Coca-Cola CEO on why he's getting rid of beloved beverages

New York (CNN Business)On Monday Coca-Cola unveiled a new, limited-edition flavor that’s supposed to taste like…pixels. Yes, pixels.

“Coca-Cola Zero Sugar Byte makes the intangible taste of the pixel tangible,” Oana Vlad, senior director of strategy at Coca-Cola, told CNN Business in an email. “Byte” is the second flavor to emerge from the company’s Coca-Cola Creations division focused on digital experiences.
It’s fitting, then, that customers’ first glimpse of the pixel-inspired beverage wasn’t in the real world, but in the video game Fortnite.

    The product, which won’t be on sale in the United States until next month, appeared globally in late March on an island created within the game called Pixel Point. Players who arrive there can play different mini-games, including one that takes place inside a classic glass Coke bottle.

      Coca-Cola (KO) also describes “Byte” as “the first-ever Coca-Cola flavor born in the metaverse,” referring to a world where people’s digital avatars engage with each other in a virtual world.

      Coca-Cola's latest limited-editon flavor debuted in Fortnite.

      That may well be the case, but beverage brands — including Coke — have long advertised directly to gamers. Red Bull has been active in the e-sports world for years, Monster Energy made waves when it appeared prominently in the game Death Stranding and PepsiCo (PEP) has even developed a product called Mountain Dew Game Fuel specifically for gamers.
      “We believe it’s important to be present in the spaces where gamers play,” Vlad said, noting that “Coca-Cola has long supported the gaming community.” The company has a partnership with video game developer Riot Games.

        The beverage’s Fortnite debut is another sign of how brands are using video games to market their products directly to gamers.

        Food brands make their move

        Snack makers are “definitely underrepresented” when it comes to advertising to gamers, said Caleb Bryant, associate director of food and drink at Mintel.
        But that’s starting to change. Virtual billboards for Cap’n Crunch have popped up in several games. Lunchable logos show up in Roblox. And Heinz-sponsored rest areas can be found in Call of Duty.
        It’s still early days, but the food makers think this strategy has big upside.
        Kraft Heinz (KHC), which owns Heinz condiments, Lunchables, Oscar Mayer and other brands, has started to think more deliberately about how to advertise to gamers, said Sanjiv Gajiwala, the company’s US Chief Growth Officer. Last year marked “the initiation of our marketing transformation,” he said, including “getting involved in gaming in more intentional ways.”
        In December, Heinz launched an ad campaign within the first-person shooter game Call of Duty. Here’s the gist: Taking a snack break can open players up to attack by opponents. So Heinz paired up with the game’s designers to set up safe spots in the virtual world, where players’ avatars could hide out while they take a quick bite.

        A Roblox avatar races in a Lunchables kart within the Lunchables Racing game in Roblox.

        Around the same time, Lunchables launched a branded game within the kids gaming platform Roblox.
        “It’s really important for us to recognize that gaming is more pervasive and is an important part of culture today,” said Gajiwala.
        As evidence of the relevance of gaming, Gajiwala pointed to Microsoft’s acquisition of Activision Blizzard, creator of Call of Duty, Candy Crush, World of Warcraft and more. The tech company announced in January that it would pay nearly $70 billion for the gaming firm, even though Activision and its controversial CEO had been accused of fostering a toxic work environment.
        The Microsoft acquisition is just one piece of the puzzle. Globally, consumer spending on games, including subscriptions and in-app purchases, hit $180.3 billion in 2021, according to Newzoo, an gaming-industry analytics company. Newzoo predicts that spending will grow to $218.8 billion in 2024.
        And it’s not just current gamers spending more cash — more people are becoming gamers, too. According to Newzoo, the number of people who said they played games on computers, consoles or mobile devices in the last six months grew 5.3% globally in 2021 compared to 2020.
        But for some big snack makers, including PepsiCo, gaming is just the tip of the iceberg.

        Welcome to the metaverse

        As gaming evolves, so does the food giants’ approach in advertising to gamers, said Adam Harter, SVP of media, sports and entertainment at PepsiCo.
        “There was a point in time where we would look at a brand like Mountain Dew and say, ‘well, Mountain Dew is the best fit for a gaming platform. So Mountain Dew is going to be the brand that we go to market and advertise around gaming,'” he said. “That’s not the way we do it anymore. Now, for virtually all of our brands, this is a must-have component of our media communication strategy.”
        Coca-Cola introduces a first-of-its-kind flavor
        PepsiCo began marketing more products to gamers in earnest about three years ago, said Harter. In 2021, it worked with Anzu, an in-game advertising company, to place ads for Cap’n Crunch in several games. It has also promoted Doritos, Ruffles potato chips and, of course, Mountain Dew in those virtual spaces.
        For Harter, it’s not enough to market more products to gamers in general. PepsiCo also has to reach different types of gamers.
        “Gaming has exploded to such a massive audience,” he said. “It’s not just about those competitive gamers … I see this now as an opportunity to become more surgical in how we reach consumers.”

          He also sees gaming as an entry point to the next wave of the web.
          Gaming is “really the springboard into this new phenomenon we call the metaverse,” he said. “As people live their lives in the metaverse on a more daily basis over the next few years … it’s critical for brands like ours to make sure we are where those consumers are living their lives.”
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