Coca-Cola’s Clever Little Trick: Smaller Packages

(The Washington Post) -
 Bottles of Coca-Cola in France. (Reuters/Benoit Tessier/File)

Bottles of Coca-Cola in France. (Reuters/Benoit Tessier/File)

Earlier this month, Coca-Cola reported its latest earnings with a big smile, boasting that global soda volume sales rose in the last three months of 2015.

The news suggests things might not be as bad as they seem in the soda universe — even in the United States, the largest market in the world, where Coca-Cola has seen its sales plummet amid a growing distaste for carbonated drinks.

But it’s also a testament to the success of a clever little trick the soda industry has adopted in tough times: selling its product in smaller packages.

For decades, soda makers nudged people to drink more with ever-larger cans, bottles, and cups. That strategy, however, has failed in recent years, as the narrative about the harm of drinking soda has intensified. So they have opted to do the opposite, shipping carbonated drinks out in smaller servings in hopes it will make soda desirable again.

The strategy might seem a bit wacky — downsize containers to supersize sales? — but it’s actually ingenious.

For Coca-Cola, it means a more profitable product, since packaging is such a significant contributor to price. “Certainly, they make more money per ounce this way,” said David Just, a professor of behavioral economics at Cornell University who studies consumer food choices.

Many other big food brands, including Kraft, General Mills, and Campbell’s Soup, have employed a similar strategy: shrinking package sizes to boost profit margins. But this is particularly important to a company like Coca-Cola, given the steady decline in soda consumption.

The mini cans and bottles allow Coca-Cola to save money on aluminum and glass, most or even all of which it pockets.