Coca-Cola shares plans to advance sales momentum in North American market
The Coca-Cola Co. will roll out a new 12.5-ounce hand-held package priced at $0.89 nationally in 2012.
The Coca-Cola Co., Atlanta, at its North America Market Tour event in Houston in late September highlighted the company’s North American roadmap for growth goals, which are to build strong brands, translate brand value into customer value, and build the capability to sustain and repeat success in the region.
Sandy Douglas, president of Coca-Cola North America, and Steve Cahillane, president and chief executive officer of Coca-Cola Refreshments, noted the benefits of bringing together portions of The Coca-Cola Co., Coca-Cola Enterprises and the bottling investments group as Coca-Cola Refreshments. The combined teams now are able to follow one set of goals and work to become the No. 1 most valued supplier to all of its customers, the company said.
“It’s a tremendous time and we have a tremendous opportunity,” Douglas said. “We have an opportunity to leverage the most popular brands in the world and an opportunity to deliver these strong brands in an even stronger opportunity model.”
Its brand strategy platform includes expanding the Coca-Cola trademark, growing in the still category, and developing, testing and deploying new brands and business opportunities, Douglas said.
Katie Bayne, president and general manager of sparkling beverages for Coca-Cola North America, explained that the sparkling portfolio has seen a 10 percent increase in consumer adoption of its no-calorie options since 2000. In 2011 year-to-date figures, 58 percent of consumers opted for trademark Coca-Cola, while 42 percent chose Diet Coke, Caffeine Free Diet Coke or Coke Zero, she said.
In addition, the company has evolved its package positioning to cater to the more than 30 million incremental use occasions in the North American market, Bayne said. Its 16-ounce pre-priced $0.99 package added 30 million incremental use occasions, she said. The company’s mini cans also expanded use occasion options and at the event, the company announced the re-pricing of six-packs of the 7.5-ounce mini cans to $2.99. It also plans to nationally launch a 12.5-ounce Coca-Cola “hand-held” package in 2012 that will retail for $0.89. The hand-held package will become the new value proposition to drive consumers into convenience stores, the company said.
To continue growing sparkling category consumption, The Coca-Cola Co. targeted five areas, which are as follows: to recruit teens and young adults, to lead sparkling credibility, to engage family shoppers, to sustain adults, and to enhance occasion, brand, package, price and channel (OBPPC) architecture.
To recruit teens, The Coca-Cola Co. activated digital methods such as its virtual soda fountain online feature and the @DocPemberton Twitter account, which is named after the founder of Coca-Cola. The company also is targeting specific brands to certain age groups, such as 20 to 29 year olds for Diet Coke and 18- to 24-year-old males for Coke Zero. Its Seagrams and Caffeine Free Diet Coke brands are part of its strategy to sustain adults, Bayne said.
In the still category, The Coca-Cola Co. highlighted the mid-August launch of Minute Maid Pure Squeezed, which is part of its plan to accelerate the company’s leadership in juice. Minute Maid Pure Squeezed is positioned as a premium juice option between the portfolio’s super-premium Simply Orange brand and value-positioned Minute Maid from concentrate options. The Minute Maid Pure Squeezed platform also provides the ability for enhanced juice varieties, the company said.
Within the still beverage portfolio, The Coca-Cola Co. also aims to close its leadership gap in active hydration, which includes its Vitaminwater, Smartwater and Powerade lineups. The company also spotlighted its Dasani bottled water brand and its plans to differentiate and drive value for premium-priced bottled water, which include communication about the brand’s PlantBottle packaging. It also highlighted the possibilities of building still commercial capabilities, such as Simply coolers for single-serve juices, the Dasani Give it Back retail rack and Gold Peak foodservice machine.
In addition, the company wants to build competitive platforms for the future in energy drinks and ready-to-drink tea with its brands Gold Peak, Honest Tea, Nestea, Full Throttle and Nos while incubating new growth, including relationships with Zico and Sokenbicha teas. The company also distributes the Monster Energy brand from Hansen Natural in retail accounts, which is included in its energy portfolio as a “mass appeal” brand alongside “high-performance” brand Nos and “blue collar/value” Full Throttle, explained Brian Wynne, president and general manager of still beverages for Coca-Cola North America.
Execution at retail
At the core of its expansion policy is its OBPPC strategy, which was pioneered by the Latin American division of the company. OBPPC is based on the principle that products need to be merchandised and marketed to appeal to consumers at the right time according to an individual use occasion.
At retail, OBPPC is put into practice by locating specific brands, package sizes and bundle opportunities in the proper location to best capitalize on the consumer’s needs at that moment. For example, a convenience store consumer might be looking for a grab-and-go opportunity and can be enticed by value or an offer to add a snack for a given price. In a grocery store, the company creates multiple zones to attract consumers who might grab a meal on-the-go, are stocking their pantries or filling in a missed purchase. By contrast, the large format store shopper who is focused on value might be enticed by a middle-of-the-aisle display of 12-packs themed around a seasonal tie-in, such as fall football tailgating.
Before implementing the strategy, the company said it had limited assortment, few price points and dispersed messaging. Now with OBPPC in place, the company has an optimized assortment, expanded price point and occasion messaging to align with shopper needs across channels and shopping occasions.
The company showcased its OBPPC implementation through a market tour of various formats and retailers throughout the Houston area. The city is the fourth largest in the United States and has a highly diverse consumer base with more than 100 nationalities represented and 90 languages spoken in the market. Caucasians, Hispanics and African-Americans each represent more than 19 percent of Houston’s total population, the company said. The diversity of Houston often is viewed as a representation of the future demographic mix of the country, it noted.
In each channel, The Coca-Cola Co. featured the various ways the Houston team embodies its “Look of Success” program, which tailors product mix to a store’s priorities, targets messaging to connect with that consumer and leverages the company’s entire portfolio. Each channel has its own priorities regarding displays, brands, bundling offers and consumer connections.
In addition to traditional retailers, the tour also included stops at foodservice outlets, which featured the Coca-Cola Freestyle fountain dispenser, and university locations that offer products through the company’s interactive vending machines.
In order to execute at retail, Coca-Cola Refreshments has implemented strategies to move toward making the company the best supply system, explained Brian Kelley, chief product supply officer for Coca-Cola Refreshments. The company standardized processes, controls and metrics across its network of 78 manufacturing plants and 416 distribution centers, Kelley said. This has allowed for approximately $20 million in annual savings, improved service and improved safety, he explained.
In addition, the company has seen a 9 percent increase in on-time deliveries and a 45 percent reduction in warehouse out of stocks. To fulfill on-time and fill-rate success for national foodservice and on-premise accounts, Coca-Cola Refreshments implemented a policy that decreases average order size, but increases delivery frequency, the company said. BI