Coke CEO’s 2020 vision eyes global middle class

Coke CEO Muhtar Kent discusses his long-term strategy. (AJC Photo by Bita Honarvar)

Coke CEO Muhtar Kent discusses his long-term strategy. (AJC Photo by Bita Honarvar)

Right before I left Atlanta to learn about Coke operations in Asia about 11 years ago, then-CEO Douglas Ivester had a suggestion. He told me to ask company execs in China, Japan and Vietnam about their vision for their markets in 100 years.

As the newspaper’s beverage reporter at the time, Ivester’s suggestion seemed less odd to me than it might to you. Of all the companies I’ve covered, execs at Coke think further into the future than any others. The company doesn’t plan for marathons. It’s in the ultramarathon business.

That’s probably one of the reasons Coke is celebrating its 125th anniversary May 8. So with Ivester’s suggestion in mind, I asked current CEO Muhtar Kent how he views the next 125 years when I sat down with him recently. I figured someone on North Avenue already has the game plan detailed in a loose-leaf book divided by decades.

“In the world, 125 years is nothing, particularly where I come from,” said Kent, who grew up in Turkey. “When you’re walking in the fields, you stumble on artifacts that are 2,000 [or] 3,000-years-old everywhere. … But I think it would be wrong for me to try to paint you a picture of the next 125 years.”

Instead, Kent said, he’s focusing on 2020. That’s when the hard-charging exec hopes the Coke system will double its global revenue. In other words, Kent wants to take about a decade for Coke and its bottlers to replicate what took a century-and-a-quarter to do.

Isn’t that too ambitious when the system’s annual revenue is already in the $100 billion neighborhood? (Coke’s is $35 billion of that, with the bottlers and distributors accounting for the rest.)

“It’s not for the fainthearted, but it’s achievable,” Kent, 58, said.

One of the keys to getting there, he said, is to pose the right questions to the largely independent bottlers (Coke has ownership stakes in some) who produce and distribute the drinks in more than 200 countries. As far as Kent is concerned, Socrates was on to something.

“What are we doing well? What are we not doing well? How should we go forward? What do you think of the next 10 years? What’s achievable? What’s not achievable? Do we have the right portfolio? Do we have the right marketing? Do we have the right message?”

The company’s plan for 2020 incorporates answers from the bottlers, Kent said. The plan also is based on a key demographic prediction — an additional one billion people are expected to enter the middle class around the world during that time.

The importance of that number cannot be overstated. A huge share of the Coke system’s future growth will come from the developing world. But right now, much of that world cannot afford a Coke, Sprite or Fanta, or any bottled or canned drink for that matter. As their economies and household incomes grow, however, more consumers there will be able to buy soft drinks.

“That led us to believe that what we’re talking about [doubling revenue] is not just a simple, pie-in-the-sky [notion], but is actually very difficult but achievable,” Kent said.

He knows there are short-term and long-term challenges. Some of the much-publicized ones include health and obesity concerns, water and environmental issues, Pepsi and other competitors, and coming up with the next blockbuster drinks.

There’s also one that gets less attention. The balance of power between companies and consumers is continuing to shift in the consumers’ direction. There was a time in Coke’s history when one clever TV commercial could drive up sales significantly. The growth of the Internet, the splintered media and ad markets and the explosion of brands have changed that.

“Consumers will increasingly vote for products — not just in liquid beverages … in everything,” Kent said. “We cannot make the decision for the consumer.”

One of the biggest threats to Coke, Kent said, is if it’s “not close enough to our consumer, who is changing rapidly.” That means his vision for 2020 will require consistent updates.

“It doesn’t mean that it has to be cast in stone,” Kent said.

There are limits to the value of long-term strategies. This powerful company, a global icon, is at the mercy of consumer choice like it never has been before. Its vision will have to be accompanied by consistent execution from all the troops — day in and day out.

And, at the end of the day, that will depend on leadership — his.

- Henry Unger, The Biz Beat

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15 comments Add your comment

TnGelding

April 30th, 2011
3:50 pm

I hope he continues to focus on healthy products and gradually phases out the sugared poison. Also there is going to be a tremendous demand for bottled drinking water in some parts of the world. We truly need another pause that refreshes!

the watch dog

April 30th, 2011
5:29 pm

I have always been a coke fan. My first coke was in a 6 oz. glass bottle. Then Pepsi came out with “2 full glasses, thats a lot” Then I was a fan of Pepsi. Now “Sams Cola” I am a fan of. That is it, I have been to Cokes Tourist Center, that was pretty good.

Jerry

April 30th, 2011
10:28 pm

Coca Cola has been around since my great grandfather; it is NOT POISON! A DRINK w/ sugar in it is only as dangerous as its’ consumer. Anyone with any measure of self control would know that fact. Get off your butt, exercise, and put down the remote.

TnGelding

May 1st, 2011
4:36 am

Ever heard of diabetes?

TnGelding

May 1st, 2011
4:39 am

[...] Muhtar Kent recently told the Atlantic Journal-Constitution’s Henry Unger that the fast-rising global middle-class and their spending power could help Coke and its [...]

Judge Dawg

May 1st, 2011
11:42 am

Love the fact this CEO has changed the narrow focus that the good ole Georgia boys had for Coca Cola. He has a world view while they only think Atlanta … This man will take Coke to places they could not even dream of…

Shadow7071

May 1st, 2011
10:27 pm

@Judge Dawg FYI Coke has been a global company since the early 1900’s. They invented the American global company. The good ole boys, as you call them, have been operating in foreign countries for years and years. Your comments show exactly how uninformed and uneducated you really are about globalization and the role Atlanta of this great company and brand.

[...] Muhtar Kent recently told the Atlantic Journal-Constitution’s Henry Unger that the fast-rising global middle-class and their spending power could help Coke and its [...]

TnGelding

May 3rd, 2011
12:59 am

Buy the stock. Skip the “refreshment.”

Enemas for Christ

May 4th, 2011
8:24 am

Whats the deal on the draping on the Coke building? It’s like a death shroud.

It Is What It Is

May 4th, 2011
9:07 am

the ’shroud’ will cover all four sides, and video will be beamed on the screens at night

SWAGA1

May 4th, 2011
11:04 am

@ The watch dog….u may have a point drinking a can of coke every now and then won’t hurt you, and yea anyone who drinks a lot of it will have to balance it with exercise…too many kids and adults for that matter drink these sodas and do nothing all day long but play video games and sit around on the couch….yea people u do have to exercise the body is designed for you to work and burn calories not sit around and become fat……your body becomes distorted looking as a punishment for your lack of activity….that should be a sign to get off your asses

mike

May 4th, 2011
11:05 am

Because Roberto Goizueta was such a Georgia “good ole boy” with a limited world view.

PA

May 4th, 2011
1:41 pm

The people who invented the Freestyle machine and took a risk on it and scored a gigantic hit have earned my business and respect. That is the kind of mindset and leadership that will take Coke to the next century. As a long time Pepsi fan, that ticked me off initially. But I can’t deny it and well, I am drinking a lot more Cherry Coke Zero these days. Brilliant drink. Thank you Coke!