The deal, branding drinks with Disney characters, comes hard on the heels of last week's joint venture with Procter & Gamble. The initiative is further recognition that the company needs a better-balanced beverage portfolio to achieve its ambitious 7-8% volume growth target. Nonetheless, Coca-Cola's still a long way from achieving such balance.
The new marketing alliance represents a departure for Coca-Cola, as it is the first time the company has sold its drinks under another brand. Initially only Minute Maid juices will be used, but other drinks are likely to be included as the partnership develops. Both companies will promote the Disney-branded products, with the aim of generating $200 million by 2005.
For Coca-Cola the initiative is another attempt to reduce its dependence on its eponymous drink, particularly in America where sales growth has stalled. Coca-Cola is keen to tap into the growth of non-carbonated soft drinks and is therefore looking at ways to boost its juice and bottled water brands. The non-refrigerated juice market grew by 9.6% last year and Coca-Cola is looking to gain a greater share of it.
Coca-Cola's strategy is similar to that of Nestle, in that it now aims to provide products to meet the needs of different life stages. The partnership with Disney will help Coca-Cola increase its share of the children's beverages market, while its newly launched Dasani bottled water brand is intended to appeal to the twenty and thirtysomethings who have begun to consume less cola.
The initiative comes just a week after Coca-Cola launched a $4 billion joint venture to co-market Procter & Gamble snacks and drinks range. For Coca-Cola the attraction was access to P&G's research facilities giving it the chance to develop, market and distribute innovative health oriented brands, but the market remained skeptical, marking Coke's shares down on the day.
While Coca-Cola's joint ventures may reduce its dependence on carbonates they are unlikely to be sufficient to meet its growth target. Coca-Cola has a long way to go before its non-carbonate brands can rival its core brands and it still lacks an effective product in the fast growing sports and energy drinks category.