The Hindu Business Line : New products, consumer focus put fizz back in Coke

If today the Coca-Cola Company is on a “high growth” rate and clocking double-digit growth rates in many countries, including India, it is thanks to an improved and innovation pipeline and its “winning culture”, the President and COO, Mr Muhtar Kent, told a group of visiting Indian journalists.

He recalled that in 2004 when Mr Neville Isdell returned to the company as Chairman and CEO, “it was a very different environment and the company took a hard look at itself and decided that it’s going to win again.” After a hard look at things “that were not working”, an innovation manifesto was devised and the “winning culture is coming back.” The present rate of growth was being driven by better consumer marketing, better relationship with its bottlers, the ongoing ‘live well, live happily’ campaign in 200 markets, and the launch of Coco-Cola Zero in 50 markets, Mr Kent said.

Minute Maid, the juice which has been launched in India too, has become the top-selling juice in China and Korea. Defining the ‘winning culture’ of his company, Mr Kent said “it is all about believing that we know where we are going, how we will get there and ensuring that people are having fun again in what they do everyday.”

Absence of a “strategic alignment with our bottling partners, not focussing on consumers and our customers sufficiently, and not having an innovative pipeline”, had now been addressed. Giving the credit to Mr Isdell for the new strategies and practices, Mr Kent admitted the clean-up was a “painful, painful process. But now we are executing much better, we are focused on the outside, we are fully aligned with our bottling partners, we have a great portfolio, a great pipeline to come and we believe in what we’re doing and we’re having fun.”

On why Coke Zero, which had been successfully launched in 50 markets with a good success rate, had not yet been launched in India, Mr Kent said the company’s portfolio in India was “unique and something we don’t have anywhere in the world; there is the local brand called Thums Up, there is Coca-Cola, Sprite, Fanta and so on. In India, we have so much more room with existing brands; we already have a dual cola.” So the scope for a third cola in an already two-cola market was limited. “Will it come one day, when we think the time is right? Absolutely. When? I can’t tell you; I don’t want to let my competitors know when,” he added.

He ascribed “historical reasons” for why Thums Up sells more in India than the trademark Coca-Cola.

“There is no other market where Coke had to leave for so many years and where the vacuum was filled by a local brand. Before Coke exited India, it was the biggest brand.”

On growth in different markets, Mr Kent said it was good across markets. “We have a very good growth rate in Latin America which is a very developed business, high per capita, etc; we’re getting growth out of EU, though at smaller levels, we’re getting growth out of India, China, Russia, Brazil - all growing at double digits. India which was not growing till a year ago is beginning to grow. Philippines, which was always declining is now growing. Japan, which is probably the most developed non-alcoholic beverage market in the world in terms of packaging, portfolio, number of products, consumer intricacies, customer complications and intense competition, is now growing.” The Japanese market, which had not seen a growth in sparkling beverages and trademark Coke since 2000, was now growing at double digits.

On future strategies Mr Kent said that the company would continue its focus on “better marketing, better research, better consumer and shopper insights and much better customer relations, and very, very innovative pipelines. Coke Zero is growing in every market and seeing very high growth rates, particularly in Japan, where it was launched this July.”

He and his colleagues were all the time focused on changing customer tastes and packaging needs and preferences. The constant endeavour was to stay ahead of the customer and consumer needs and “to become the most respected company in the world.” Deficiencies in the portfolio were addressed by what he called “bolt-on acquisitions” in mineral and vitamin water, ready-to-drink tea as well as juice. So was Coke in the race for Snapple? “I can’t really comment on that”, was his cryptic response.