Jones Lang LaSalle


SPACE CAN 03 30 06
COKE THINKS COFFEE - AND RETAIL
Peter Slatin

Coca-Cola launches its carbonated coffee-like beverage, Blak, April 1, but is keeping its hot brewed Far Coast drinks under wraps.

It's a small deal that could pack a big pop, or just a little fizz. Coca-Cola Inc. has quietly leased a 4,000-square-foot retail space in Toronto. While it's just a storefront, it foreshadows what insiders say is the beverage giant's dreams of dunking Starbucks in its own brew.

The lease, which is much larger than the average Starbucks space, goes into effect on April 1, the same day Coke will also drench the world in Coca-Cola Blak, which a spokesman describes as a carbonated "Coca-Cola Classic-based beverage that finishes with a rich essence of coffee." But the spokesman declined to discuss or even confirm the Toronto lease, which was confirmed by real estate and design industry sources in Manhattan and Toronto. Coke was represented in the deal by CB Richard Ellis, which also refused to discuss the transaction.

Coke's spokesman did confirm that the Atlanta company has trademarked a hot beverage brand name, Far Coast, although he would not elaborate further.

"Far Coast is a brand that we'll be launching in the future. It's a hot brewed product," said the spokesman. "We don't comment on any future activities."

Sources familiar with Coke's plans say that, after years of internal development, last year the company hired Philadelphia design firm Otto Design Group and a Manhattan advertising agency to explore a look for the brand and the retail rollout. Gensler was also interviewed.

For its first store, Coke is not going for just your basic storefront. The Toronto store is located in the Tony Yorkville district. "If you have a purse to sell for $8,000, that's where you'd sell it," quips a local real estate observer.

With plans for the store being cloudy, it's worth pointing out that the company's previous high-profile foray into retail--a store on Fifth Avenue and 54th Street in Manhattan that sold a wide range of Coke-branded products--did not fare well. And on the product side, Coke had one of the biggest marketing flops in business history when it was forced to withdraw its hyped "New Coke." But this time, with a product to focus on in a market that, with the expansive success of Starbucks, has proved far deeper and broader than many experts had predicted, Coke clearly hopes to score not only a product hit but also build in a retail presence.

They'll have a lot of work to do. According to Starbucks 2005 annual report, the Seattle bean brewer spewed $1.6 billion worth of beverages in its U.S. retail operations last year, netting $338 million. Worldwide, Starbucks' 10,000-plus stores brought in more than $5 billion in revenue.