Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
Speech to the Commonwealth Club San Francisco, CA
November 16, 2011
As prepared for delivery
It's always a pleasure to visit California and particularly San Francisco -- one of the most aesthetic and dynamic cities in the world.
I'm delighted to join you at the Commonwealth Club and share a bit about one of my favorite topics: the future.
In moments of quiet and reflection, I often think about what the world is becoming rather than what it is. And that's always worked well for me.
Over 30 years ago, I was reading a newspaper in New York and stumbled across a classified ad for an entry-level position at The
I was lucky; I got the job, traveled around the country and later the world. I also picked up a few things about sales, distribution and operations, and whole lot about human relations. In time, of course, my initial faith and optimism in the future of
When I came to work for
There were many striking parallels to the situation we find ourselves in today.
And America, as we all know, didn't collapse. On the contrary, America got stronger... much stronger... and that's because this great nation did what it has always done best: America innovated and reinvented itself. Instead, America replaced up to 40 million jobs with 80 million new, primarily high tech jobs.
Much of that reinvention began right here in the Bay Area, by a high-tech industry that barely existed in 1980.
My goal today is not to focus on the past. But I think we can learn from that example.
Beyond that -- and let me state in plain English and put my cards on the table -- I think our future remains bright. Very bright. In fact, one day, people may well talk about this decade the way they talk about the 80s and 90s.
That's not to say that I think today's anxiety and frustration are misplaced. It's turbulent out there. North America and much of Europe, as we all know, are still in for an uphill climb in terms of recovery. Less so for Eastern Europe, and certainly less so for many of the "crisis unaware" markets we see today in parts of Latin America, Africa, and Central and South Asia.
Most economists now believe global GDP will grow around 3.0 percent this year. That said, emerging and developing economies will likely grow in excess of 6 percent while developed economies will grow on average less than 2 percent.
So it's really a mixed picture. And depending on where you are in the world, it will be a mixed recovery.
Operating in 206 countries, though, gives us a unique perspective on the world.
I believe that there are four consistent and inter-connected themes that we all need to focus on as we collectively search for ways to rekindle and unlock the code for growth. I see these four themes as:
3. Social Harmony, and
4. Sustainable Growth
Let's start with confidence. Public trust in our institutions, as you very well know, has been at historical lows these past few years. Not just in government and Congress, but in big business, education, NGOs and even religious institutions.
Collectively, we must work to restore trust. And ensuring long-term trust will require repairing our governance models.
This can't be done independently by one organization. It's going to require continued hard work and cooperation among business, government and civil society to ensure that we have processes in place for greater scrutiny and long-term accountability.
The unrest we've seen in Greece, Portugal, Spain and other markets... the massive uprisings across North Africa and the Middle East... this has all grown out of a lack of confidence... a lack of trust... a breakdown in social harmony. There's a feeling among many of lost opportunity… especially among our young.
When people begin to feel that their social mobility has been impaired, we begin to see cracks in the mosaic of social harmony. Those cracks can only be repaired by growth, investment, innovation and job creation.
No amount of stimulus or new taxes will ever work. It's wrong to assume we can tax our way to prosperity. That's not how a free market system works. That's not how business works. Quite frankly, that's not how human nature works.
Collectively, we -- all of us -- have to grow our way out of this problem.
That's going to require investment and innovation on our part... smart, intelligent incentives on government's part… modern, simple tax reform suited for the 21st Century… and a spirit of cooperation on everyone's part.
We know it can be done. And we believe America must lead the way.
Make no mistake: The United States is a growth market of immense opportunity. Forget everything you hear about America's decline... or diminished relevance. Instead, ladies and gentlemen, let's look at the facts.
1. We're growing: Over the next 40 years, the U.S. is likely to add 100 million people. Our fertility rates -- the highest in the developed world -- are higher even than much of the developing world.
2. We're young: By 2050, only a quarter of our population will be over 60, compared with 31 percent in China and 41 percent in Japan -- and even higher percentages in much of Europe.
