Soft drinks enjoy a brand equity boost during the pandemic


Dive Brief:

  • Soft drinks were the most successful segment of the fast-moving consumer goods market (FMCGs) when it comes to growing consumer relationships during the pandemic, according to Kantar’s 2021 BrandZ report
  • The category showed particular growth in terms of perceived worth despite a growing sense of price consciousness among consumers, thanks to increased innovation and equity, according to Kantar. Coca-Cola increased its value 7.4% from 2020, while PepsiCo rose 14.2% on a pandemic-fueled surge in snack demand. 
  • BrandZ’s valuation methodology assesses brand equity through millions of consumer interviews in more than 500 categories, with a focus on how people feel about a brand as a measure of its opportunity or success. Kantar considers meaningfulness (meeting needs in relevant ways), differentiation (standing out or setting trends), and salience (coming quickly to mind) as the foundations of brand equity.

Dive Insight:

The pandemic helped foster a new appreciation for soft drinks as consumers spent more time eating and drinking at home. The category provided some people a way to break up the monotony of dining at home while restaurants and bars were closed, through different offerings from major beverage manufacturers. 

Although the pandemic presented challenges around employee safety, logistics, and general operations, major brands felt pressure to continue their R&D pipelines to prevent falling a year behind their competitors. This led to innovation around ingredient procurement, workflows and forced some brands to shed underperforming SKUs from their portfolios to shave costs and maximize resources. Coca-Cola alone has committed to cutting 200 brands globally.

But major beverage manufacturers also showed commitment to continued innovation during the pandemic. Their efforts have apparently paid off, with Coca-Cola’s Innovation score rising to 120 from 112, according to the BrandZ report. The BrandZ Index average is 100.

Coca-Cola launched a few pivotal new items in 2020, including its Coca-Cola energy drink line. In July, it debuted coffee-flavored cola, one of 20 new beverages that the brand plans to add to its subscription ordering service, which launched in December 2019. The product was originally available to a limited number of loyal fans, upping the intrigue around the product and adding an air of exclusiveness that may have had other consumers hoping to learn what the buzz is about. 

Coca-Cola also inked a deal with Molson Coors Beverage Company to launch Topo Chico Hard Seltzer in select Latin American cities in 2020, marking Coca-Cola’s first foray into the alcohol segment in the United States.

Meanwhile, PepsiCo’s BrandZ Innovation score increased slightly to 106. The beverage and snack giant maintained a steady pace around new product launches and is targeting each new item around a specific consumer trend. It debuted a line of nonalcoholic cocktail mixers called Neon Zebra targeted toward younger shoppers. In September, it launched a a stress-busting sleep-aid drink called DriftwellThis March, it added a Mtn Dew energy drink to capitalize on the growing demand for functional offerings, and fostered new snack brands like keto-friendly chip maker Hilo Life through its accelerator. 

As consumers shelter-in-place, work from home and opt for home cooking, food and beverage manufacturers have also ramped up their e-commerce presence as a promising avenue for reaching their target demographics and debuting new products. In 2020, PepsiCo debuted two new direct-to-consumer sites, with one focusing on top-selling pantry favorites while the other offers over 100 Frito-Lay products.