Author: He Danlin (original)
The Coca-Cola Company operates more than 200 brands worldwide, from soft drinks and juices to coffee to ready-to-drink teas, and sells more than 2.2 billion servings of beverages every day. When considering how this big game of chess will "fall" in the future, the beverage giant is becoming more and more "decisive".
"If the brand is small, it's not growing, it's not shared, it's irrelevant in the category, it's not profitable, we're going to knock it out." James Quincey, chairman and chief executive of The Coca-Cola Company, said stop-loss was an "easier decision to make."
But it is not without "tangles". "The challenge is to distinguish between brands that are underperforming but have potential for future growth, and those that are simply underperforming. This is the hardest judgment to make. This, he lamented, also requires a certain amount of patience on the part of the company.
The Coca-Cola Company Chairman and CEO Zhan Kunjie (file photo)
Last week, the head of Coca-Cola attended a consumer conference between Redburn Atlantic and Rothschild & Co., and talked about the company's ideas for managing its huge product portfolio, as well as its future investment direction and views on the coffee business.
Next, Xiaoshidai will take everyone to pay attention to the on-site news.
"It's like eating a buffet"
The beverage giant's investment strategy for its businesses is in the spotlight.
"You've always said that investing to grow your bottom line is a top priority. How do you see investments in a very strong portfolio of core brands, as well as strategic bets on emerging categories? On the other hand, when you feel like it's time to stop investing in some of your business, how do you and your bottling partner make decisions? The moderator asked.
Zhan Kunjie said that it depends on the performance of the brand. "When things aren't going well, it's easier to stop when things don't go well – it's easier to stop than to explain, even though we're not growing, we're losing money, we don't have a share, but why do we do it [stick to the investment]."
As a result, he noted, Coca-Cola cut the number of brands in half during the pandemic. "It's not even painful for us to do that," he said, "and if you can't find a path to growth and profitability, that's somehow an easier decision to make." ”
When talking about the next investment direction, Zhan Kunjie said that Coca-Cola and its industry sell some "happiness, pleasure and happiness", and people see a lot of opportunities from it. "Generally speaking, we see more opportunities than we can have, and it's like when you go to a buffet and you have all the food in front of you, but you don't have everything on your plate."
So, he argues, there have to be some processes to decide what to prioritize. "We actually have a relatively robust process to look at all markets and all categories and make decisions about where we need to invest our money next and what our priorities are next in terms of building our global portfolio."
But it's not easy to "bet on the right treasure".
"That's the problem." "Because people see a lot of opportunities (temptations), but relatively few of the money, time, or human resources that can actually be used for execution (which needs to be carefully screened)." ”
Costa咖啡
When asked specifically about his views on the future of the coffee category, Zhan Kunjie believes that from Coca-Cola's point of view, this is indeed a new category. "The industry is huge, fast-growing and lucrative, although it is relatively fragmented. We have to learn to walk before we can run. ”
"So, our strategy is selective prioritization." This means, he said, that Coca-Cola is not in a hurry to "go all over the place" in the coffee business, and "we don't just run up and expand the coffee business everywhere without knowing what we're doing." ”
Xiaoshidai introduced that earlier in 2018, Coca-Cola acquired Costa for 3.9 billion pounds, entering the field of coffee chain restaurants for the first time in history. Under the "selective first" strategy, Costa's priorities in different business segments in different markets may also be adjusted accordingly.
Up to now, Costa has three business segments in China: chain retail coffee shops, FMCG business (RTD packaged coffee RTD and home coffee), and coffee service business (Costa Express and self-service coffee machine Express).
Zhan Kunjie also mentioned that the same applies to other brand businesses, "that is, we need to get it right in some places first, and then we start trying to expand to other places." That's what our 'selective first' strategy means. It's not an analysis of category appeal, it's a guide to what we need to do next and where we want to go. ”
After accumulating successful experience in priority areas and key markets, Coca-Cola still wants to pursue large-scale expansion. "We wanted to expand the brand. We prefer to have more global brands than local brands scattered across numerous markets. He said.
