Here’s How Coca Cola Is Gearing To Fight The “Health” War In Japan

An increasing number of consumers and regulators are declaring a “war” against sugary colas as consumers increasingly prefer “healthier” alternatives.  Accordingly, The Coca-Cola Company (NYSE:KO) is now looking to introduce a cola version with “health benefits” in Japan. Aimed at the ageing population in the country, this new drink, to be called Coca Cola Plus, will have no calories or sugar and each bottle will contain five grams of indigestible dextrin and other dietary fiber. The company claims that drinking one bottle each day along with meals will reduce the absorption of fat from food and moderate the levels of triglycerides in the blood following the meal. This makes Coca Cola Plus a “Tokuho Cola” which in Japanese means foods for a specific health use. This beverage is aimed at consumers above 40 years of age and has the potential to become the preferred beverage for lunch in the office.

Associating The Coca Cola Brand With Health

Coca Cola continues to be on the receiving end of the “war” against “unhealthy” carbonated soft drinks. Several governments are looking to impose “sugar tax” on these drinks. And a number of vendors in India have decided not to sell these drinks anymore, since they are unhealthy. The company is now looking to modify its portfolio of beverages to suit consumer preferences. PepsiCo has a profitable snack division and does not rely as much on carbonated soft drinks. The company is also working on a transition towards healthier drinks. However, according to our estimates, carbonated soft drinks (Coca Cola, Sprite and Fanta and Diet Coke) account for nearly 45% of Coca Cola’s valuation.

Coca Cola is the number one beverage maker in Japan, but carbonated soft drinks are not popular in the country. Coca Cola has an array of beverages on offer in Japan and its top sellers include Georgia Coffee, bottled water, I Lohas flavored waters and Ayataka green tea. With the Japanese population preferring these healthier beverages, Coca Cola’s strategy in the region is to introduce several versions of its drinks and a variety of offerings to suit the consumer needs. Aiming a drink with health benefits for the older population (which is fairly significant) in the country can enable Coca Cola to create a brand identify associated with “health”.

We believe Coca Cola is facing criticism from several quarters for marketing “unhealthy” beverages. If the company is able to increase products in its portfolio that are healthy and also provide health benefits and market them on a larger scale, it can associate its brand with good health. This change can be a key catalyst to grow sales in the long term.

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