ATLANTA – Coca-Cola is speeding its transition to a total beverage company and has a renewed focus on innovation and growth, President and CEO James Quincey told more than 120 investors and financial analysts Thursday at the company’s global headquarters.

In Coke’s first major investor gathering since 2009, Quincey and other senior leaders explained how the company is expanding its consumer-centric product portfolio, quickly scaling wins from market to market, and embracing an experimental, test-and-learn approach.

“We must be more agile and get things to market quicker,” Quincey said. “We operate in 200-plus countries, so having a success in one country frankly doesn't move the needle. The needle only really moves with a big success in more than one big country. So lifting and shifting… the best and most successful ideas around the world is absolutely critical to creating more billion-dollar brands in a diverse portfolio.”

For example, the company will launch soy-based beverage brand AdeS – a top performer in Latin America – in Europe early next year. Similarly, Honest Tea and smartwater recently made the jump across the pond from the U.S. to the U.K. And the company’s central and eastern Europe unit recently adopted Coke North America’s Venturing & Emerging Brands (VEB) model, which takes an entrepreneurial approach to investing in, nurturing and incubating up-and-coming beverages.  

Over the last few years, Coca-Cola has been returning ownership of its bottling operations to independent companies around the world. This newly refranchised system returns the company to its core focus on building and nurturing brands and empowers a network of 250 bottling partners to bring the “total beverage company” vision to life in the marketplace.

“We’re driving a culture change in the way we operate, the way we engage with the bottling system, and the way we go to market collectively,” Quincey said.

Fransisco Crespo
Chief Growth Officer Francisco Crespo explains how Coca-Cola is taking a disciplined approach to building its brands. 

'Growth is not an objective... it's a discipline'

Chief Growth Officer Francisco Crespo introduced on a new concept for Coca-Cola: the discipline of growth. “Growth is not an objective… it’s a discipline,” he said. “When you practice that discipline, the outcome is growth.”

Taking a disciplined approach to growth includes building a portfolio of brands with what Crespo calls “quality leadership.” The end result: stronger profit margins than the competition.

“Rather than telling consumers what they should be drinking, we will humbly align our portfolio to follow their tastes, their needs,” Crespo said.

'Rather than telling consumers what they should be drinking, we will humbly align our portfolio to follow their tastes, their needs.'

Crespo outlined three broad categories: explorer brands, challenger brands and leader brands.

Explorer brands like Honest Tea grow by establishing a differentiating edge through startup-like incubation. “Quality leadership starts with edge… our competitive advantage,” he said, citing the Simply juice brand in the U.S. as an example. “Edge requires discipline and consistent over-investment and over-execution.”

Brands ideally graduate from explorer to challenger status. The biggest winners become leaders in their respective categories, like the iconic Coca-Cola brand in much of the world. “These are three disciplines: the discipline of entrepreneurial audacity, the discipline of the fighter that has the stamina to never give up, and it is the discipline of the wisdom of the leader.”

Developing and launching beverages based on consumer tastes and needs is paying off, Crespo said. For example, retail sales of Coke Zero Sugar, which launched recently in the United States, are up 13 percent in 2017. And Fanta, which was updated with a new bottle design, new formulation and new marketing, is up 8 percent year-to-date. “There is a lot of value to be captured on our leading brands,” Crespo said.

Senior leadership on stage
Senior leaders of The Coca-Cola Company take questions from investors.

Coca-Cola’s consumer-driven innovation also includes a growing presence in natural, craft, organic and premium sparkling categories, through brands like Schweppes (Great Britain), Appletiser, Vio and Blue Sky (U.S.). The company is also adding value to the Coca-Cola Trademark with extensions such as Coca-Cola Coffee in Japan and Australia.

Crespo said this focus on smaller, but highly profitable, categories aligns with the company’s shift from volume to value. “Instead of defining volume as the sole metric, we will find ways to empower our brands with the ability to capture transactions and revenue.”

'Clear destination, great foundation in an attractive industry'

Coca-Cola is embarking on its total beverage company mission from a position of strength, Quincey said, citing its global category leadership positions in sparkling, juice/dairy/plant, hydration tea/coffee and total nonalcoholic ready-to-drink (NARTD) beverages. Since 2007, the company has more than doubled its portfolio of billion-dollar brands to 21.

“We have a fantastic strong foundation of brands, distribution and know-how,” he said, adding that the growth of NARTD beverages is outpacing most other CPG categories. “We have got a clear destination, a great foundation, and we're in a very attractive industry,” he said.

'If we're not curious about how the consumer is changing and we're not curious about the customer strategy and how they create value, then we're not going to come up with the right ideas. If you are not bringing in divergent ideas… then you're missing a chance.'

The company’s projected organic revenue growth of 4 to 6 percent between now and 2020 could drive $150 billion in revenue.

“We know there is a lot of value in our leadership positions that we can and will capture by chasing revenue, not volume, by better connecting our brands with those consumers and by going after niche and premium spaces,” Crespo added. “That money is good growth for us and will help us fund the experiments we need to explore.”

The discipline of growth will require Coke to build muscle in several key areas, including segmentation, supply chain and experiential marketing, to digitize its entire ecosystem. “The journey is only beginning,” Crespo said.

It all starts, Quincey said, inside the four walls of Coca-Cola.

“We have to be curious,” Quincey said. “If we're not curious about how the consumer is changing and we're not curious about the customer strategy and how they create value, then we're not going to come up with the right ideas. If you are not bringing in divergent ideas… then you're missing a chance.

“If we can't become faster, more experimental, cycle faster through ideas, experiments, insights and learnings – and on to the next iteration – then we won't be able to expand not just across categories, but across the number of countries we need to succeed in.”



This article includes certain "non-GAAP financial measures" as defined under U.S. federal securities laws. Refer to our third quarter 2017 earnings release issued on Oct. 25, 2017, and related supplemental information, available on the company's website at (in the “Investors” section), for full financial results and a reconciliation of non-GAAP financial measures.

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