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Muhtar Kent's New Coke

By:  Patricia Sellers, Fortune May 10, 2012
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Muhtar Kent's and Coca-Cola


In his four years as CEO of The Coca-Cola Company, Kent has cranked up profits and trumped Pepsi in the beverage wars. Now he is shaking up Coca-Cola's culture and remaking the company in his own image.

FORTUNEMuhtar Kent, the son of a Turkish diplomat, grew up in Thailand, India and Iran, and he runs a company that operates in more than 200 countries. So it is rare for him to visit a place he's never been before. Yet, as we travel by van out of Shenyang, a bustling metropolis of 7 million people, the Coca-Cola CEO quickly finds himself in uncharted territory: an increasingly desolate expanse of land in China's northeast, the nation's former rust belt. Then, eight kilometers from our destination, we are greeted by a ribbon of red banners — 1,520 of them — leading the way to a new bottling plant, Coke's 42nd in China and its largest to date. Hundreds of workers, all in bright red hats, cheer his arrival. "China will be Coke's largest market," Kent says. "I can't give you a time. But it will happen."

This unflagging confidence that China will more than double its sales of Coke products to leapfrog Mexico and the U.S. and become the company's No. 1 market confirms what many investors (and millions of consumers) have come to realize: Kent has put Coke (No. 59 on the Fortune 500) back on track — after years of mismanagement — and he's set up the beverage giant for significant growth around the world. Since he ascended to the CEO job in July 2008, he's redefined Coke's culture and replaced about 70 percent of its senior managers, filling the ranks with operators who, he says, "know how to generate results." The new team has ramped up spending, energized Coke's marketing efforts, and cranked up the dealmaking machine: The company is discussing a potential partnership or possible investment in energy-drink maker Monster Beverage. Coke has been busily integrating its $4.1 billion purchase of Glacéau's vitaminwater, and Kent personally devised an intricate $12.3 billion deal that restored company control of its bottling operations in North America and positioned Coke to ignite growth in a once-stagnant market. The upshot: Revenue last year soared 33 percent to $46.5 billion, in part because of the bottling deal, and operating profits rose 20 percent to $10.1 billion. The stock is up 48 percent during Kent's tenure while the S&P has risen 10 percent. Shares of rival PepsiCo (PEP)? Up only 5 percent Coke (KO) and Pepsi perpetually seesaw; when one is up the other is down, an uncanny pattern that seems destined to continue. Right now it's Coke's — and Kent's — time. Coke is the No. 1 soft drink in the U.S., and Diet Coke has surpassed Pepsi as No. 2 in the category. Coca-Cola has built $15 billion brands, including Sprite, Fanta, Minute Maid, Powerade and Dasani water. While PepsiCo investors are critical of Indra Nooyi's performance, Coca-Cola's shareholders and directors are feeling content. Herbert Allen, the CEO of investment firm Allen & Co., calls Kent "the best chief executive Coke has had in 25 years."

Kent aims to double Coke's business by 2020, no small feat for a company on track to hit $48 billion in sales this year. To achieve that ambitious goal, he is pushing Coke to be more global, agile and entrepreneurial — in essence, more like himself. "I've never met anyone so intense," says Coke board member and IAC chief executive Barry Diller, who is buying Coke stock for the first time. During a nonstop, five-day trip through Asia in late March, the 59-year-old Kent constantly exhorted his employees and managers to act with urgency. "This is your once-in-a-lifetime opportunity," he tells them. "Don't miss it."