Coca-Cola redefining innovation

by Keith Nunes
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Sprite Cherry - Coca-Cola
Coca-Cola plans to launch Sprite Cherry, a flavor inspired by its Freestyle machine.

NEW YORK – The term innovation is often interchangeable with such words as revolution, transformation and breakthrough. At the Coca-Cola Co. the definition has less to do with such descriptors and more to do with meeting the needs of consumers, a top company executive said.

Sandy Douglas, Coca-Cola
Sandy Douglas, president of Coca-Cola North America

“Typically we think of innovation as just new products, but in fact new approaches and new packages are often innovative opportunities for growth …,” said Sandy Douglas, president of Coca-Cola North America, in a presentation Nov. 15 at the Morgan Stanley Consumer Conference, referring to the company’s line of sparkling products. “I think the consumer wants to have just what they want, whether it's with sugar products or zero-calorie products or somewhere in between, and the ability to execute proprietary special packaging to the perfect location in the market has a lot of runway for growth going forward and continues to grow nearly at double-digit rates in our portfolio.”

Mr. Douglas said the shift to smaller packs has had an impact and the company has extended the idea to its flavored sparkling brands Fanta and Sprite.

Mini cans of Sprite and Fanta - Coca-Cola
The company has extended its smaller packs idea to Sprite and Fanta.

“We are focused on capturing the full potential of these brands as well by executing that same occasion price package strategy and innovating with both new flavors and new packet sizes,” he said. “For example, we've been consistently stretching our Sprite flavors portfolio with great tasting new flavors, examples of which are Sprite Cherry, which is Freestyle-sourced flavor innovation that's something that came out of our Freestyle machine that consumers were making in fountain.”

The beverage company also is committed to rapidly growing its still beverage portfolio.

Dasani, VitaminWater, Gold Peak - Coca-Cola
Dasani, Gold Peak and Vitaminwater have experienced strong organic growth.

“This has been an area of tremendous overhaul in the company,” Mr. Douglas said. “Ten years ago when I started in this job, we had a long way to go, and we set the goal in the short term. While we were a long way from being big, we wanted to be the fastest growing. We pursued this strategy through a number of key acquisitions led by the Glaceau acquisition of Vitaminwater and Smartwater, but strong organic growth as well with brands like Gold Peak and Dasani.”

Focus on its sparkling and still product lineup has grown the company’s Nielsen measured retail value by $1 billion, Mr. Douglas said. Of the $1 billion, $300 million is generated from sparkling and $700 million is generated by stills.

Smartwater - Coca-Cola
Smartwater recently became Coca-Cola’s 12th $1 billion brand.

“Today, our stills brands account for more than 40% of our retail portfolio, which is increasing year-after-year and is up 3 points over the same time frame,” Mr. Douglas said. “And these still brands are continuing to grow at strong rates with strong growth across many major categories.”

Within the portfolio, Smartwater recently became the company’s 12th $1 billion brand. Dasani is being extended into the sparkling water category, and ready-to-drink coffee products are being added to the Gold Peak line of products.

“The net effect is that our premium stills portfolio today is a crucial part of our growth engine and our ability to complement a growing sparkling revenue with even faster growth in the premium still category,” Mr. Douglas said.

Fairlife, Suja, Aloe Gloe - Coca-Cola
Coca-Cola sees opportunity from such newer brands as Fairlife, Suja and Aloe Gloe.

He also sees opportunity from such newer brands as Fairlife (value-added dairy), Suja (cold-pressed juices) and Aloe Gloe (functional).

“We'll see more and more of that I think, more and more experimentation, but in terms of big existing chunks of the portfolio I think we're more in an organic mode now," Mr. Douglas said, "but we have awfully-long pipeline of innovation that's working and contributing a significant part of our growth right now."

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