Could there be a Coke in Ocean Spray's future?
12/8/99 Until now, Coca-Cola has all but been ruled out as a possible suitor to acquire the Ocean Spray label and introduce cranberries to a worldwide market. Coke has had more than its share of troubles in the past two years, with profits suffering due to the Asian economic crisis, a federal racial discrimination suit , the well publicized contamination scare and criticism over Coke's slow response, and an antitrust investigation in Europe that blocked the attempt to buy Orangina. After only two and a half years on the job, Coke's CEO M. Douglas Ivestor is stepping down and being replaced with Douglas Daft.
Daft, an Australian with an international perspective, ran Coke's Middle East, Far East and Japanese divisions. Last quarter, 73% of Coke's profits came from global sales. Randy Donaldson, Coke's vice president for corporate communications, is quoted in the Associated Press as saying that "Daft can also be 'very tough' but understands different cultures. He's lived all over the world and understands the way different people live.'' No doubt, he also understands how to introduce cranberries to countries where 99% of the population has never tasted the "sweet tart berry."
While Coke hasn't pushed Minute Maid into international markets, and never followed through on their plans to introduce a line of shelf-stable Minute Maid products, Daft could view the acquisition of Ocean Spray as a way to compete from a position of strength both on the domestic and the overseas juice aisles, as well as in the single serve category. It would also enable Coke to market "good for you" beverages to the growing segment of the worldwide population who are switching from nonnutritive carbonated beverages to juices. If this trend continues, as it is likely to, and Pepsi has designs on making Tropicana the international fruit juice company, Coke could well loose out on this lucrative market.
Ocean Spray has been a good fit with the Pepsi line ever since they acquired Tropicana. Now with a new leader at Coke who may be able to think beyond just competing for the caffeinated bubbly consumer, Coca-Cola may be a potential suitor of Ocean Spray.