Driving revenue growth and helping our consumers make smart, healthy choices are not mutually exclusive. Coca-Cola has modernized its growth model, opting for value over volume. As people today expect to have more control over what they eat and drink, Coca-Cola is providing smaller packages and making it easier to control sugar.
Coca-Cola believes a “value over volume” approach is not only right for the business but right for our consumers as well. So, what does “value over volume” involve? For packaging, Coca-Cola has introduced small, more convenient packages, including mini cans, which continue to be a package that consumers gravitate toward. Mini cans and other smaller packages jumped from 10% to 15% of Coca-Cola’s retail value in the United States over the past six years, with retail value for mini cans growing double digits in 2017, according to Nielsen.
Coca-Cola is focused on five clear strategic growth priorities introduced in 2017, two of which are as follows: (1) accelerating the growth of its leading consumer-centric brand portfolio; and (2) driving its revenue growth algorithm. Coca-Cola’s organic revenue (non-GAAP) in North America grew an average of 4% over the last three years, but the positive results of revenue growth management initiatives are not limited to North America.
Coca-Cola Hellenic Bottling Company (CCHBC) Ireland and Northern Ireland, as another example, launched a 200ml Coca‑Cola Zero Sugar small glass package in 2017 to meet local consumer demand. The no sugar, sparkling soft drink is also expected to drive incremental growth for Coca-Cola’s retail partners–including pubs, hotels and premium cafés, where the 200ml size is popular.
As a result of revenue and growth initiatives implemented in Poland several years ago, Coca-Cola and CCHBC introduced a 200ml can into the market. Brian Smith, Coca-Cola’s president of the Eurasia, Middle East and Africa group, said, “We decided with Hellenic that it was the right pack, and we decided price through our analysis, which was essentially 80% of what a bus fare would be for young adults and teens. The right pack, at the right price, in the right locations – it is all about being consumer centric. It is a great package to go out and market to our consumer base to bring more people into our franchise.”
Coca-Cola works closely with its bottling partners to respond to the market quickly, while partnering with customers to help grow customer businesses as well. Coca-Cola uses data and machine learning to accelerate and improve our revenue and growth efforts. The algorithm is based on an analysis of data—including information about brands, products, packages, channels, competitors and more—which helps markets identify potential pricing and packaging initiatives to invest in.
At the core of the algorithm are brands with a unique, unbeatable quality that sets them apart from everything else. Those elements then benefit from the Coca-Cola system advantage. At the heart of the Coca-Cola system advantage is our world-class bottling partners who put our drinks in more hands in more places than anyone else, utilizing delivery trucks and coolers to make sure our drinks are there whenever and wherever people want them.
“We decided to invest in marketing for the new 200ml can, and Hellenic increased distribution up to 50% and put the package next to the highest frequency packages that they had in the market. The package grew 40% year-over-year and increased our immediate consumption transactions by 10% year-over-year as well,” Smith added.
The revenue growth algorithm aims to capitalize on the Coca-Cola system advantage, including strengths such as deep customer relationships.
The Eurasia, Middle East and Africa group is in the process of rolling out similar programs across approximately 25 markets, including 14 top markets in the group with CCHBC, Coca-Cola European Partners and Coca-Cola Beverages Africa.
Coke’s Latin America Group president, Alfredo Rivera, believes that Coca-Cola’s approach to revenue and growth management helps to maintain and grow the consumer base. “On revenue management, what we looked at was expanding our portfolio, particularly in single-serve packages, and focusing on magic price points to make sure that we remained relevant with consumers,” he mentioned during Coca-Cola’s 2017 Investor Day.
The renewed system focus on revenue growth is paramount in driving enhanced execution. Whether a consumer enters a store in Lagos, Buenos Aires, Lahore, Barcelona or Atlanta, Coca-Cola is focused on putting the right package–informed by data and carefully listening to what people want–at refined price points that are identified by the revenue growth algorithm.