Investing Caffeine

Coke Targets Cows

August 28, 2009 at 4:00 am 1 comment

Coca-Cola (KO) has come up with a new product idea: fizzy milk. Sound strange? From my perspective, I prefer my milk with cereal and chocolate chip cookies. I never received a marketing degree, so somebody please explain to me what the heck Coke is thinking?

What’s next? Coca-Cola anchovy and liver protein shakes. Or perhaps fizzy gravy? What better than a little carbonation to liven up your mash potatoes on Thanksgiving?!

The name of Coke’s new carbonated milk product is Vio, and the creation is being test-marketed throughout New York (primarily in delis and health food stores) to gauge acceptance. The fizzy milk product comes in various fruit flavors, including Tropical Colada, Very Berry, Citrus Burst, and Peach Mango. Peculiarly, the product is stocked on shelves at room temperature. Mmm, nothing like lukewarm milk, it just sounds so delightful (I don’t think so).

Coke also has grander ambitions of rolling Vio out globally, if the U.S. launch proves successful. According to the TimesOnline article, perhaps natural food stores should not be targeted since Vio contains similar levels of sugar as Coca-Cola’s main non-diet drinks. Some believe Coke’s introduction of Vio is merely a crafty exploitation of a technicality in school beverage rules. A recent article written on creativematch states, “The American Beverage Association’s School Beverage Guidelines prohibits sugar-sweetened carbonated soft drinks from being sold in elementary, middle, and high schools. However, the guidelines still allow some milk-based products to be sold.” Perhaps Vio is Coke’s Trojan Cow for getting new drinks onto schools’ menus.

Time will tell whether Coke is successful in this beverage niche, but I will not hold my breath for its triumph. No matter the level of Vio achievement, at a minimum, dairy cows have found a new revenue stream to keep them employed in a tough economic environment.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

DISCLOSURE: Sidoxia Capital Management and its clients do not have direct investment exposure in Coca Cola Co. (KO) at the time the article was published. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

Entry filed under: Stocks. Tags: carbonated, Coca-Cola, Coke, fizzy, KO, marketing, milk, TimeOnline, Vio.