Coca-Cola is evolving to become a total beverage company by reshaping its growth strategy and operating model in line with changing consumer tastes and buying habits, President and Chief Operating Officer James Quincey said in February at a Consumer Analyst Group of New York (CAGNY) conference.
James, who will become CEO on May 1, said the company will focus on driving revenue growth by building and bringing to market “consumer-centric” brands – including more low- and no-sugar options and drinks in emerging categories – and prioritising beverage transactions and value share over sales volume as it has in years past. This new strategy will be powered by a leaner operating model and a digitized business enterprise, he added.
Here are key takeaways from Quincey’s presentation:
Growing the business while reducing sugar
The company is taking added sugar out of its drinks across the portfolio by reformulating existing beverages while preserving the taste consumers love, and by rolling out
“We’ve been very clear that for us to drive sustainable, profitable growth of our brands, we also need to encourage and enable our consumers to control added sugar consumption. We are making a very conscious effort to not just expand our portfolio, but to shape our portfolio in a very deliberate way,” James said.
Investing in beverage categories consumers want
Coke will broaden its portfolio in five category clusters including sparkling, energy, dairy/juice/plant-based, water/enhanced water/sports drinks, and ready-to-drink coffee and teas.
“We have perhaps in the past spent more time focused on the next-largest categories, volumetrically, rather than those most on trend with consumers and that are of the greatest value to us,” James said.
The company will continue to innovate locally, he added, noting that approximately 75 percent of the company’s billion-dollar brands were created in the field. “We absolutely see the likely trajectory is accelerating our own innovation and scaling brands that are working, such as smartwater or Honest Tea,” he explained, “but also continuing to invest in smaller companies and make acquisitions to bring more billion-dollar brands into the pipeline.”
Bottler refranchising almost complete
“The end is in sight,” James said of efforts to sell company-owned bottling operations around the world. “But refranchising is not an end in and of itself. It’s an enabler of greater execution. Better marketing and better execution leads to faster revenue growth.”
Leaner, faster operating model
Key to driving this new strategy forward, James said, will be a more agile operating structure that drives quick action in the marketplace. “We will adopt more of a tech company modus operandi rather than inventing the perfect thing and taking a long time doing it. We need to get out there faster and take more risks.”
He concluded, “The net result is intended to drive the growth strategy – to grow the top line and improve our operating margin.”