Coca-Cola Investors Day Outlines New Beverages, New Approach

At Coca-Cola’s first investors day meeting with Wall Street analysts in eight years, CEO James Quincey and his executive team had a lot to talk about, including shifting the company’s product lineup in step with changing consumer tastes and diversifying the portfolio away from the core Coke product.

If those priorities seem a world apart from past Investors Days which might reveal a Cherry Coke or mini-cans, it’s because the product it’s named for is no longer its core focus. Quincey and the beverage giant are facing a new world in which its flagship Coca-Cola line is experiencing a long-term sales slide because of concerns about obesity and wellness.

Quincey, CFO Kathy Waller and colleagues assured investors that Coca-Cola is taking a confident, comprehensive and multi-pronged approach that hits all the appropriate levers for growth: changing its corporate culture; overhauling its approach to e-commerce; developing more nutrition-friendly options such as smaller packages, sugar-free beverages and alternative ingredients; and, perhaps most important, continuing to diversify the portfolio away from the core regular Coke and Diet Coke products.

Coca-Cola welcomed more than 100 analysts to its global headquarters in Atlanta to hear the corporate and regional strategies for growth, and to sample an array of innovative international products in various global markets that included Coca-Cola Plus Coffee No Sugar (Australia and Japan); AdeS, a plant-based line (Latin America and, soon, Europe); Georgia Cold Brew, a ready-to-drink coffee in Japan and South Korea; and Honest Sport, an “enhanced hydration” drink in the U.S.

“Consumers are looking for ways to manage sugar intake,” Chief Growth Officer Francisco Crespo said at the Nov. 16th  investor day.

Coca-Cola also showcased innovations coming to convenience stores such as a cooler that turns a cold bottled beverage into a slushy in a few seconds through chilling technology developed in partnership with former NASA engineers, as well as a system for offering customized recipes for various drinks in personalized packages that would be shipped directly to a shopper’s doorstep via e-commerce.

Among the most potentially impactful innovations unveiled—the first-ever Coca-Cola with no added sugar sweetened only with a sweetener derived from the stevia leaf. The company plans to test Coca-Cola Stevia No Sugar in the first half of 2018 in a to-be-announced market outside the United States. Coke has used stevia to supplement sugar before, but Stevia No Sugar—which will be designated by a strip of green on a classic Coca-Cola red can and a Stevia logo with the phrase “Sweetened from a natural source 100% Stevia”—will be the first to rely entirely on stevia.

Coca-Cola Stevia No Sugar is emblematic of the new Coke—healthier, innovative and precision-marketed. Quincey told CNBC that the beverage’s “great-tasting” formula will be “far superior” to other stevia-based products, and not leave the typical licorice-like aftertaste of stevia. (Rival PepsiCo CEO Indra Nooyi a few years ago famously complained about the difficulty of using stevia alone in a cola beverage like Pepsi.)

Coca-Cola CEO James Quincey acknowledged the headwinds of change in his opening remarks: “Consumer preferences are changing, they’re changing around ingredients, whether it’d be less sugar at times, whether it’d be more natural, whether it will be organic, whether it’d be just really understanding the core provenience of where the products coming from. Sometimes it’s about where they buy them, how they buy them electronically.”

“The shift from the bricks and mortar (retail) … and the digitization of the total of shopping is part of what’s going on. You can see it in your own lives. You can see it around the world. This is not just a first world phenomenon. It’s across the developing and emerging markets. So consumer preferences are changing fundamentally and that’s making the category shift, making the products within the category shift. Of course, some of these could be represented as challenges, but for an industry or for a company  like ourselves with a great foundation and the capabilities, we can turn those into opportunities to drive much as the growth with the share gains for ourselves.”

Quincey also says Coca-Cola can be a catalyst for change, wellness and help fight the obesity that many consumers fear: “We think we can help to solve the obesity problem… we have to turn each of these challenges into opportunities.”

Quincey’s five key strategies across the company:

• Accelerating the growth of our consumer, leading consumer-centric brand portfolio

• Driving the revenue growth algorithm

• Strengthening our system’s value creation advantage

• Digitizing enterprise (“our products need to be within arm’s reach of desire, may be in the future they need to be within a click’s reach of desire”)

• Unlocking the power of our people. And in doing that, we need to make the right choices and invest for growth.

Quincey also spoke of the need to embrace “integrated, experiential brand-building. Brands are built on the experiences that consumer has, so it needs to start with the brand purpose and the brand essence; it needs to follow what is the brand strategy; what is the key occasion to activate, to build their habit; it needs to explain what is the brand age; and that has to weave across design, packaging, activation, communication. We talk a lot about precision marketing and the truth is that it’s just sending the same message, better tailored, to different customers.”

“We need to develop 21st century storytelling. So what those that means? That means that the media’s diet has changed. Those ‘meals’ (ads) of 60 seconds or 30 seconds, nobody is eating those as the only meal they get. That still exists, but now they are eating a lot of bites: six seconds—that’s all the attention span they have—and a little bit of those ‘snacks,’ those 15-seconds non-skipable (video formats). So making sure that we have enough of our diet offered in the right place… the little screen is important. That is 21st century storytelling.”

Quincey added that its digital marketing strategy will be co-created with its two biggest platforms, Google and Facebook, saying they were recently instructed by Coca-Cola: “I want for you to sign a non-disclosure agreement, I want to tell you all my strategy, I want you to poke all the holes in it, and I want you to bring insights. We’re doing that in the December, because we are going to co-create our strategy with our partners. We need to build strategic value for them as they build strategic value for us.”

See more in the transcript of the day and the videos below.

James Quincey, President and CEO, The Coca-Cola Company:

Francisco Crespo, Chief Growth Officer:

Kathy Waller, Chief Financial Officer:

Jim Dinkens, Incoming President, North America:

Alfredo Rivera, President Latin America:

John Murphy, President, Asia-Pacific:

Brian Smith, President, Europe, Middle East & Africa (EMEA):

Analyst Q&A

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