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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