Playing to Win
By SARAH THEODORE
Enterprises change the rules
In beverage marketing,
it’s widely believed that the larger the company, the less responsive
it will be to changes in the marketplace. Coca-Cola Enterprises, the
largest soft drink bottler in the world, knows firsthand the challenges
that come with size, but it is hoping to change that rule with a new
“one company” focus and a slimmed-down operating structure.
Despite its large company stature, Atlanta-based CCE
actually is made up of many smaller bottlers acquired over the years and
pieced together to form one company. Doing away with what remains of
disparate operating systems and uniting those groups under a common
operating framework has been a priority, says Terry Marks, president of the
company’s North American business unit.
“If you think back on the way this company was
first put together and how it has evolved, we are the aggregation of many
independent bottlers with their own cultures, processes and ways of doing
things,” he says. “We have reached a point in our development
where we really need to operate more like one company across North
The changes will make the company easier for large
national retailers to do business with, and it will allow CCE to meet its
own desire to be more responsive, faster to market, and in Marks’
words, “play to win.”
“There’s a very big difference between
playing to win and playing not to lose,” Marks says. “When you
play not to lose, people tend to be very tentative, and they’re
afraid of making a mistake. But playing to win involves taking calculated
“We’re not going to achieve success in the
long run by doing things the way we’ve always done them,” he
says. “Once you come to that realization, it pushes you into areas
where you can be comfortable taking risks.”
The company devised its new operating framework on
that tenant, focusing on building three key world-class capabilities
— revenue growth management, sales and customer service and supply
chain — and the role the entire company plays in achieving those
“The energy and dedication of our people makes
this company great, and their support of this new framework is what will
make it a success,” Marks says.
From pricing to value-creation
Revenue growth management usually concerns pricing
strategy, but according to Hal Kravitz, vice president of North American
business development and chief revenue officer, CCE has expanded the way it
thinks about revenue management to a much broader value-creation philosophy
based on research and collaboration with brand owners such as The Coca-Cola
Co. and Cadbury Schweppes.
“When you operate in a decentralized environment
across diverse markets that are comprised of many bottling companies with
different packages and brands, it can get quite complicated,” Kravitz
explains. “So we spent a lot of time building solid modeling and
implementation tools around sound pricing strategy by geography, customer
segments, package and product type — essentially, we are finding the
balance between the art and science of our approach.”
Kravitz describes the core of revenue growth management as identifying business opportunities through research
provided by brand owners, as well as retail data and syndicated data such
as household panel research.
“It’s a combination of the brand owners
having a lot of good information and using the other data to figure out
where we want to go,” he says. “It’s identifying market
opportunities based on those insights — what categories of products
do we need to compete today, tomorrow, the next two to three years, and
down the road.
“This process will enable us to understand and
identify where those opportunities are going to be, not just products or
packages, but also what other distribution channels consumers are shifting
to,” Kravitz says.
With those opportunities identified, the Coca-Cola
system plans to step up innovation in both carbonated soft drinks and other
beverage categories. The company spent much of the summer concentrating on
diets, with the rollout of Coca-Cola Zero and Diet Coke sweetened with
Splenda, and most recently, new Fresca flavor extensions and packages.
“We’ve been pleased with the new
zero-calorie products we’ve introduced,” Marks says.
“Both Diet Coke sweetened with Splenda and Coke Zero are on target
from a volume standpoint, and from a profit standpoint, they are a little
bit ahead of plan because of the mix.”
But he points out, being faster to market doesn’t
mean unrealistic new product expectations. “The great brands in this
business were not built in three months, they were built over years and
years,” he says. “We all have to remember that we need to be
patient. It takes time for consumers to change consumption habits.”
CCE’s North American business unit has stated
its destination as having the No. 1 or strong No. 2 brand in every category
in which it participates. To facilitate that, it has developed a
“build or borrow” attitude toward innovation that allows it to
add to the product portfolio in differing ways. The company can
“build” products by working closely with brand owners such as
The Coca-Cola Co. or it may “borrow” products through
distribution agreements such as the ones signed this summer with Rockstar
Inc. and Bravo! Foods International.
“We want to identify where consumers are going,
and then based upon the development of any individual category, we’ll
make a decision as to whether it’s best to build or borrow a
brand,” Marks says. “It will differ category by
Of course, pricing is an essential part of revenue
growth management, and the company is working to develop a more structured
pricing system based on brand, package and retail channel.
“It all comes back to creating and maximizing
value,” Kravitz says. “It doesn’t mean one price across
the United States or one package, but we’ll look for natural
geographic breaks and price zones ... again, bringing science to the
The company also plans to centralize a lot of the
commercialization tools for its field organization, creating programs at
the North American business unit level and turning them over to field
personnel to localize and bring to life in the marketplace. Kravitz
stresses the importance of the frontline in ensuring the success of its
“We give them all the rationale and the logic so
they can effectively sell,” Kravitz says. “It’s really
soup to nuts — everything they would need to effectively launch a
brand and implement a brand initiative.”
In addition to developing superior commercialization
in stores through its field organizations, CCE has made retail partnerships
one of its essential capabilities, and it has devised several programs that
it hopes will benefit both itself and its customers.
Mark Schortman, vice president of North American sales
and chief customer officer, says the company wants to create collaborative
business development plans with customers that allow Coca-Cola Enterprises
to learn from the retailers’ insights and share their own expertise
to jointly grow the beverage categories.
