Saturday, March 22, 2008

Beverage Industry Memo: Coke For Passover: Beverage Giant Coca Cola Makes 'The Real Thing' For Jewish Holiday

In mid-to-late March -to- April each year in the U.S., Beverage giant Coca Cola goes back to the future so to speak and produces a limited amount of "The Real Thing," which is the company's original Coke soft drink beverage made with pure cane sugar or sucrose (sugar refined from sugar beets) instead of high-fructose corn syrup, which is the sweetener it's used in all of the carbonated sodas it produces and sells in the U.S. and most everywhere else in the world except Latin America (and particularly Mexico) since 1985.

Prior to April, 1985 when Coca Cola announced it would switch to using high-fructose corn syrup in its flagship Coke brand, along with its other brands of soft drinks, the beverage maker used sugar in all of its sodas sold throughout the world. Coke was the first soft drink-maker to switch to using high-fructose corn syrup, primarily because it's cheaper than sugar, and the other U.S.-based soda pop makers followed the leader.
Those real sugar Coke days also were when the beverage giant created its popular "The Real Thing" marketing and advertising campaign. "Coke; it's The Real Thing...Coke is." That very popular tag-line, which became part of the American lexicon, went away once Coke no longer was sweetened with sugar but rather with corn syrup instead.

Many U.S. consumers crave "The Real Thing." So much so in fact, that a huge market exists in the U.S. for Coca Cola produced in Mexico using sugar. The "Real Thing" is then shipped across the border into the U.S. for sale at stores which primarily cater to Hispanic consumers.

But the world's number one carbonated beverage maker and marketer does make an exception to its high-fructose corn syrup-only as the sweetener of choice policy in the U.S. once each year. From mid-to-late March to April each year in the U.S., Coca Cola produces limited runs of its Coke soft drinks using sugar instead of the corn syrup during the three weeks or so leading up to the Jewish Passover holiday. (PepsiCo also produces a limited run of its Pepsi brand carbonated brand soft drink sweetened with sugar for Passover.)

Among the foods Observant Jews aren't allowed to consume during the Passover holiday period include any food or drink made with chamez. High-Fructose corn syrup falls into this category since anything produced from refined corn it chamez as stated in the Torah. Observant Jews must follow all of the proscribed Passover dietary restrictions as laid out in the Torah. The punishment for eating chametz during Passover is karet ("spiritual excision.")

Since Coke doesn't want to lose sales from Observant Jews during Passover, it's been producing the soft drinks made from either sugar cane or sucrose (sugar refined from sugar beets) for years since it stopped using sugar completely in Coke produced in the U.S. and most elsewhere in the world in 1985.

"Real Coke" for Passover is generally only available during the religious holiday in large metropolitan areas with high populations of Jewish consumers such as Los Angeles, New York, Boston, Philadelphia, Baltimore-Washington D.C., Miami, Atlanta, San Francisco and Houston, Texas. Since Coca-Cola's system is to have local bottlers produce all of its soft drinks, the local bottlers in those regions are responsible for making and selling the Passover sugar-sweetened Coke.

Selling the Passover Coke isn't a problem however. The beverages fly off store shelves as soon as they're stocked--and it's not just Observant Jews who are buying the "Real" Coke to drink during the eight key days of Passover. Indeed, consumers of all stripes and religious backgrounds who prefer the taste of the sugar-sweetened Coke to today's high-fructose corn syrup version, stock up on the limited-run soda pop as soon as they see it in stores.

The Passover Coke is certified by local Rabbinical councils as "Kosher for Passover," which is the designation required in order to satisfy Jewish dietary laws during the religious holiday observance.

The special sugar-sweetened, Coke is usually bottled in 2-liter plastic bottles, which are distinguished by their yellow caps that sport the OU-P (Kosher for Passover) symbol or the words Kosher L' Pesach in Hebrew on the cap. Some Coke bottlers produce Passover Coke in cans as well as the 2-liter plastic bottles, but it's a rarity. [You can read more about the OU certification at their website here.]

