A short time later, after traveling to Atlanta for an interview, I accepted the job as a management trainee. And this started me on an amazing, 40-year journey in the
My time with the company is now drawing to a close, as I’ve announced plans to retire as our Executive Chairman at our annual meeting in April 2019. I’ll take with me many dear friendships, fond memories and vital lessons learned along the way.
Perhaps the most valuable of these lessons is that business success is never guaranteed. Even a business like ours, with a rich heritage going back 132 years, must continuously reinvent itself to stay vibrant, sustainable and healthy. And I count it a special privilege to have been part of our ongoing reinvention over the course of my career, which has taken me across four continents.
When I started out in 1978, our business was healthy but not exactly thriving. We sold Sprite, Minute Maid, Fanta, Tab and a handful of other brands, but most of our focus was on brand Coke. Diet Coke hadn’t even been invented. And some observers were asking if our best days might be behind us.
In the 1980s, our business really began to hum, thanks to strong leadership and thoughtful risk taking. For example, the debut of Diet Coke in 1982 was a runaway success. While you might think this would have been an easy decision, it was not. Diet drinks were becoming mainstream, but a fear of diluting the Coke brand had resulted in internal resistance to extending it to new products.
As things turned out, Diet Coke’s fast start and rapid growth helped improve our fortunes dramatically. So, too, did the unsuccessful 1985 debut of New Coke, which reinvigorated the public’s love for
Many years later, another generation of analysts would begin to raise doubts about our ability to grow.
When I became CEO in 2008, our product portfolio was larger, more diverse and less reliant on sparkling soft drinks than ever before. Even so, there was a lot of work to do in order to evolve our business and position us for growth. In this way, there were echoes of the position we were in when I came onboard in the late 1970s.
Ultimately, we needed to refocus on our core business model of building great brands, enhancing value for our retail and restaurant customers, and leading a strong franchise bottling system.
Over time, we took action to strengthen our bottling system, temporarily increasing the share of company-owned bottling territories. More recently, we refranchised the vast majority of these geographies, turning them over to proven and committed franchise partners and putting our system on a winning path for long-term growth and value creation.
We also had to rethink some of the fundamentals of our business. Historically, the model had been pretty simple. The company made and sold concentrate to our bottling partners, who made and distributed finished products. This created a compelling incentive to increase total volume, as this boosted concentrate sales.
This model worked well for many years. And then it didn’t. More people started to tell us they wanted to enjoy smaller servings. We also learned consumers would pay more per ounce, if we offered them the right smaller packages in the right outlets.
We needed to refocus the system on building sales revenue, even if it meant less total volume. This required a tailored approach. In developed markets, we focused more on pricing and packaging mix. In developing and emerging markets, we built a more balanced model that continued to value increased volume.
It’s hard to overstate the scale and complexity of this change, which sometimes involved revamping contracts that had been in place for decades.
This critical shift, however, wasn’t the end of the story. Consumers were also looking for more variety in their beverage choices. So we ramped up investments to diversify our portfolio. The number of products marketed by our company expanded from about 2,800 in 2007 to more than 4,100 today.
As we grew our portfolio through a combination of innovations, acquisitions and strategic partnerships, we had to do so in ways that maintained our profit margins. And we needed to keep driving results for our core sparkling brands, especially brand Coke.
Part of the solution was embracing productivity as a business strategy. The programs we began in 2008 have put us on track to deliver more than $4 billion in annual savings through 2019. With these savings, we reinvested in our core brands, which is paying off in our results. We also invested in many new brands to help our business now – and far into the future.
Throughout, we’ve focused on doing business the right way. We know our business thrives when the communities we serve are also thriving. And, as we do business in all but two countries in the world, we have a truly global framework.
In my own travels, I’ve seen firsthand the importance of supporting economic opportunities for women. Yes, women make many purchasing decisions, but they’re also hugely important in building small businesses. This led us to launch our 5by20 initiative to support the economic empowerment of 5 million women entrepreneurs globally over the course of this decade. And we’re on track to do so.
We also committed to replenishing 100 percent of the water used in our finished products by 2020. We achieved this goal in 2015, five years ahead of schedule, and we’re working to do even more as we grow.
This was a lot of change, all vitally important. I also knew we needed to make sure we had the right leader and team lined up to lead the business into the future. On the day I became CEO, I began thinking about who the next CEO would be. And I worked closely with our board to ensure we were always developing our leadership pipeline across the world.
I was immensely proud when we had one of the smoothest CEO transitions in our history in May 2017 when James Quincey succeeded me.
Now, I’m very proud to hand over the chairman’s role to James next spring. He knows our business inside and out, and he’s done an excellent job since becoming CEO last year. Without question, his ideas and instincts will continue to change our company and system in important ways.
Over the years, I’ve learned that evolving and strengthening a business like ours is never about one person. Instead, it’s about building on our past and preparing the next group of leaders for our future. Success is never assured. It must be won – day by day and year after year – by seizing opportunities to change the business for the better.
As I look back on what we’ve accomplished and look forward to what’s ahead, I remain constructively discontent, just as I was when I responded to that fateful classified ad in 1978. After 40 magnificent years with
In closing, I want to thank our amazing system associates and bottling partners for their hard work and commitment and our board members for their invaluable guidance, confidence and friendship over the past decade. Lastly, I wish James and all of my