The company has implemented or is in the process of
implementing a number of programs for achieving its execution goals that
include working with retailers on several levels. One plan is for a select
few retailers who choose to be part of an ongoing initiative, with
“This is for a series of customers who are
business and industry leaders who choose to invest time with Coca-Cola and
our brands,” Schortman says. “They are willing to share custom
consumer analytics so we can make better decisions based on their consumers
and shoppers. They have a willingness to invest in future solutions and in
working together to find solutions.”
The programs are less about pricing and more about
finding opportunities that create value for the customer and the consumer,
he says. “They tend to be our larger growth customers,”
Schortman says. “It’s an alignment between two parties who want
to invest the time and effort to grow the business together. They span
every channel, within every customer segment we do business.”
But the company is not only concentrating on the
biggest customers; it is implementing collaborative planning programs with
all of its customers, big and small.
“We have macro consumer insights that we can
share with all customers,” Schortman says. “We have 27 years of
studies from the Coca-Cola Research Council globally ... there’s a
lot of work from around the world that we can already share with customers.
“The biggest issue is taking what the information
says and asking ‘So what?’ How do we move it from strategy to
execution ... being able to make informed decisions, take it forward and
take calculated risks,” he says.
The company executes programs in the marketplace by
tailoring opportunities to its customers, and it often makes use of events
or properties such as sports venues.
Schortman says it also has placed high importance in
integrity around customer agreements as another of its stated goals.
“The key measurement is around better consistency and
performance-based reinvestment,” he says.
Removing decision layers from the organization has been
a goal on all levels, especially as it pertains to marketplace execution.
“The new organization really creates a bias for
action,” Schortman says. “You marshal the energy you have in
the business — we have incredible energy and passionate people
— and then it’s about directing the
“As you de-layer the
organization, it brings clarity in two ways, the strategy from the North
American Business Unit to the field organization, and feedback from the
field organization that it’s working,” Schortman says.
“By having fewer layers, the clarity of communication both ways
increases, for both speed and accuracy.”
“I would absolutely expect and hope that
customers would feel the effect of this because we should be much easier to
do business with,” Marks adds. “We will be able to make
decisions more quickly and implement programs and initiatives in a more
consistent manner across the country.”
The third leg of CCE’s new operating structure is supply chain, and Ed Sutter, vice president of
supply chain for North America, says his organization’s inclusion in
the new framework speaks to the company’s effort to streamline all of
its operations into a unified company.
“It’s very significant that supply chain
is recognized as a key capability,” he
says. “If we can’t be world class at supply chain, we
won’t reach the destination that we’ve set out for
The supply chain goal is to align all functions end to
end — from raw material to retail scanner. It’s an area
on which the company hasn’t always concentrated in the past, but
Sutter says it will make CCE more efficient and effective in producing quality products and enabling top-line growth.
“A world-class supply chain doesn’t
separate manufacturing from transportation, distribution and
merchandising,” Sutter says. “It’s a single supply chain
that is optimized at the whole vs. sub optimized at the
While CCE is the largest Coca-Cola bottler, it is not
the only one, and Sutter and his team are also focused on aligning with
other bottlers in the system. And Coca-Cola North America also has
its own supply chain organization that handles Powerade, bottled water and
“Those are huge supply chains that we are
working very hard to align ourselves with and to make sure we’re
taking advantage of all our synergies,” Sutter says.
While ideas about innovation often are limited to new
products, Sutter says CCE’s supply chain team can be creative in its
“It should be a system that is proactive in
bringing supplier innovations into the company,” he says. “We
are not just an enabler, we are part of the process.”
Like the others, Sutter believes the new framework and
its goal of creating a faster flow of information within the organization
will enable everyone at CCE to clearly understand their role in making
things happen. BI
Building or borrowing brands
Coca-Cola Enterprises has
put significant stock in innovation, and has developed a “build or
borrow” philosophy toward creating brands.
Several brand-building strategies are behind the
company’s recent jump into the energy drink category. Making up for
what it felt was a late entry into energy drinks, CCE decided to both
“build” a brand in the Coca-Cola Co.’s Full Throttle, and
“borrow” the more established Rockstar energy drink through a
master distribution agreement with Rockstar Inc. Rockstar’s creator,
Russ Weiner, maintains ownership of the brand, but CCE will distribute the
product in most of its territories.
The company also recently took on Bravo! Foods
International’s Slammers milk products through a master distribution
agreement. “It’s early days with Bravo!, but we think there is
a good opportunity for us in immediate consumption,” says Terry
Marks, president of CCE’s North American business unit.
But everyone at CCE stresses that its relationship
with The Coca-Cola Co. remains its most important.
“We’re working hard on strengthening our
relationship with The Coca-Cola Co., and it’s never been stronger
here in North America,” says Hal Kravitz, vice president of North
American business development and chief revenue officer at CCE. “We
know that for us to be successful, they must be successful, and for them to
be successful, we must be successful.”
“The Coca-Cola Co. will always be our primary
source of innovation and future revenue growth,” Marks adds.
“What we’re doing together as a system is getting smarter, and
beginning to understand that there is value out there that we can capture
for the benefit of Coca-Cola Enterprises and the Coca-Cola system.”