Has Coca-Cola learned anything at all from the last 15 years of health and wellness strategy? Apparently not.
Coca-Cola has big ambitions for its recently-launched Fairlife high-protein, low-sugar ultra-filtered milk.
Among the statements made by the company and widely quoted in the media are that:
- Fairlife will, “Rain money”. This attributed to Coca-Cola’s CEO Sandy Douglas.
- Fairlife is planning to go into “every fridge in America.” This attributed to Steve Jones, CEO of Fairlife.
The big question, is whether the product has enough of a point of difference to justify a 100% price premium in the consumer’s mind and also achieve the mass-market success Coca-Cola seems to be looking for.
There are some good things about Fairlife:
- a higher protein content (13g per 240ml compared to 8g for ordinary milk)
- it is lactose-free
- half the sugars of regular milk (6g compared to 12g)
But tens – perhaps even hundreds – of high protein dairy drinks have already been launched by dairies large and small, making Coca-Cola a late arrival at the protein drink party.
Most products on the market target sports recovery, weight managers and teenage males and deliver hefty doses of protein – typically 20g-25g per 250ml, compared to Fairlife’s 13g.
Clearly, Coca-Cola is trying to attract new consumers to protein: “Household mothers and women ages 25-39 who are looking for better, more nutritious choices for their families.”
Does Fairlife have enough of a point of difference to become the transformative success that Coca-Cola’s comments seem to suggest they are aiming for?
We think not.
Here are a few of the challenges Fairlife faces:
1. Focus too much on the technology. “Ultra-filtered milk” it says prominently on the Fairlife website and in communications for the brand. But consumers don’t know or care about technology – and when they do pay an interest it’s usually to tell industry that they want something “less processed”. The consumer wants health benefits they can understand and taste. Majoring on telling the consumer about the production technology creates no value in the mind of the consumer.
2. The technology is not an advantage and the product is easy to copy. So many of Fairlife’s communications have mentioned “ultra filtration” that it even got a mention in the Wall Street Journal. The only problem is that ultra-filtration has been around in the dairy industry for a long time and Fairlife could quickly and easily be copied by a host of dairy producers. In fact, an almost identical product to Fairlife, called Sun Latte, produced by ultra-filtration, has been on the market in New Zealand since 1995. It has the same nutritional profile and benefits.
3. Premium price for liquid milk = niche sales. Consumers will happily pay premiums for yoghurt, cheese and dairy products of all kinds, but when it comes to selling them a liquid milk that you pour on your cereal or add to your coffee, they think twice. Value-added milks’ failure rate is above 95% and when they survive rarely do they have more than a 3%-4% share in most markets. Family users with average incomes and high usage of milk not only don’t pay premium prices for pouring milk, they actively seek the lowest price.
Fairlife has said it has the potential to “take milk where it’s never gone before”. We think that at best it can take it to a niche – a big niche admittedly, worth perhaps $100-$150 million in sales. But that’s less than 1% of the American milk market.
Most companies would be very happy with that result. Whether Coca-Cola’s volume-obsessed management would feel the same, however, is another question.
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