What once started as a syrup produced by a local pharmacist in 1886 is now one of the most popular American soft drinks and the world's largest non-alcoholic beverage manufacturing and distributing company.
Coca-Cola is known for joining forces with some of the industry's biggest liquor brands, expanding into the canned cocktails business, and making it a more versatile beverage company.
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Since Coca-Cola is such a renowned company, it has chosen established partners that can't harm its image. These iconic partnerships include its collaborations with Molson Coors' (TAP) Topo Chico and Gold Peak, Pernod Rochard's (PDRDF) Absolute Vodka, Constellation Brands' (STZ) Fresca cocktails, and Brown-Forman's (BFA) Jack Daniel's.
Coca-Cola, Bacardí unveil partnership with a historical backstory
On Tuesday, Coca-Cola announced it has teamed up with the Cuban-founded rum brand Bacardí to recreate an iconic cocktail that combines both beverages.
Although this partnership with Bacardí may have just officially launched, it is not the first time the brands have come together.
Coca-Cola and Bacardí's relationship has a long history dating back to 1900.
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The Cuba Libre, which stands for "free Cuba" in English, is a popular Cuban cocktail that has married Coca-Cola and Bacardí for over 112 years, with a squeeze of lime, of course, being the secret ingredient.
This Cuban drink was born in 1900, soon after the end of the Spanish-American War, also known as Cuba's War for Independence.
After the end of the war, Americans flew to Cuba and brought this soda along with them, which soon made it a popular drink among the Cuban community as well.
Coca-Cola devises lucrative strategy in the canned cocktail market
The pre-made canned cocktail will initially launch in Mexico and select parts of Europe in 2025, with plans to eventually make the drink available worldwide.
Coca-Cola (KO) , the American soda company, serves more than 2.2 billion units in over 200 countries daily, amounting to 800 billion servings annually.
According to Coca-Cola's Q2 earnings report for 2024, revenue grew by 3% worldwide, with 7% growth in European, Middle Eastern, and African markets and a 20% increase in Latin American markets, the largest growth of all markets compared to the last fiscal year.
Latin America, specifically Mexico and Brazil, is one of Coca-Cola's most profitable markets, with a reported 5% unit case volume growth, despite the 19% price increase caused by inflation.
Not only is Coca-Cola thriving, but the canned cocktail industry is as well.
According to an FMI study, the canned cocktails sector is driving sales in the spirits industry, which is estimated to be worth nearly $19 billion as of 2023 and expected to reach over $33 billion by 2033.
With a booming Latin American market and a growing canned cocktails industry, launching this partnership in Latin America seems like a no-brainer to generate more profits.
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However, the same is not equally true for its European market.
The European, Middle Eastern, and African markets reported flat unit case volume numbers due to a 24% surge in Coca-Cola prices, which is the most out of all entities, and current world conflicts.
Although this launch seems to make little sense in a not-so-strong market for Coca-Cola, Europe is one of the heaviest alcohol consumers in the world, with more than two-thirds of the population consuming alcohol.
The launch of Coca-Cola's partnership with Bacardí could be a successful strategy, as both continents are major consumers of each market.
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