Tuesday December 26 5:22 PM ET
Coke Plans Milk-Based Drinks

By TANIA FUENTEZ, Associated Press Writer

ATLANTA (AP) - Got milk? Think Coke.

The Atlanta-based soft drink giant plans to market milk-based products to children as part of a wider effort to stay ahead in the billion-dollar soft drink industry.

Though Coke isn't revealing many details about ``Project Mother,'' its new initiative to develop dairy-based products, the company has announced plans to test at least five milk drinks early next year.

Coke has been taking strategic steps to establish itself as a total beverage company, Coca-Cola spokesman Rob Baskin said Tuesday.

The company also is in the early stages of research and development with juice-based beverages and other income-generating initiatives, Coca-Cola spokesman Rob Baskin said Tuesday. Among the ideas are in-home water purification systems, kiosks that would allow customers to use the Internet and personalized packaging.

``There are literally dozens of new projects going on worldwide,'' Baskin said.

But milk and Coke? Milk isn't exactly the drink most often associated with sporting events and theme parks where Coke's soft drinks have carved a niche for themselves.

Coke officials say researchers are looking at ways to counteract negative perceptions of milk - that it isn't hip, refreshing or something kids will want to drink in public. Company researchers are also considering how to market such products, examining everything from size and packaging to flavoring.

John Sicher, editor and publisher of Beverage Digest, calls the new initiative part of Coca-Cola's long-term strategy.

``This is part of a much bigger process within Coke. It's revising the way it looks at itself and its opportunities,'' Sicher said. ``It's a very smart thing to do. It basically wants to sell more products to more people at different life stages.''

Coca-Cola Co. recently backed out of talks to buy Quaker Oats, the maker of blockbuster sports drink Gatorade, for a reported $15.75 billion. Coke's rival, PepsiCo Inc., then snapped up Quaker for $13.4 billion in stock.

By adding Gatorade to its fleet of non-carbonated beverages, which includes Aquafina water, Lipton teas and Tropicana juices, PepsiCo would gain control of the dominant brand in the $2.5 billion sports drink category.

Earlier this month, Coca-Cola officials in Atlanta reassured analysts after shares slipped amid concerns about fourth-quarter profit estimates and future growth.

In recent years, Coca-Cola Co. has branched out to include non-carbonated beverages such as its line of bottled water, Dasani, and a new line of energy drinks such as KMX.

Dr. Greg Miller, vice president of nutritional research for the National Dairy Council, expressed concern that the new products could crowd milk out of children's diets.

Soda consumption has been displacing milk consumption for several years, he said. ``My concern as a nutritionist is that we have a calcium crisis among children who aren't meeting the recommendations for milk intake,'' he said.

Merrill Lynch analyst Doug Lane commended Coca-Cola's initiative: ``They're being more proactive, more involved in innovation and participation in this smaller, but rapidly growing beverage niche,'' he said.

Coke shares were up $1.13 to close at $60 Tuesday on the New York Stock Exchange (news - web sites).


On the Net:

Coca-Cola site: http://www.coke.com

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