Coca-Cola Needs to Be More Than Just Coke, its Next Chief Says
February 23 2017 - 05:33PM
Dow Jones News
By Jennifer Maloney
Coca-Cola Co. has outgrown Coke, according to its next chief
executive.
At an analyst conference on Thursday, James Quincey, Coke's
current chief operating officer who will take the reins in May,
said the 130-year-old company must speed up the development of
products beyond soda to become "a total beverage company."
"The company needs to be bigger than the core brand," he
said.
Mr. Quincey, 52 years old, said his plans include cutting
corporate staff as well as the company's "sugar footprint," and
introducing a new compensation system intended to encourage more
research, development and innovation. He didn't say how many
positions he expects to be eliminated.
His tone marks a shift from departing CEO Muhtar Kent, who has
long called the Atlanta company's namesake cola its "oxygen."
"Change is in the air," Morgan Stanley analyst Dara Mohsenian
wrote in a note Thursday. He called Mr. Quincey's presentation "a
refreshing (literally and figuratively) assessment of where the
company stands."
Coke's revenue has declined in each of the past four years. And
despite a push into juice, bottled water, dairy and other
beverages, soda still represents about 70% of company sales.
As consumers drink less soda, Mr. Quincey said, the company
could still grow soda revenue by focusing on smaller, higher-priced
packaging that would help it improve its margins. At the same time,
he said, Coke must work more quickly to increase its market share
in categories such as sports drinks, energy drinks, bottled water,
dairy and ready-to-drink tea and coffee. The average person
consumes eight 8-ounce beverages a day, he said, noting that
globally, Coke currently provides about 4 of those ounces.
This year, Coke is rolling out new versions of Fanta and Sprite
with less sugar and is continuing to introduce Coca-Cola Zero
Sugar, which launched last summer in the U.K., to new markets.
"For sure, some of them won't work," Mr. Quincey said of the
company's recipe-tinkering, but he added that Coke must behave more
like a technology company, releasing regularly updated versions of
new products and packaging.
The company for decades talked about putting its namesake cola
"within an arm's reach of desire," Mr. Quincey said. Now, he said
he and his colleagues must ask themselves: "Is everything we do
within a click's reach of desire?"
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
February 23, 2017 17:18 ET (22:18 GMT)
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