3. We're multi-cultural: The U.S. remains the world's top destination for immigrants. In fact, today, according to demographic expert Joel Kotkin, half of all skilled immigrants come to the U.S. Since 1990, these new Americans have launched nearly a quarter of all venture-backed U.S. public companies.
4. We're enterprising: Two out of 3 new jobs in this country are created by businesses less than 5 years old. Women entrepreneurs alone account for $4 trillion dollars in GDP in the U.S. That's nearly the entire GDP of China today.
5. We're innovative: The U.S. produces more patents and inventions than the rest of the world combined.
6. And we're generous: Today, Americans give over $300 billion dollars a year to charitable causes. The American ethic of service and philanthropy is alive and well, and continues to serve as a beacon for the rest of the world.
I might also add that no other state in the union is more defined by these six drivers of growth than California. And in fact, the Golden State -- despite recent economic troubles -- is at the heart of
Here in California, we have nearly 7,000
We value our success in this state, and we're investing in it further. We've replaced 80 percent of our fleet here in Northern California with hybrid trucks. We've installed environmentally responsible blow molding in our bottling plants. We're using hydrogen cell technology in our pallet jacks and forklifts. And, we've launched Plant Bottle, a recyclable PET bottle made from up to 30% plant material.
Equally importantly, we're investing in our customers -- the businesses that sell our beverages.
If we're going to succeed, we need our shopkeepers and restaurant owners to succeed as well. It's that simple. In short, we want our beverages on store shelves for as little time as possible.
And we measure that, what we call "velocity." As you'd imagine, velocity is a good thing for our retailer and restaurant partners. When inventories are turning, shoppers are coming in frequently and often buying more than just beverages. In this way,
In addition, our products are often very significant sources of cash flow and profitable revenue for our customers. When our retail partners do well, they generate jobs, investment and hope.
I want to tell you about one such business partner, operating right here in San Francisco. Her name is Yan Chu and she owns the Java Source Coffee House, over on Clement Street.
Ms. Chu immigrated to the United States over 20 years ago from China. Like so many new Americans, she came here searching for economic opportunity and personal dignity. And like so many great enterprising San Franciscans, she saw a need in the marketplace... invested her money and her dreams… and worked 20 hour days to build a business.
Today, she's counting on
Together, we've still got much work to do... but we will get there.
And tonight I've asked Ms. Chu to join us so that she can hear my pledge to her in person.
Ms. Chu -- please stand. Thank you, Ms. Chu.
Ladies and gentlemen, there are millions of Ms. Chus all around the country tonight who believe in the future of this great nation... have staked their future in it... and will help drive it forward in the years to come.
In the time I have remaining this evening, I'd like to highlight four critical areas where we must continue to serve as a beacon for the world... and a beacon for the next generation of Americans who will grace our shores.
And let me preface this by saying one thing. I have a fundamental belief that the world needs a strong America now more than ever. A strong American economy. A strong American conscience. And strong American diplomacy.
I'm not a social scientist or politician, but I am a business person, and I feel we need to continue to push forward four uniquely strong American traditions.
3. Entrepreneurship... and...
4. International trade
These four critical areas have made the U.S. the greatest economic power the world has ever known. They're also the keys to the future growth of both California and the country.
Let's quickly look at each one, starting with innovation.
While it would be tough to imagine a drink more widely and enthusiastically loved than
For our fans and our customers, choice is good -- and we deliver. .. Sparkling and still… Calorie, mid-calorie, non-calorie... Juices, teas, coffees, sports drinks and many more.
One of our most important new innovations is called
We believe Freestyle will be a game-changer for us, giving our fans more choice and interaction and providing us with real-time preference data. It's also environmentally friendly, eliminating 30 percent of the water and packaging associated with our traditional fountain business. In time, this will represent a significant green advantage for us.
Today, there are 1,500 Freestyle fountains in 1,000 locations in 39 states including California. I should also mention that
One more thing on innovation.
