The Demise of Lucozade Energy Cola

Well that didn’t take long! Launched with some fanfare in October 2011, Lucozade Energy Cola was the latest in the long line of pretenders to the throne jointly occupied by Coke and Pepsi. But in recent months it has quietly slipped off the shelves and into a Cola hospital to hang out with the likes of Virgin Cola, Red Bull Cola and others, though it is still available online. Two questions are worth looking at in this case. Why did Lucozade enter a space where so many others have tried and failed and what explains the enduring dominance of Coke and Pepsi?

It would have been fun to have been a fly on the wall when the good people at GSK were discussing this possible brand extension. Was it all gung-ho and groupthink or were there dissenting voices? Only a select few know the real answer. We did have some seemingly compelling arguments to accompany the brand’s launch. It had apparantly compared very favourably in taste tests! The Cola market in the UK is worth £3 billion and even getting just 2 per cent of that would grow Lucozade’s annual sales by 50 percent! But there also seemed to be some doubts. It was initially a ‘limited edition’ and it wasn’t always clear whether it was going to be positioned beside colas or other energy drinks in the shops.

So why did it all go wrong? Well for a start, if the primary rationale for the launch was that this brand tasted better, then it was doomed from the word go. Cola has never been about taste no matter what consumers might tell you. Even Coca Cola themselves proved that way back in 1985 with their disastrous decision to launch New Coke which bombed despite extensive testing. Colas are pretty horrible sugary drinks but they sell so well because they are connected in the consumer’s minds with positive images like youth, fun, happiness and good times through years and years of powerful advertising and imagery from the leading brands. This level of emotional value takes a long time and lots of creative effort to build which explains why the big two stay strong while the pretenders fall by the wayside.

Means and Ends

In business, results are everything. For publically quoted companies quarterly results are fretted about internally, pored over by analysts and draw rapid responses, either good or bad, from investors. In small and medium sized businesses, the pressures may be less intense but are no less important. Rising sales and profits suggest that things are going well whereas the converse is a cause for concern. But is this fixation with the bottom line appropriate? Is it the outcome or how you get there that matters most?

Professional sport provides a very interesting parallel for business. Teams want to win but many of the best think less about the result and more about what needs to be done effectively to get there. In a sport like rugby union for example, percentage line outs won, number of line breaks, percentage of kicks converted combined with number of tackles missed on the defensive side are pretty good indicators of who is going to come out on top in the end. Banks of statistics are now available for team sports and they can be very revealing. Spain gloriously won the recent European Soccer Championships. The statistics behind their play are revealing. On average, they had possession of the ball for almost 60% off the time in their games – an average of 39 minutes compared with 22 minutes for the worst performing team in the competition. Renowned for their passing, they not surprisingly dominated the passing stakes making almost 5,000 passes (1,000 more than the next placed team) and successfully completing a staggering 80% of them (versus an average of 70% for the other 15 teams). The scored more goals than anyone else (12) and conceded less – just one. The more time you keep the ball and the more accurate you are with it the more chances to win you create. Means to ends!

Businesses need to operate in the same manner. What are the key means that we need to attend to in order to reach the desired ends? Win on these dimensions and the sales and profits take care of themselves.

Related articles

What's Luck Got to Do With It?

Effort Versus Talent