What Will Save Coca-Cola?

HINT: it's not prebiotic sodas

What we’re discussing in this issue—

• Coca-Cola’s Got Milk

• $1M vending machines

• Liquid Death’s Euro exit

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Coca-Cola’s Fastest Growing Brand

The biggest threat of milk was never plant-based substitutes, it has always been water; as our diets evolved, so did the lack of ocassions to drink milk—our generation isn’t really eating cereal, instead we started frothing supplements into water, the same reason why orange juice sales have declined, but along came Fairlife, a company that helped us rekindle our relationship with milk, one protein shake at a time. Unless you’re in the industry—you’re probably unaware Coca-Cola actually owns Fairlife, the company was founded as a collaboration in 2012, but CC ended up buying the rest of it in 2020.

Fairlife has become the most expensive Coca-Cola purchase to date, when they initially bought the company, they agreed on performance based payouts, originally projected to be $320M, but post-pandemic, sales of Fairlife have skyrocketed, with Coca-Cola struggling to meet demand, thanks to the convergence of protein maxxers and Ozempic users—Fairlife’s sales reached $1B in 2022, and their price tag is now looking to be closer to $7.4B over the past 5 years, making a huge dent in Coca-Cola’s operating marging.

Will milk save Coca-Cola? Pepsi’s been able to show growth thanks to snacking, and their latest acquisition of Siete can offer glimpse on an upcoming focus on health—with soda sales struggling and MAHA looming, meanwhile Coca-Cola has been trying to go beyond soda, from water, booze, caffeine and sports drinks, with Body Armour and Topo Chico being equally as succesful acquistions, but none as big and as expensive as Fairlife.

One thing we can deduce from this—the future of Coca-Cola won’t be prebiotics.

Poppi Spent $800k on Vending Machines?

I’m so confused as to why Poppi spends so much money on forcing a narrative of their drinks as the “future of soda” from their Superbowl ad to their latest influencer stunt—$25,000 vending machines. Over the last week, 32 influencers received Poppi vending machines, that are allegedly around $25K each, tallying up the cost of it to almost a million dollars, not to mention we are not even adding up what the influencers must have charged for the post itself. Call me old fashioned—but to me when someone is constantly flashing something, whether its status or wealth, there’s more to the story than meets the eye.

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Both Olipop and Poppi claim to be doing $500M in sales, meanwhile both Pepsi and Coca-Cola have announced their entry into the category—and yes brand can be a moat, particularly in such a saturated space as beverage, but at what point is it really a brand vs. an endless marketing spend, a real testament of a brand is one that can doesn’t need to burn through insanes amount of cash to be top of mind for people? The insanity that has been venture money funneled into CPG in the past decade is probably to blame for the expectations of wanting to hack “legacy” in a short amount of time, as if CPG can easily equate tech returns.

The backlash for this campaign was to be expected—with most comments equating it to the disastrous Tarte Dubai campaign, if Poppi really wants to appeal to mainstream audiences, why is it spending so much money to suck up to influencers who feel out of touch for the masses? I’ve said this before, GenZ consumers are one of the most savvy (with Gen Alpha coming in hot) quickly will be able to snif out the bullshit when something feels inauthentic. Though those who get boners from growth marketing can claim this was a “sucessful campaign” because of how many views and comments it’s getting, I would say to me it feels like the cracks are beginning to show, why is Poppi so desperate to make “itself” happen by throwing ungodly amounts of money around?

Feels more like a timer running out—here’s hoping their long awaited exit comes sooner than later.

What’s Going On with Liquid Death?

Speaking of beverage brands burning through investor money—The Grocer reported that Liquid Death was retreating from the UK market, after having made extensive marketing pushes that involved festivals and partnerships with LiveNation, their managing director for international markets recently left the company as well. Liquid Death’s last raise was $100M with over $1B valuation—then rumors of it getting ready to IPO circled, it’s most recent injection was a $55M credit line from Ares Commercial Financing in December. The company has clearly expanded into other promising categories like hydration powders and most recently, repositioning itself as a soda dupe.

I’m so curious as to what the future holds for Liquid Death—will they ever IPO, unsure if they would really want to open up their financials like that, Chobani retreated shortly after their S-1 went public, but at this rate, it seems this may be the only option left, unless we keep seeing more credit line extensions pop up. Liquid Death’s cocky attitude has been their moat—no other BigBeverage would want to deal with the legal implications of trying to emulate that, but how much farther can that attitude take them?

Is Liquid Death something that could only ever function in the US? Is their valuation justified? Their dupes keep popping up—curious if they will soon try their hat in Latin America, Coca-Cola’s TopoChico success is a prime example that looking into emerging markets can pay off.

Would love to know what you guys think.