coke with Lime; diet drinks make up 29% of the soda market, according to Beverage Digest. Pepsi earlier this year announced that Diet Pepsi would become its flagship brand, a tectonic shift. "Cola is the fastest-declining category, and for Coke to succeed, they need a new blueprint," says Phil Lempert, food-industry analyst and author of The Lempert Report.

Lempert and others argue that it's time for Coke to tamper with its famous and famously secret ingredient mix. Most Coke is sweetened with high-fructose corn syrup, yet kids in Latin America are drinking sugar-based, fruit-flavored beverages, he says. Lempert says the cola market will continue to dry up without a radical recipe shift. "The savior of cola, and I don't know who's going to do it first, Coke or Pepsi, is the reintroduction of the core product, substituting sugar for the high-fructose corn syrup."

That's unlikely anytime soon, but if recent intros are any indication, innovation under Isdell will stretch beyond trendy bottle designs. Coca-Cola Blak, a single serving carbonated coffee, and Dasani Sensations, a line of flavored sparkling waters, are among the highly regarded new drinks in the pipeline. Tab Energy, expected to launch later this year, is aimed at women and the market for healthier sodas. Like the M5 Coke bottles, Tab Energy's containers will feature a novel design (slender and pink), as will the new Von Dutch energy drink (camouflage cans). "When thirsty people go into a store looking for something to drink, the package sells the product. It's a brand's last chance to sell itself," says Hemphill. It's an acknowledgement that in the vastly overcrowded beverage aisle, every advantage counts.

With reporting by Greg Fulton/Atlanta