Diet Coke revamps, but tough road ahead

Earlier this year, Coca-Cola announced major changes to Diet Coke that will take place throughout 2018. Seems like Diet Coke is walking a very fine line between alienating its loyal customers to pursue people that frequently choose alternative refreshments over Diet Coke. An aging customer base and changing tastes fuel this revamp, with Diet Coke looking to reinvigorate through younger and multicultural audiences. While the formula remains untouched, the brand is modernizing with a new identity that includes updated packaging and additional flavours.

Diet Coke’s most loyal drinkers grew up with the brand in the 1980s and are primarily Anglo. In fact, 80% of Diet Coke drinkers are Anglos and mostly boomers. This presents a clear opportunity to diversify, but also confuse its core customers with the added complexity. Diet Coke potentially gets “lost on the shelf” since it's keeping the current 12-oz. can (appeal to core audience), and bring in new slimmer cans (reach new target). What will be marginalized in the soft drink grocery aisle, especially when retailers are shifting to grow healthier on-trend beverages? Where cooler space is even more limited, the package and flavour fragmentation poses immense challenges for retailers.

Millennials pose different opportunities and challenges. New packaging and font types should resonate well. The line extensions should appeal since consumers are exploring spicier, more exotic and more global flavours. While “carbonated drinks” are still what consumers are opting for, the alternatives have extended well beyond colas. Sparkling Ice, Perrier and La Croix are already major competitors. GT Kombucha, Health-Ade, Synergy and KeVita are on the rise. Sparkling cold brew coffee is quickly emerging to compete for the same audience.

Diet Coke’s changes are bold. Change was necessary. Sales have been declining and status quo doesn’t cut it for a billion dollar global brand. Will this revamp accelerate its declines, as the product risks getting lost on shelf with its core customers and potential customers select healthier options? Or will this forge a strong relationship with new users to re-energize the brand?