Coca-Cola president sees C2 ‘cannibalizing’ Coke

The Associated Press

NEW YORK — Coca-Cola Co.’s new C2 soft drink will cash in on the low-carb craze, but at the cost of regular Coke and other drinks, the company’s North America unit President and Chief Operating Officer Donald Knauss said.
‘‘We do see some cannibalization’’ of regular Coke sales, Knauss told CNBC Tuesday.
The company, he added, estimates about 50 percent to 55 percent of the volume coming from C2 will be ‘‘incremental to our business, which is pretty high’’ with 10 percent to 15 percent of that volume coming from other categories, like water and other non-carbonated drinks. So ‘‘it’s not just going to cannibalize the sugar soft drink industry, it’s going to go after some of these other categories as well,’’ Knauss said.
He thinks Diet Coke’s sales are less likely to suffer on the June launch of C2, which Knauss said ‘‘creates a new category in the soft drink industry’’ that ‘‘hits a sweet spot.’’
C2, with its 12 grams of carbohydrates, may not be a choice for those on the strict Atkins diet, Knauss admits. However, he added that only about 10 percent of low-carb dieters are on Atkins.
Regular Coke has 27 grams of carbohydrates, so switching to C2 might be a more viable choice for aging people who are cutting their consumption of sugar colas, but love the taste of regular Coke, Knauss said.
‘‘We don’t think Diet Coke users are going to give up their 0 carbs and 0 calories for something that comes back into the middle,’’ he said. ‘‘There are a number of people, and our research shows it’s over 100 million people in this country alone, who don’t want to compromise on taste, but do want to cut carbs and calories.’’
Asked why Coca-Cola has recently started selling its soft drinks in 1.5-liter bottles instead of the old 2-liter size, but charging the same amount, Knauss said it’s both a response to inflation and to ‘‘maximize revenue for the customer.’’
‘‘We’re testing a couple of different price points, we’ll see where it nets out,” Knauss said of the new bottle size, which is being tested in New York.
He said Coca-Cola is trying to determine if 1.5 liters is a better portion size for consumers, who complain that soda in a
2-liter bottle often goes flat in the refrigerator. <-->