Coca-Cola ( KO), one of the great symbols of American ingenuity and pride, is on the ropes. Crushed between the triple threat of a slowdown in carbonated-soda sales at home, the deteriorating image of U.S. interests overseas and a rise in health concerns everywhere, its revenue is flagging, and Coke's stock price, though up a bit recently, is down 45% from 1998. Yet Coke has been around a long time, and it is a fighter. And it just so happens that, in recent months, its long-dithering executives appear to have recognized their peril in a more fundamental way and are prepared to emerge from their corner, swinging. Yes, the cola king is preparing a comeback. And this time it just might work.On Wednesday, Coca-Cola reported a drop in its fourth-quarter net income due to impairment charges at its largest bottler. But revenue rose and results surpassed Wall Street's expectations. Coke's fourth-quarter net income fell 22% to $678 million, or 29 cents a share, from $864 million, or 36 cents a share, a year ago. The company said it experienced 3% growth in its sparkling beverages, or carbonated drinks, a business that includes trademark products such as Coke and Fanta. The secret recipe, strangely enough, has nothing to do with the red can for which it is so famous. The path back to glory is mostly green, with a big, new-age helping of tangerine and pink grapefruit, and perhaps a dash of java.
Long Odds, Big PayoffThe new corporate Coca-Cola, you see, is not really that into soda at all. While sugar water will always be at the core of the company's mission, the way forward is all about high-concept juices in groovy bottles, as well as vitamin water, energy potions and chilled coffee. Consider Coca-Cola's most recent $250 million purchase, a small "alternative" beverage pioneer called Fuze. If you've never heard of it, you're probably not a 28-year-old woman. In years past, this was exactly the kind of concept drink the soda giant shunned. Now it's considered a potential lifesaver. Fuze was invented four years ago in the New Jersey basement of industry veteran Lance Collins. It's an awesome story of stubborn entrepreneurship. Collins knew the odds were around 97-1 against success, but he thought he saw a niche for low-calorie, high-taste, upscale juices for beautiful people, and he gave it a shot. His design team created a gorgeous, colorful glass bottle for his "banana colada" and "peach mango" concoctions, gave them such coy names as Slenderize, Refresh and Vitalize, called them "infuzions" instead of juices, and listed "transformative" ingredients such as chromium, carnitine and Citrimax. This doesn't sound like Coca-Cola's cup of tea, but check out the demographic. Collins started small by focusing on urban women in their 20s and 30s, then elbowed his way past the big boys of the game via an aggressive distribution strategy into one chain store after another. He sold 24 million bottles in 2003, double that in 2004 and double again last year.