SLADE KOBRAN: What macro trends are influencing the work you do at Coca-Cola?
JERRY WILSON: One is rapid urbanization, where we see more than 700 million people moving into cities across the globe over the next decade. On top of that, somewhere in the neighborhood of a billion people will rise to the middle class. Those trends will drive tremendous growth in per capita income. For a business that today enjoys 1.7 billion consumer transactions a day, these are very healthy trends and position us well for tremendous growth.
You’ve spoken about a new paradigm that is unfolding in light of changes in the global economy. What exactly do you mean by that, and how is Coca-Cola taking advantage of it?
Consumers are changing at a rapid pace, whether it’s reacting to the recession or reacting to China growing into the world economy. Recognizing consumer demographic changes and lifestyle and emotional changes allows us to understand customers better and bring meaningful solutions to meet their needs. In doing so, the ability to adapt, to bring more beverages to consumers in new ways while being true to our core business, is important. This is something that we’ve really recommitted to—the power of our core sparkling beverage business all around the world, from the Coca-Cola portfolio to Sprite to Fanta. Our sparking portfolio is the lion’s share of our business, so we must continue to be relevant with those core brands while we bring out new innovations. Today, we have 15 billion-dollar brands in our stable—that’s 15 of only 31 beverage brands in the world that are at $1 billion. We’re very committed to building winning non-alcoholic beverage brands that have scale and reach.
How is this new paradigm affecting your partnerships with retailers?
We have a very unique, high-demand category. It’s a fast-turned item in most stores. The inventory comes in and the inventory moves out very quickly, so it’s a good cash flow business for retailers. However, we have to begin with the shopper at the front of the conversation, which is unique when compared with relationships based only on price-level negotiations. At the end of the day, we’re talking about building new capabilities to work with retail partners to be able to bring winning solutions to life. It’s not to our advantage or the retailers’ advantage to just pump a lot of SKUs into the store; they don’t move and they take up space for fast-moving items that are then out of stock. In that case, we could end up over shelving items that may not meet the needs of that particular shopping experience, and under shelving what is in high demand. The other thing we’re looking at is matching up future consumption with immediate consumption in different shopping experiences. This is something that we see consumers demanding more and more; they want a Coke to drink on the way home. They may be loading up the pantry, but they’ve got a 20-minute drive home and they want a Diet Coke for that trip. We want to make sure that’s at the right location in the store, and it’s got to be cold, properly priced, and in the right package.
With such a high-volume business, how do you collect and manage customer data and then turn it into something that allows you to create a better customer experience?
We’re uniquely a global brand with local business. When we are at our best, we are connecting one perfect shopping experience at a time, one store at a time. This works by being very connected with every single location, through our bottling system. At the top end, at a large modern trade customer, we need to understand the core growth strategies that are in place so that we can be consistent with those strategies—from the store to the C-suite to everywhere in between. Connecting those dots is really what allows us to then invest behind growth platforms.
Has this focus on collaboration been well received by retailers?
We’ve been in the customer business for 125 years, beginning with Jacob’s Pharmacy in Atlanta. We recognize the importance of working with our customers to win; it’s in our DNA. The challenges of retailing today, and the challenges of growing publically traded companies today, can lead to focusing on short-term wins; it can lead to thinking about the business on a very narrow horizon. Collaboration is not quickly rewarded in the compensation programs of many companies. People are compensated for selling their brands to retailers, and retailers are compensated on the gross margin that they negotiate from manufacturers. Rewards drive behaviors, so when we have different types of rewards structures in place—ones that are focused on shopper satisfaction or supply chain efficiencies—there’s a lot more shared value in that type of conversation. We have examples of many retailers with whom we have that type of relationship today. Those are the retailers that are generally growing the category at a faster rate. It’s a strategic decision of executive leadership on both sides of the fence to have a collaborative partnership. It’s a two-way street.
How does Coca-Cola coordinate using public social networks, such as Facebook, with internal programs like the My Coke Rewards program?
It all fits together. It’s all part of allowing the consumer to interact with Coke on their terms. We have millions of My Coke Rewards loyalists who love the gaming aspect of accruing the points and looking at the prizes they can win. It’s fun because they’re brand loyalists and now they’re engaged in an activity that makes them interact even more with our brands. That’s what we want. We want a relationship with our consumers that is a two-way conversation. Facebook allows that from a market up perspective. We see a field of multiple activities in the social space, all the way down to mobile phones, that allow people to interact with Coke on their terms.
We’re still learning how to leverage social networks. We want to make sure we don’t overstep the trust boundary. It’s a fine line between winning in social networking and becoming obnoxious in social networking. We’re erring right now on the side of wading into the pool rather than suddenly issuing Coke ads every 30 seconds to cell phones. Whatever we do around mobile technology and social networking will be focused on helping to open happiness for our consumers. That’s what we’re all about—simple moments of happiness. Embedded in that will be helping consumers be more happy, whether it’s through more transparency, nutritional labeling that helps shoppers make decisions, or fun YouTube videos. We had a good example on YouTube recently: We put this magical Coke machine in a university, and as people put money in, a sub sandwich came out with a two liter bottle and flowers. It was amazing to see how viral that became. People are thirsty for happiness, and we can help bring that to life.
I would submit that one of the earliest, if not the first, organized consumer-product social networks formed when we launched New Coke back in the 1980s. We learned through that launch what it was like when society organized around an issue. We learned very directly that we don’t own the brand—the consumers do. Fortunately, we responded quickly. We brought their Coca-Cola back and it taught us to always keep the consumer at the front of the line.
Having been at this for, as you mentioned, 125 years now, how does Coca-Cola keep things fresh?
That’s a great question. We find unique ways to keep our brands fresh through constant innovation and by staying relevant to what’s important in consumers’ lives. For example, last year we were able to bring FIFA World Cup to life all around the world, and did so in ways that had great relevance in today’s marketplace.
We often ask ourselves, what is the occasion for using our brand? Ultimately, how will it be used? What brand is best suited for that occasion of use? How do we bring it to life within our customers’ growth strategies? We have a very sequentialized way of thinking through it.
We’re launching 1.25 liter contour bottles in the U.S. right now. Over the last couple of years, we’ve replaced our straight wall, two-liter bottle in the U.S. with a contour bottle that we’ve had in many markets around the world. Just by doing that, it reminds people of the heritage of Coca-Cola. In our business, packaging is very important. The content of our creative in general is very important. Right now, in the food-service business, we’re launching new fountain dispensers that we completely reinvented. Using micro-dosing technology developed by the medical industry, our new Coca-Cola Freestyle can deliver over 120 different beverage options to consumers and do so in the footprint of a normal fountain machine. And with a visual screen, they can create their own combinations. Diet Coke with lime? Of course. Vanilla Coke with orange? Boom, it’s done, served fresh like it just came from a bottling plant. Innovation—in products, packaging and equipment, and in connecting with people in relevant ways—will always be a part of who we are, and will be delivered in ways that are uniquely Coca-Cola.