BOCA RATON, FLA. — James Robert B. Quincey, chief executive officer of The Coca-Cola Co., predicts “another good year of progress” for the Atlanta-based company in 2019. A key driver of growth is product innovation.
“Innovations on reformulations, innovations on functional benefits, premiumization, personalization, price/pack architecture,” Mr. Quincey said during a Feb. 22 presentation at the Consumer Analyst Group of New York Conference in Boca Raton. “There’s a lot of innovation on Coke, and that is paying dividends.”
Tailoring the sparkling beverage portfolio to today’s consumer has involved adding functional benefits such as fiber or coffee to Coca-Cola. A premium offering, Coca-Cola Origins, features regional flavors, including California raspberry and Georgia peach.
“Once we’ve got something that works, we’re in 200 countries, we need to be as good as we can be on lifting, shifting and scaling the best ideas and taking them around the globe, which requires, of course, a degree of testing and agility and acting with speed,” Mr. Quincey said.
Last year, the Coca-Cola Co. executed more than 500 “lift, shift, scale” launches across multiple key markets and brands.
“2018 saw the roll-out of Fuze Tea across all the European markets,” Mr. Quincey said. “Now this was a brand and formulations and product that existed everywhere else in the world or almost everywhere else in the world. And so we were able to draw on the best learnings from our roll-outs and from our marketing and from our execution of Fuze around the world and really come up with the optimal bundle for the European marketplace and had great success in launching that in 2018.”
A third strategy driving growth for Coca-Cola is bolt-on mergers and acquisitions. In January, the company finalized its $4.9 billion acquisition of Costa, a coffee business with retail outlets and vending machines throughout Europe, Asia Pacific, the Middle East and Africa.
“We’re going to use the idea of Costa Coffee and the retail stores as part of the brand essence of underpinning the brand, but we see this as a coffee strategy, as an opportunity to be much more effective in providing a total beverage solution to our customers,” Mr. Quincey said. “Whether that be through the vending machines — the Costa vending machines are truly world-class in delivering a barista experience for coffee — whether it's those vending machines, whether it’s with more traditional beans and machines, and whether it’s ready-to-drink. Obviously, ready-to-drink and the vending machines are very much in the sweet spot.”
John Murphy, the company’s incoming chief financial officer, reiterated Coca-Cola’s long-term financial targets.
“As I take on this role, I’m very confident that we will achieve our stated long-term targets: organic revenue in the 4% to 6% range; operating income at 6% to 8%; earnings per share, currency neutral, at 7% to 9%; and free cash flow, 90% to 95%,” he said.