Coke sees $300 billion international opportunity

by Jeff Gelski
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BOSTON — Excluding North America, a $300 billion growth opportunity exists in other parts of the world from 2014-20 for non-alcoholic, ready-to-drink beverages, according to the Coca-Cola Co. For example, half the world’s population has not had a Coke in the last 30 days, said Ahmet Bozer, executive vice-president of the Coca-Cola Co. and president of Coca-Cola International, during a Sept. 4 presentation at the Barclays Back-to-School Consumer Conference in Boston.

“(There are) 600 million teenagers who have not had a Coke in the last week,” he said.

The company will use different approaches in different markets to drive beverage growth, said Kathy Waller, executive vice-president and chief financial officer for Atlanta-based Coca-Cola.

“In emerging markets with lower per capita consumption of packaged beverages, it’s important that we work with our bottling partners to focus on volume and share gains as we invest in our infrastructure and build our business,” Ms. Waller said. “Once a market enters the developing stage, pricing and mix become more important, given both the rising disposable income that our consumers are enjoying and the scale of our system, and we expand our price/pack architecture so that we can pull levers other than rate increases to drive revenue growth.

“In developed markets, we work together as a system to focus on price realization as we leverage our scale position, innovation opportunities, and in the premium position of our brand.”

Mr. Bozer said Coca-Cola uses price/pack architecture, market place execution and marketing to drive growth.

Price/pack architecture may involve immediate-consumption packs with different price points. For example, a 300-ml product in the Philippines sells for 10 Filipino pesos (23c).

“This package has been growing very healthily, pushing forward our immediate-consumption growth, gaining share with teens, and getting a lot of consumption with the teens,” Mr. Bozer said.

Marketplace execution involves an R.E.D. (right execution daily) score, which measures how well Coca-Cola performs within a store.

“Today, around the world, we have (the) majority of our bottlers implementing that system, and we cover 44% of our global volume through the R.E.D. score,” Mr. Bozer said.

He gave the example of a “splash bar” in India where product sells 5 for rupees (8c).

“This is actually a product from the cooled PET bottle being served in cups, which is really doing very well where we do this, which allows us to get to the parts of the country which is hard to get, which then has applicability in other parts of the emerging world,” Mr. Bozer said.

For marketing, 80 markets have adopted the Share a Coke campaign, which replaces the logo on the Coca-Cola bottle with a first name, he said.

Mr. Bozer gave two more examples of Coca-Cola’s international growth in beverages. For one in China, Schweppes +C has vitamin C and sells at a higher price point than normal sparkling beverages.

“That’s giving us great margins and giving us the opportunity to grow,” he said.

For an example in Japan, Aquarius Zero targets the older adult consumer.
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