No Longer 'Sweet As' for Coca-Cola

Coca-Cola Amatil NZ's GM Marketing, Wendy Rayner, recently sat down with Fairfax reporter Richard Meadows to talk innovation, consumer choice and sugar.

Coca-Cola Amatil NZ's GM Marketing, Wendy Rayner, recently sat down with Fairfax reporter Richard Meadows to talk innovation, consumer choice and sugar. The below article was originally published by the Sunday Star Times

No Longer 'Sweet As' for Coca-Cola

Richard Meadows

30 November 2014

Wendy Rayner's go-to drink is an L&P, a Coke Zero, or a "good bourbon and coke at the end of the night".

The general manager of marketing at Coca-Cola Amatil (CCA) NZ is partial to the products her company bottles and sells, and doesn't like to see them demonised.

Coca-Cola wants to come to the table, she says - hence the interview; the first she has given.

"I guess you need to stand up and give evidence that we're taking it seriously, and we've got nothing to hide," says Rayner. "We want to engage, so we have to do things like this."

Late last year, the company decided to dive into the great sugar debate, get to know the science behind it, and understand what academics were saying, she says.

Selling soda is big business in New Zealand, so there's a lot on the line. Companies Office records show CCA NZ's holding company reported a net profit of $60.8 million in the last calendar year, on revenues of over half a billion dollars.

The profit is eclipsed by the holding company's whopping $81m spend on "selling and marketing", which was almost twice the cost of warehousing and distribution. This river of cash flows into promotions and events, dairies plastered with Coke signage, and all the usual advertising mediums.

Print is still in use, though Rayner says digital is now a much larger part of the mix, including the likes of YouTube and social media. Television spend is less than it was, but Rayner says the viewership is still strong and the medium has big advantages for spreading the Coke message.

"When you're telling stories and your brand represents an emotion, there's no better way to convey that than filmed content," she says.

Rayner has been drinking the company cola for two years, following a long stint with Lotto. She says she was ready for a new challenge, and wanted to have a crack at fast-moving consumer goods, with Coke's positive brand imagery one of the big drawcards.

"It's about happiness. It doesn't get a lot better than that."

As a diehard L&P fan, one of the brands owned by CCA, she says her favourite campaign was "Bit Different, Aye". The quirky king of Kiwiana has a "heap of latent love", Rayner says, with the challenge to make it more modern and relevant to younger drinkers.

One of her dream days on the job so far involved collaborating with marketing whizzkids at Whittakers.

"I just rang them up and said I had this crazy idea . . . within three months I was down at the factory, trialling six different variants of L&P chocolate bars."

It's not all fun and games. Rayner wanted a challenge, and she's got it. The new rhetoric coming from global public health campaigners is that sugar is poison.

University of California professor Robert Lustig, arguably the godfather of the anti-sugar crusade, argues it's as harmful as cocaine or tobacco. This year Lustig was a keynote speaker at a symposium for local action group FIZZ, which wants sugary soft drinks banned altogether by 2025. To the FIZZ camp, soft drink is little more than diabetes and tooth decay in a bottle.

While the blame game rages on, the cause for concern is indisputable. New Zealand is the fourth fattest country in the OECD, and nearly a quarter of a million Kiwis have diabetes, with at least 50 diagnosed every day.

Inside CCA's enormous warehouse at the Oasis in Mt Wellington, a poster on the bulletin board warns, "Anyone can get diabetes".

The sheer scale of Coke's local operations is awe-inspiring. The factory is currently ramping up for the busy summer season, and will churn out an entire pallet of soft drink every minute at peak production.

Rayner agrees that, deservedly or not, Coca-Cola is the "poster child" for sugary food and drinks.

"You could say we take it as a compliment, because we are a big part of people's lives," she says.

She readily admits she's no scientist or nutritionist, but says she doesn't agree sugar is fundamentally bad.

"We've got a role in educating parents to a balanced lifestyle," says Rayner. "I'm very open in saying that I don't give my two children Coke, because of the caffeine."

But anyone who goes to her house will find a fridge that contains L&P and Sprite alongside water and juice.

"After a game of soccer, my son will come home and have one," she says.

The message of moderation clearly does not get through to some families. Witness the horrific case of the six year old who had eight teeth pulled and multiple fillings recently, after swilling 1.5 litres of Coke every day.

Rayner says being a parent herself gives her empathy and motivates her to want to be part of the solution. Coke's solution boils down to an improved range of choices and better education.

The company reports that new smaller pack sizes - including 250ml cans and 300ml bottles - are doing well, with more packages sold, but fewer litres overall.

Of course, the price incentives don't always stack up. A 600ml bottle of Coke still costs twice as much as a 1.5 litre on a multi-buy special, and there are no plans to pull the top-selling big bottles.

Almost all of the fizzy drink range have sugar-free alternatives.

Then there's the recently announced Coke Life, the green-label product containing a third fewer calories, which hits supermarket shelves in April. While there was some talk of the stevia-sweetened brew being a silver bullet, Rayner says there's no such thing.

"Will it be massive? No, I don't think so. But it's just another choice," she says. "We genuinely hope it helps, but it's going to take a lot of things from a lot of people."

There's not much point offering healthier alternatives if people don't even understand the nutrition labels. Besides improving labelling on packs and vending machines, Rayner says Coke is looking into a simpler way to spell it out - "not because we have to, but because we want to".

That's likely to be the voluntary Health Star Ratings, which the company has committed to in Australia and is planning to bring to New Zealand.

If any of these initiatives actually work, you'd expect to see it reflected in sales figures.

The company won't give a breakdown of the popularity of its classic Coke, Diet and Zero brands. However, it says across its entire portfolio, retail sales of low or no-calorie drinks increased 1.9 per cent in the year to October, while full sugar drinks were down 7.4 per cent .

"We've sold significantly less sugar in the last five years, and yet obesity's gone up," says Rayner. "You can't argue a direct correlation in the face of those facts."

For groups like FIZZ, voluntary initiatives are a step in the right direction, but don't go far enough. University of Auckland professor Boyd Swinburn, a core member, has said the only effective way to tackle the issue is government legislation.

FIZZ wants to use the tactics that have worked so well for tobacco, including taxes, restricting sales and advertising, and graphic warning labels. Well-respected figures like New Zealander of the Year Lance O'Sullivan and John Key's chief science advisor Sir Peter Gluckman have piled on in support.

However, regulatory change looks highly unlikely in this term of Government. The Prime Minister has opposed any sort of "fat tax", pointing out that the price of Coke would have to climb significantly before it affected sales.

Overseas experience suggests modest tax increases on targeted foods are ineffective. By contrast, tobacco is subject to hefty excise taxes that more than quadruple the price of the base product.

Rayner says a sugar tax or other intervention is not the right solution.

"I'm a big fan of self-regulation in any industry, actually," she says.

However, that doesn't appear to extend to Coke changing its own pricing. Rayner says setting different price points for full-sugar products has been discussed, but discarded.

"The sentiment of New Zealanders would find that quite frustrating, for us to dictate what was okay for them to drink, and what should be priced higher than another option," she said.

On a personal level, Rayner says she's come to enjoy occasional exchanges with people who take issue with what she does or who she works for. They don't always leave as converts, but they're not the ones that matter.

"I'm more concerned with the mass who do drink it, and ensuring we're offering them great drinks, great choices."

Rayner says anyone who knows her knows she's no corporate sell-out.

"It would be a sad state of affairs if you can't have that sort of thing in life, those little treats," she says. "I wouldn't be here if I didn't believe it."

- Sunday Star Times