There's more to Coca-Cola Co.'s re-emphasis of its classic hour-glass bottle than some green-tinted memories.
Proprietary packaging is just the most recently unsheathed weapon in a war as bitter as any the soda giant has fought against arch-rival PepsiCo Inc.: The war against private labels.
Because private-label colas have made inroads into America's gullet, the Real Thing is emphasizing its unique bottle, red disk logo and patented taste formula.
"In this environment, we're stressing symbols of differentiation to set Coke apart from wannabes," said Sergio Zyman, Coca-Cola's chief marketing officer. "One of those symbols is the best-known package in the world, with the possible exception of the egg."
Until recently, national brands gave little heed or marketing muscle to private-label products, focusing instead on traditional big-company rivalries. "They virtually ceded the field to the parasites," said Frank Assumma, president and chief executive of the ad agency Bates USA.
Private-label products have reached 19.7 percent of U.S. consumers, selling more than $30 billion a year in supermarkets alone. Experts expect that number to rise to 30 percent within five years and even higher in Europe.
As a result, national brands are fighting back, Mr. Assumma said, "chopping prices and taking the short-term hit in profits for the long-term gain."
After private-label diapers surpassed name brands in sales, Procter & Gamble Co. lowered the cost of Luvs disposable diapers 11 percent and Pampers by 2 percent, instituting a value-pricing program on about 70 percent of its products.
Philip Morris Cos. has cut the price of Marlboro cigarettes, General Mills Inc. has slashed cereal prices 11 percent and Quaker Oats Co. recently announced plans for a value line of cereals that replaces boxes with less costly bags.
Another common response to private labels is to increase the use of coupon promotions. "Kellogg, for one, has taken this approach," said Bill Spencer, president of Gage Marketing Group's Consulting Division. "But with over 50 percent of cereals bought on coupons, manufacturers have trained customers to look for that" already.
Marketers are also investing in innovation, coming up with hard-to-clone improvements and demonstrably superior products that can justify a higher price. "It will be tough for a supermarket to replicate the taste of a fat-free Snackwell or Frito Lay's fat-free salty snacks," said Chris Hoyt, president of Hoyt & Co. marketing consultants.
Some marketers are countering private labels' persuasive price points with more advertising, said Mr. Assumma, "to remind customers how terrific their brand is and will always be."
Others are cutting back on the number of brands or brand extensions, said Paul Kelly, president of Silvermine Consulting Group in Westport, Conn. "Procter & Gamble got rid of White Cloud" to focus on its core brands of toilet paper.
Because it's too expensive to develop separate packaging, shipping and promotion programs for multiple brands, Johnson & Johnson's Tylenol pain reliever has fewer line extensions, and Kellogg Co.'s Rice Krispies has fewer sizes on the shelves.
Another popular punch-back strategy is to offer value-added promotions such as "buy one, get one free" and bonus packs that add as much as 25 percent more for the old price. "This makes it more difficult to compare the value for the dollar with the conventionally sized private-label clone," said Mr. Kelly.
Mr. Hoyt suggests getting in bed with the enemy: Supermarkets. Their private-label brands return average gross margins of 30 percent to 35 percent, compared with 25 percent to 30 percent for nationally advertised brands that pay supermarkets for retail displays and warehouse storage.
Manufacturers should follow the co-marketing example set by Kimberly-Clark Corp., which melded a pitch for its Kleenex tissues into an ad that stressed the virtues of shopping at Pathmark supermarkets. Unlike traditional co-op ads that append the retailer's name as if an afterthought, a new breed of double-barreled ads promotes the store throughout the message.
Manufacturers "can either fight retailers or join them," said Jon Kramer, president of J Brown/LMC, which brokers manufacturer/retailer ad tie-ins. The makers of Keebler cookies, for example, advertised an in-store sweepstakes for Chicago's Jewel stores. And shoppers at Safeway grocery stores were offered a dollar off its private-label coffee with the purchase of Keebler's Pecan Sandies.
The war, though bloody, could end up benefiting name-brand marketers and private labelers, not to mention consumers. Even if the national brands win out, private labels will be happy about it. "They need something to feed on," Mr. Assumma said.
Private labels are "like a dose of tough love for name brands," Mr. Kramer said, the way Japanese cars forced American automakers to reassess their ways in the 1970s.
By forcing brand marketers' extraneous products and incremental package sizes off supermarket shelves, Mr. Kramer said, "private labels are the catalyst that will focus this business."