India: Coca-Cola Tests a New Flavoured Milk Drinks Brand, Vio

With the planned launch of the Vio brand in February 2016, Coca-Cola ventures into flavoured milk drinks, a rapidly growing category in India. It will be at least initially available in just two relatively classic flavours, Almond Delight and Kesar Treat, at a price of Rs25 per 200ml bottle (US$0.37), and is positioned as an affordable drink targeting children and teenagers.

As it will initially be available at only 500 outlets under an exclusive distribution agreement with Reliance Retail, it can be seen as a “soft” launch. However, due to a relatively fragmented competitive landscape beyond the largest brand, Amul, Vio has the potential to rapidly become a major brand among local players.

Not choosing a well-known global brand

The Coca-Cola Co describes Vio as a global brand in its press release. Vio was available in both the UK and the US in 2009 as a carbonated flavoured milk drink, under a different packaging and with innovative fruity flavours, making it compete more directly against soft drinks than against dairy-based drinks.

However, Coca-Cola did not succeed in making Vio a well-recognised brand in these markets, where it ultimately failed to sustain a presence. The group also owns the Vio bottled water brand in Germany, which may give some credence to its global claim, but their logos are as different to each other as bottled water is to flavoured milk drinks, and therefore the two products cannot benefit from any brand synergies. In its latest incarnation, Vio has been developed specifically for the Indian market and is produced locally, which heralds an entirely new chapter in the brand’s history.

Among Coca-Cola’s recently launched dairy brands, the Fairlife milk brand, introduced in the US in 2014, where it has seen a strong performance, initially had a markedly different positioning to Vio; it was closer to standard drinking milk, but had a premium price, reflecting its health and wellness credentials, as it contains more protein, more calcium and less sugar than standard cow’s milk. However, Fairlife’s subsequent extension under the YUP! range has seen it move into flavoured milk drinks targeted at a young audience and suitable for on-the-go consumption. Therefore, on the face of it, Fairlife could have equally been used as a so-called global brand for the company’s venture into India.

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SOURCE: The Coca-Cola Co

The rapid growth in flavoured milk drinks sales in India could attract other global companies, notably Danone, which is already a major player in Indonesia with Milkuat. In its wider global strategy to move away from the stagnating carbonates category and exploring opportunities in higher growth environments, Coca-Cola could gain from being an early entrant. Although not exposing the Fairlife brand to Indian consumers could appear as counter-intuitive, developing two clearly distinct brands, one premium for developed markets alongside a more affordable one for India and potentially other emerging markets in Asia, could help Coca-Cola spread its net wider.