After Coca Cola halved its brand during the pandemic, the beverage giant is preparing to strategically rebuild its product portfolio, adopt new marketing models, raise innovation standards, and focus on larger goals than five years ago.
At a consumer analyst group meeting in New York, company executives told stakeholders that their target market size is about $1.3 trillion, twice the size of the target market in 2017, and is more diversified.
James Quincy, CEO of Coca Cola, said: “In 2017, we talked about a potential market of $650 billion. Our competitive categories are Coca Cola, sparkling water, fruit juice, energy drinks, water, sports drinks, etc. But now, we have begun to try other popular categories, such as coffee and some alcoholic beverages, or the emerging category we are talking about here, which provides Coca Cola with huge expansion opportunities, enabling us to maintain our core, remain authentic, and strong “While expanding widely to meet any needs of consumers.”
Zhan Kunjie pointed out that emerging categories are expected to grow fastest, with a CAGR of 8-10% from 2023-2026, followed by energy drinks during the same period, with a CAGR of 7% to 9%. It is expected that the compound annual growth rate of hot drinks and water/sports/coffee and tea beverages will reach 5% to 6% by 2026. Zhan Kunjie said that in the
Before Coca Cola can seize this opportunity, it needs to reduce its existing product portfolio to ensure that there are sufficient resources and space to place new products. “We eliminated about 400 brands,” accounting for only a few percentage points of total sales, with the slowest adjustment.
Although “we have always had work to do to update our product portfolio to ensure that it is the most consumer centric product portfolio,” Zhan Kunjie said that Coca Cola now has “the right strategy to make its product portfolio more vivid.”.
The strategy has three pillars: consumer focus, higher innovation standards, and updated marketing models.
1、 Consumer centric
Coca Cola firmly believes that successful products and businesses begin with consumers, accurately determining what they want, like, and will buy.
In addition, according to Coca Cola’s research, the human insights that shape consumption trends include virtual interaction, sustainability awareness, healthy charging, functional advantages, premium and affordability, and demographic changes.
Zhan Kunjie said that in these categories, Coca Cola is using a large amount of first-party data to focus on the most important passion points of any particular brand for consumers in its product portfolio, including music, games, sports, and personalized opportunities. General.
2、 Unified and localized marketing model brings results
Compared to the 1990s, Coca Cola today can do this more effectively. Its cash liquidity is stronger, and it can invest in any field it wants to invest in, because Coca Cola has updated its marketing model.
“We have transitioned from a very decentralized organization to a more coordinated organization, and in some ways, we are more centralized. We have a group of marketing partners, as well as opportunities for local creativity. Through this model, we have begun to readjust the location and manner of our conversations with consumers.”
Zhan Kunjie said that Coca Cola also enhances the creativity of its marketing department through cooperation with influential people and artificial intelligence technology. As a result, the timeline from idea to execution has been shortened by 3 to 6 months. By 2022, the gross profit per dollar of advertising spending will increase by 9%.
3、 Higher innovation threshold
Coca Cola has also adopted a new and innovative approach, which is more experimental, but more rigorous and action oriented.
Zhan Kunjie explained that Coca Cola carefully considered possible innovations from the above human perspective, including the balance between premium and affordability, healthy charging, functional efficiency, and sustainability awareness. Examples being tested include the energy balance advantages of the premium edition of Schwepps, Costa coffee products, and Smart Water, the functional advantages of Body Armor, and sustainable transformation including caps and unlabeled bottles.
“We are beginning to see that the success rate of innovation increases over time (doubled from 2019 to 2022), and the gross profit per release also increases over time (increased by 12% from 2019 to 2022).”
One of the most promising companies is Fairlife. “It has achieved astonishing growth for eight consecutive years.”
However, Zhan Kunjie admits that not all attempts by Coca Cola have been successful. For example, he pointed out, “We have proposed 27 different alcoholic beverage ideas, but they will not all succeed. However, the signs of experiments continue to inspire us to believe that there is a chance, and let us adjust our methods of seizing this opportunity.”
Similarly, he pointed out, “Last year, we encountered some obstacles when integrating Body Armor, but there is still great potential in restoring growth and improving brand awareness.”
Finally, Zhan Kunjie concluded that learning from failures and improving opportunities for future innovation are the way out for Coca Cola to continue to successfully adapt to the “crazy world”.
