Coca-Cola bets on innovation and commercial strategies to fuel growth

USA – The coronavirus pandemic has triggered seismic shifts in shopping behavior and further challenging – while at the same time creating – new opportunities across major fronts; from brand launches and marketing campaigns to routes to market and revenue growth management strategies.

This has prompted companies in the food and beverage industry, to accelerate their efforts to streamline their portfolio and adopt processes as a response to the pandemic.

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John Murphy, the Chief Financial Officer of The Coca-Cola Company, shares some of the key takeaways on how the beverage giant in responding to the pandemic.

Murphy says that the company is making progress on becoming more nimble, faster to adapt and pivot its business with an objective “to emerge from the crisis with an even stronger leadership position.”

Speaking at the recently concluded Deutsche Bank Global Consumer Conference, Coca-Cola’s CFO observe that the company is leveraging its innovation and commercial strategies to catalyse growth.

Murphy observes that the pandemic has prompted the company to engage more in efforts to streamline its beverage portfolio, eliminating under-performing “zombie” brands and adapting its innovation pipeline.

“We’ve seen tremendous expansion… a lot of experimentation, a lot of learning, but the pipeline has become rather busy and clogged,” Murphy said adding the that the company is now balancing an entrepreneurial edge with a tighter focus on fewer, bigger and more relevant offerings with potential to scale to multiple markets.

“We are becoming more disciplined and making the tougher decisions to prune back and allow the (brands) that have the opportunity to grow to get the attention they deserve,” Murphy said.

Reinforcing the consumer-centric approach

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Murphy observed that the company is closely monitoring its consumers and local communities to understand how consumers are adapting and behaving through the crisis, and what behaviors are short-term versus those that may stick.

“It’s important to remain consumer-centric,” he said adding that the Coca-Cola is keeping a close eye on new trends emerging in the COVID-19 era and innovating accordingly.

“The area of hygiene, for example, is one I think is going to be very much on consumers’ minds going forward,” Murphy said. “Building touchless solutions, therefore, in the away-from-home channel is a big opportunity we need to tap into. There also will be some new motivations in the functional arena that we need to bring into our portfolio faster.”

Helping retail and foodservice customers adapt

The company noted that it is collaborating with grocery customers to adjust supply chains and prioritize delivery and promotion of core brands and SKUs like multipacks as people adjust to stay-at-home lifestyles and make fewer, quicker stock-up trips.

“We’re doing what we need to do to keep the attention of the shopper. Customers are very focused in times like these on what moves,” Murphy said.

Notably, he highlighted that the U.S. launch of AHA flavored sparkling water is off to a strong start despite a challenging environment. “So, the bigger brands, the bigger SKUs, get a lot of preference. We’ve tailored our approach accordingly.”

The company will continue to invest in packaging that meets consumer needs at different price points while maximizing per-outlet revenue, Murphy said, citing recent successes in Latin America, the Philippines and South Africa.

With the surge in e-commerce channels – which have doubled in some countries as more people order necessities for home delivery –Coca-Cola observed that it is prioritizing package options that are fit-for-purpose for online sales while boosting investment in digital promotions.

Murphy added that the company is increasing in-app visibility with e-delivery grocers, and piloting digitally enabled fulfillment models.

According to the CFO, Coca-Cola bottlers are also investing in digital B2B solutions to manage customer orders and deliveries, and the company is rolling out a B2C platform in Latin America that lets consumers order beverages and groceries from local mom-and-pop stores for home delivery.

“We are investing in improving our digital shelf capability, bringing to the digital shelf the same discipline and quality we have learned to do on the physical shelf,” Murphy said. “There’s a lot underway in this regard, and I see that accelerating and forming an even bigger part of our plans going into the next couple of years.”

Markets outlook

With countries around the world in varying stages of the outbreak along with varying levels of economic impact, Murphy said the company expects recovery to be segmented.

“We’re not going to see one letter of the alphabet describing the rate or speed of recovery,” he said. “A few markets will be more on a V-shape recovery, whereas a number of markets will be either U or a form of L, and I think it’s too early to be able to profess what those varying shapes will look like.”

He therefore noted that with so many variables, the company’s focus “remains very much the same as it has been in previous crises. And that’s to make sure our North Star is to emerge stronger.”

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