BOCA RATON, FLA. – 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 today at a Consumer Analyst Group of New York (CAGNY) conference.
Quincey, 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 prioritizing 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 Coca-Cola Zero Sugar and other low-/no-sugar brands globally. Expanding availability of smaller packages like mini cans is another top priority.
'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.'
“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,” he said. “We are making a very conscious effort to not just expand our portfolio, but to shape our portfolio in a very deliberate way.”
Quincey said the company supports the World Health Organization (WHO) and other public health bodies’ recommendations to keep added sugars under 10 percent of daily caloric intake and sees “exponential” growth opportunity within these recommendations Read more about the work the company has been doing across its portfolio to reduce added sugars.
Investing in beverage categories consumers want
“The Coca-Cola Company has grown to be bigger than brand Coca-Cola,” he said. “The brand Coca-Cola will always be the heart and soul of The Coca-Cola Company, but the company has outgrown its core brand. The company needs to be bigger than our core brand.”
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,” Quincey 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,” Quincey 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.”
'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.'
Leaner, faster operating model
Key to driving this new strategy forward, Quincey 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.”