We've often wondered why Coca-Cola hasn't introduced (or actually reintroduced) Coke made with pure cane or sugar-beet refined sugar since it's sugar-sweetened Mexico-bottled soft drinks are so popular with consumers of every ethnicity in the U.S.

A little background: In the mid-to-late 1980's, Hispanic foods distributors in the U.S. started exporting the Mexico-made Coke across the border (without Coke's express permission) to sell at Hispanic grocery stores and in Mexican restaurants in parts of the U.S. where there were large Mexican, Central and Latin American immigrant populations. Not only did the Mexican-bottled Coca Cola catch on fast with the immigrants, but non-Hispanic consumers in the U.S. discovered the sugar-sweetened version in the stores and Mexican restaurants and grabbed it up regularly.

Just a few years later, in the early 1990's, conventional supermarket chains with stores in high-population Hispanic communities, along with specialty foods distributors, started getting numerous requests to sell and distribute the Mexican-bottled Coca Cola.

Specialty foods distributors like A-1 International Foods in Los Angeles (now part of Tree of Life), Hagemeyer's Gourmet Specialties in Northern California (now owned by Unified Western Grocers), Gourmet Award Foods in Texas (also owned by Tree of Life) and others started distributing the sugar-sweetened Coke to supermarket chains and independents like Safeway Stores, Inc., Fiesta Mart, Ralph's and numerous others, who put the Mexican-bottled Coke in the Hispanic food and beverage sets in their stores in neighborhoods where there are high Latino shopper demographics.

Sales of the Mexican, sugar-sweetened Coke have soared since then, as more supermarkets, grocery stores and restaurants have stocked the soda pop. Today, it's a good bet that if a shopper of any ethnicity goes into a Hispanic grocery store, supermarket (chain or independent) or authentic Mexican restaurant, you can get a bottle of bottled in Mexico Coca-Cola, made using sugar rather than high-fructose corn syrup.

This gets us back to "wondering" why Coca-Cola hasn't reintroduced a "new" everyday version of the popular vintage (and current Passover and Latin American version) sugar-sweetened Coke in the U.S., which is its largest market globally. We think we know why. Our bet is the giant beverage marketer believes if it did so, the sugar-sweetened version of Coke would be so popular it would seriously hurt sales of corn syrup-sweetened Coke, even though the soda pop would have to retail for more because of the higher price of sugar compared to lower-cost high-fructose corn syrup.

Instead of let what would be a very popular version (sugar) of Coca Cola canabalize sales of its corn syrup-sweetened carbonated beverage by marketing a sugar-sweetened version--in addition to being subject to the price fluctuations of the sugar market--we suggest the beverage marketer prefers to just stay with what it has, despite the strong niche demand for the "Real Thing" among a healthy segment of American consumers.
High fructose corn syrup is generally plentiful--although that's changing a bit since a good portion of the food and sweetener-grade corn crop acreage in the U.S. is being planted for ethanol fuel-grade corn currently--and inexpensive relative to sugar. (If the ethanol trend continues, and corn-based products like sweeteners keep going up in price, maybe sugar will make a comeback as the carbonated beverage sweetener of choice? For example, commodity price of corn is up over 15% in the last year.)

However, when it comes to Passover, which begins on April 20 this year, the giant beverage maker and marketer stills go back to the future and produces a limited amount of its vintage Coke. And, since there aren't any religious tests given at the supermarket checkout stand, any consumer who desires can buy the sugar-sweet stuff.

Further, lets not forget, the Mexican-bottled Coke made with sugar is available in many parts of the U.S. where there are substantial Hispanic consumers. Since Hispanics are the fastest-growing ethnic group in the U.S.--and are a fast-growing population not just on the east and west coasts but in places like Iowa, Idaho, Illinois and elsewhere throughout the country as well--we suspect people in parts of the U.S. where the Mexican Coke isn't currently available will see it in many of their stores soon.

Meanwhile, during the upcoming Passover season, Coke is rolling out its Passover Coke. We suspect it won't stay on store shelves very long if this year is like the last few years in terms of the special yellow-capped carbonated beverage's brisk sales. Hag kasher vesame 'ah (happy and kosher Passover). It's "The Real Thing."

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