Amazon wins big with Coke and Pepsi launches

Looks like Coca-Cola and Pepsi are both experimenting with new frontiers to the Cola War.

This time, they are taking the battle to the online retail channel by enlisting Amazon.

Last September, Coca-Cola announcedthey were bringing Surge for a limited release and selling it exclusively through Amazon. For those that aren’t aware of Surge, it competes against Pepsi’s Mountain Dew as a caffeinated citrus soft drink. Within hours of appearing on the Amazon website, the resurrected soft drink sold out. It sold out a second time quickly after its reinforcement shipments were made available.

Fortunately for Surge fanatics, the drink is still available on Amazon with replenished inventory (link here for US readers). After the Surge news release, Pepsi announced that they were introducing Pepsi True – a stevia-sweetened lower calorie Pepsi soft drink – also exclusively on Amazon.  It seems that both soft drink makers want to test and see which beverage would sell better online, enabling them to claim the lead position for online sales. At the end of the day, the test may not represent anything more than a traffic driver for Amazon and a creative approach to launching new products for Coca-Cola and Pepsi.

For Amazon to have secured exclusive launches with Coca-Cola and Pepsi is fantastic for the online retailer, but the test may not been as rewarding for both beverage companies. According to the results so far Surge has claimed leadership not only against Pepsi True, but also against all other soft drinks, ranking as the #1 Best Seller for Soda Soft Drinks category. Indicated by the customer reviews and ratings, the re-introduction can be counted as a huge success.

Pepsi True also ranks #1, among newly released items in Soda Soft Drinks. It’s worth noting that Pepsi True’s 1-star rating is the result of a smear campaign by environmental activists, inundating the product page with over 3000 negative reviews and 1-star ratings (link here). From a sales and popularity point of view, Coca-Cola Surge has benefited from launching exclusively through Amazon. Pepsi True, not so much.  So what was the difference between the two drink launches?

The chances that Surge would fail were extremely low. After the drink was discontinued in 2002, the Surge Movement facebook page popped up and has been slowly gaining popularity. While Coca-Cola credits the fan page for resurrecting the drink, launching exclusively through Amazon shows that Coca-Cola understands the customer and the market conditions. Consumers that remember Surge are at least in their late 20s, meaning they are comfortable with technology (ie social media, online shopping, etc). More importantly, these fans are scattered across the U.S., meaning a product push into retailers may have resulted in less than stellar sales.

Coca-Cola’s bottler network may also be less interested in carrying this product over other drinks with a proven sales history. Retailers themselves may also have been less inclined to give up shelf space and fridge space for a decade-old discontinued soft drink. The Amazon launch solves all these problems. Fans can order Surge online with free shipping that delivers a case of the drink to their doorstep. Bottlers are not inconvenienced to sacrifice truck space and would still get a percentage of sales profits for Surge sold in their districts.  Retailers did not have to give up any shelf space, though I’m sure many are now interested in listing the soda in their stores.  In fact, the Surge Movement facebook page encourages fans to request their local retailers to stock the drink.  Surge had a lower chance of failing simply because of its history and cult status, which is still paying dividends post-launch.

Pepsi True is a different story. Launching online was a calculated approach since retailer resistance and bottlers’ willingness to carry Pepsi True were likely problems just as they were for Coca-Cola Surge. Without historical significance or a cult following, Pepsi True was left to target health-conscious soda consumers.   However, this consumer segment is also niche, possibly with little loyalty among any particular soda drink. Pepsi would have to invest heavily into consumer marketing to educate the public on Pepsi True’s unique benefits, while also competing with Coca-Cola Life which launched into the same stevia-sweetened soda segment. Have you seen any Pepsi True commercials or any Coca-Cola Life commercials? Launching online was clearly the most cost-efficient for Pepsi True. But their circumstance is very different from Surge, and they also have to deal with more competitive products.  As a silver lining, Pepsi True is now also available on Walmart’s website. This could be a sign that retailers are slowly stocking the stevia-soda.

I would still term Amazon as the ultimate winner in this scenario, gaining exclusivity for two product launches.  After this test, Coca-Cola may be more inclined to try out introducing new beverages or reviving discontinued sodas with Amazon.  Pepsi may be just as willing, but hopefully they will fair much better.