NEW YORK – “The Coca-Cola business in North America is strong and growing. We’re following a consistent strategy and we’re starting to see excellent results,” Coca-Cola North America President Sandy Douglas told investors this week at the Goldman Sachs Global Staples Forum. 

During a brief prepared presentation on Tuesday, Douglas described the path of the Coca-Cola North America business over the past year.

“We finished a steadily improving 2014 with a strong fourth quarter, and our first quarter in 2015 was also very strong,” he said.

Coke’s North America business is accelerating its momentum because three pillar strategies – building strong, valuable brands, creating customer value, and driving capability to repeat and sustain success – are working, Douglas explained. He also credited improved advertising and effective marketing, in part, with recent growth in the sparkling and still beverage categories. 

Douglas also emphasized the importance of the company’s strong occasion, brand, price and package (OBPPC) strategy and highlighted recent changes in refranchising the U.S. business. Combined, these efforts are helping to reshape Coke’s business in North America.

Here are five key takeaways from Douglas’ 20-minute Q&A session with investors:

1. Consumer preference is changing.

Coke is and will continue to follow the consumer. The company is meeting consumer needs through package innovations like mini cans and unique package designs. “The consumer is telling us to offer a new variety of diverse packages. We’re giving them what they want,” said Douglas. He explained that while the strategy is working – there was 11% growth in volume and 16% growth in the dollar value of smaller packages in the first quarter – it’s “still a work in progress.”

2. Health and wellness is an enduring trend.

Consumers’ desire for fresh and natural ingredients in the foods and beverages they enjoy is here to stay. The company is taking action by introducing new products and package sizes and by giving consumers choice across beverage categories. These include new brands such as Coca-Cola Life, which is sweetened with cane sugar and stevia leaf extract, not to mention the company’s portfolio of juices and waters. Douglas explained, “We’re building valuable enduring brands in each of the categories where today’s consumers want to buy beverages.”

3. Growth spurred by entering new beverage categories with new products.

Entering the value-added dairy category through a partnership with Select Milk Producers, Inc. to introduce fairlife is one way Coke is growing in the United States. Douglas explained that with all new brands, trial is important as is raising awareness, but initial reaction to fairlife has been positive. “Retail and consumer reaction has been strong and trial ahead of expectations,” Douglas said. “We think consumers looking for more protein [in their milk] and other attributes will find it and enjoy it. It tastes great.”

4. Investing in new business ventures brings opportunities for innovation.

Sandy Douglas
J. Alexander “Sandy” Douglas Jr. (download)

With news over the past year of Coke’s partnerships with Monster and Keurig Green Mountain, Inc. on Keurig Kold™, excitement is brewing across the company as to how these investments will bring about growth.

Douglas noted that Monster is very innovative in the energy category and that the company is the “perfect global partner for our system… Because of Coke and Monster’s combined capabilities, [the partnership] gives our system worldwide a winning plan.”

In terms of the opportunities available with Keurig Kold, Douglas explained that the innovative platform creates variety for the consumer. It allows Coke to grow with consumers, offering them products that may not be available in other ways.

5. Refranchising efforts position Coke’s business for the future.

Coca-Cola’s refranchising strategy in the United States is picking up pace. Several territories were transferred in the first quarter and at the beginning of the second quarter. The company is slightly ahead of schedule to transfer Chicago and Central Florida during the second quarter, which represents approximately five percent of the bottle/can volume in the United States. The territories transitioned to-date or covered by new agreements calling for transfers over the next two years represent more than 15 percent of total U.S. bottle/can volume according to Douglas.

“We are incredibly confident in the power of family owned Coca-Cola bottlers,” he said.

The presentation and an archived version of the full webcast are available here.