But successful experiences cannot be copied mechanically.
"Just because it works in country A doesn't mean it will work in country B. There may be many of the same consumer needs, retail needs, and so on, but you have to be able to say why it's going to work in this market. Zhan Kunjie pointed out.
So, he says, the first step to expansion is figuring out if the brand really has the uniqueness to exist in the next market and a reason to win. "Just because it's from Coca-Cola, doesn't guarantee that."
"Patience is required"
While eliminating underperforming businesses more "decisively", Coca-Cola did not want to "go away", so it also maintained a certain amount of patience.
"The challenge is to distinguish between brands that are underperforming but have potential for future growth, and those that are simply underperforming. This is the hardest judgment to make. Zhan Kunjie said. From the perspective of time, according to industry data, it may even be necessary to maintain patience for more than 4 years before making a judgment.
"There was a study in the beverage industry in the U.S. that looked at all the new products that were released over a long period of time, and there were about 10,000 of them. The study categorizes these products from the top 10% all the way up to the worst 10% and shows their sales performance over a 10-year period. Of course, in 10 years' time, the best brands will become billion-dollar brands, and the worst brands will be out of the market. He mentioned.
Zhan Kunjie points out that the interesting thing about this analysis is that in the first three years, there was almost no difference between the sales of the top 10 percent and the bottom 10 percent. Even in the fourth and fifth years, the gap is still small.
"So we need to be patient, and we're actually trying to distinguish which consumer segments are gaining loyalty, and which ones are just struggling. This is actually one of the most difficult parts of innovation management in the beverage industry. He concluded.
Zhan Kunjie also said that very few product innovations can succeed with the first idea. "They often iterate in a certain path or form to finally polish the best solution." The process also requires patience, he said.
"Not satisfied with the status quo"
When talking about the long-term driving force for Coca-Cola, a "century-old brand", to continue to move forward, Zhan Kunjie believes that there are four key elements.
"First, we need to be curious." "As Robert Woodruff put it, he gave a famous speech in 1936 for Coca-Cola's 50th anniversary, titled 'The World Belongs to the Discontented,' which meant a lot to Coca-Cola," he said. ”
Woodruff was not the inventor of Coca-Cola, but he was hailed as the "father of Coca-Cola" by Americans. It was during the more than 60 years that he was at the helm of the Coca-Cola Company that Coca-Cola was marketed all over the world and won the crown of "King of Non-alcoholic Beverages in the World".
"If you're a winner and everything is fine, then you should also keep looking for opportunities to move forward and not rest on your laurels. And it's all driven by a certain level of curiosity, curiosity about external consumers, curiosity about retailers, and so on. Zhan Kunjie said.
Second, he argues, there needs to be a certain level of initiative. "Curiosity is important, but after I notice it, who cares if I don't do anything and don't tell anyone? After arousing your interest, you must have a certain initiative to put it into action. ”
The third point is, don't take it for granted that you were the first person in the history of the world to come up with this idea. "It's likely that people have thought of and practiced something similar before. Before you step on the pit again, try to find out what they did, what mistakes they made, and at least make some new mistakes to avoid repeating the same mistakes. Zhan Kunjie said.
Finally, don't wait for perfection. "This goes hand in hand with the shift from a world centered on TV advertising to a world centered on social media." Zhan Kunjie said.
"If you're making five TV commercials a year, you spend an extra week perfecting it, like making a movie, and there's really nothing wrong with that, you can do it perfectly. But on social media, the train has already gone (meaning the heat has passed). Everything is moving forward, and you need to be able to iterate faster. He explained.
Over the past five years, The Coca-Cola Company has achieved organic sales growth of 8 percent, with 2 percent of that contributed from volume growth. "The opportunities in front of us are still huge, and as I just said, we need to be not satisfied with the present so that we can create a better tomorrow. Keep that mindset and we'll keep going. Zhan Kunjie said.