Today, we have a very promising partnership growing with Bloom Energy -- a California company headquartered just down the road in Sunnyvale. We're working with Bloom Energy to install hydrogen cell batteries in our production facilities, allowing us to cut energy consumption 30 to 35 percent at a given location. To date, we've completed an installation at our Odwalla facility near Fresno, and we have another location pending, with an announcement expected early next year.
Second, I mentioned the importance of education. Everyone says America needs to invest more in its schools, and I think that's true.
But I think we also need to remember that our education system, particularly our higher education system, remains the envy of the world. Leaders of other nations send their kids to our universities for good reason.
Could we do some things better in our schools? Absolutely.
We need more science, more engineering, more math… and yes, more physical education. We need more accountability in our elementary, middle and high schools. We need to set higher standards for students, teachers and administrators.
But we have a strong base. And we must continue to build from a position of strength.
Here in California, of course, you have some of America's very best schools at every level. Your university system is -- without question -- the best in the world. And that bodes very well for your future.
For our part,
And finally we need a better and more progressive system to retain in the U.S. some of those foreign students who were provided a great education.
Right here in San Francisco, we're proud to be providing a multi-year, $500,000-dollar grant to fund the
This is in addition to our
The third area I mentioned is entrepreneurship. We must never forget that small businesses and big businesses depend on each other.
Large corporations are often the biggest customers of small entrepreneurs. In fact, I believe one of the great untold business stories of our time is the mutual dependency of American businesses, large and small.
Each year, the
Many of these suppliers and retailers are small businesses. And all of them have the potential to become big businesses.
We want to be there with them on this journey, just like we were with Safeway on Day One... Mi Pueblo on Day One... and that sleepy little hamburger shop that started down in San Bernardino (McDonald's).
Fourth and finally, I want to emphasize the importance of international trade.
America depends on global companies and global trade. Today, global American-based companies, including
Success abroad creates jobs and investments at home. And that means global U.S. companies are every day creating real and tangible benefits for Main Street America.
Take the case of our Main Street citrus plant in Auburndale, Florida. Yes, it's really on Main Street!
Last year, I was down there to help inaugurate a $115 million dollar expansion of our operations and to meet with our local suppliers who provide us with citrus for our growing global juice business.
In fact, one third of the entire Florida orange juice crop is now processed at our Auburndale facilities, where 135 new jobs have been created and more than $60 million dollars has been infused into the local community.
Here's something you might find interesting: The capital improvements we've made to our Auburndale facilities are a direct result of the intense demand we're seeing for our juice beverages in China.
In fact, about 80 percent of the orange pulp processed at our Auburndale plant will be exported to China alone. That's right -- our business in China is creating jobs and economic stimulus right here in the U.S.
Trade, of course, is a two-way street. Having access to other markets means opening up our own. That can take faith, even courage.
But it's encouraging, amidst all the inaction, to see Washington, at long last, approve new free trade agreements with South Korea, Columbia and Panama.
As Chairman of the U.S.-China Business Council, I want you to also know that we are extremely focused today on attracting more Chinese investment to California and all of America.
After all, our nation's history is pretty clear: America became a global power by being a global player. We've never profited as a nation from closing our minds, our borders or our ports of entry.
When we think broadly, innovate actively and engage the world, we always do better.
And there's no better, more potent example of this than this most American of states. California has always been in a constant state of renewal and reinvention. And you've long been at the tip of the spear of American change.
In the summer of 1976, my cousin and I took a road trip through this amazing state. Those were not, as I noted earlier, America's brightest days. In the wake of Watergate and Vietnam, some wondered if our best days were behind us. And, yet, even then, I saw so much potential and opportunity -- and I chose to make my life here in the United States. Before long, I was in New York responding to that fateful help-wanted ad from
Tonight, I believe we're already seeing the beginnings of the next great cycle of American growth.
It won't happen on its own. Each of us will need to be part of the effort. But, together, there's no question we can make it happen.
As we do, some of the most important decisions, some of the most critical choices for growth, will be made here, in this once, now and always Golden State of California.
Thank you again for your hospitality, and I wish each of you a wonderful holiday season.
Thank you very much!