NEW YORK – Incoming Coca-Cola North America President Jim Dinkins shared how the company is driving growth in its flagship market by building an increasingly diverse portfolio of brands and more today at the Beverage Digest “Future Smarts” conference.
Dinkins, current president of the Minute Maid business unit and chief retail officer for Coca-Cola North America, will officially succeed Sandy Douglas on Jan. 1, 2018. Here are eight things we learned from his remarks, which mirrored themes he presented at Coca-Cola Investor Day on Nov. 16:
A Big Market With Big Opportunity
The $200 billion nonalcoholic ready-to-drink (NARTD) industry in North America is projected to add $30 billion of growth over the next three years. “And $20 billion of that growth will come from categories where we have less than a 25 (percent) share,” Dinkins said, adding that over $7 billion will come from categories the company leads.
Refranchised Bottling System is Focused and Energized
Coca-Cola recently wrapped a decade-long process of returning ownership of its bottling operations to nearly 70 local businesses who are now investing in their markets and sharpening Coke’s ability to serve its customers and communities. “We’ve moved from one bottler (Coca-Cola Enterprises) having about 70 percent of our U.S. business,” Dinkins said, adding that 30 percent of Coke’s U.S. bottlers are under multicultural ownership. “We’re seeing very positive results… when you look at it over multiple months, what you can see is the business is improving.”
Value Over Volume
Coke has overhauled its volume-driven growth model in North America through a focus on key revenue-focused metrics: incidence, transactions, margin growth and value share. This transformed strategy is grounded in giving the consumer the choices and packages they want, for the occasions they want, at prices they are willing to pay. And it’s working, according to Dinkins, who said Coke’s organic revenue and price mix in North America are both up 4 percent over the last three years.
Coca-Coca Zero Sugar Off to a Sweet Start
Earlier this year, the company replaced Coke Zero with Coca-Cola Zero Sugar. Dinkins credits an improved recipe, popular packaging and targeted marketing focused on the brand’s partnership with ESPN College GameDay with delivering a “7 percent change in the trajectory of the business” and double-digit growth for the brand.
Unique Routes-to-Market Provide Competitive Advantage
Coca-Cola North America is building its brands through three advantaged routes-to-market: direct store delivery (DSD), via a network of 68 independent bottlers; the largest distribution network for chilled beverages in the U.S., via Minute Maid business; and fountain, which continues to play a critical role in driving profit growth, innovation and customer value creation.
Finding and Nurturing ‘Explorer’ Brands
Coke’s Venturing & Emerging Brands (VEB) unit identifies and invests in emerging beverages, using the company’s market insights, commercial capability and distribution muscle to help them grow with the scale of the company’s vast U.S. system. VEB looks for the right business model – whether minority investment, majority investment or an outright acquisition. Dinkins cited a few VEB wins, highlighting Honest Tea as a brand that successfully “graduated” from the VEB stable of brands into the broader Coke portfolio, and noting that fairlife milk has captured 75 percent of the value-added dairy category’s growth in 2017.
Engaging Consumers Through Digital
Coke is accelerating the digitization of all aspects of its business – from consumer engagement, to customer management, to internal processes. For example, the company recently sunset its My Coke Rewards under-the-cap consumer loyalty program and replaced it with the Sip N Scan platform, which lets consumers scan codes on their mobile phones to access real-time content, rewards and more.
Embracing the e-Commerce Revolution
Dinkins said the company is “covering all areas” of the e-Commerce map, which is reshaping the way people buy (and receive) foods and beverages. This includes partnering with meal-kit delivery services to pair Coke beverages with menu items, tacking on beverage suggestions to orders placed via artificial intelligence (AI)-powered voice interaction services, giving shoppers easy ways to add drinks to orders for pickup at e-grocery “click and collect” lockers in urban areas and on college campuses, and finding ways to drive beverage purchases through restaurant customers’ online/mobile ordering apps.