As the completion to the second decade of the 21st century quickly approaches, the beverage market remains at the frontend of developing and marketing innovative solutions for today’s modern consumer. With a 132-year legacy, Atlanta-based The Coca-Cola Co. has witnessed many of these evolutions throughout the global beverage market.
As a proactive participant in this transitioning market, the company has benefited from its embracement of traditional and new age beverage solutions. Helping to guide the legacy company through this latest evolution is James Quincey, The Coca-Cola Co.’s president and chief executive officer (CEO).
Since ascending to the top executive position in May 2017, Quincey has borne witness to the completion of the refranchising of the company’s North American bottling network, investments and acquisitions of growth-driving brands as well as new innovations from The Coca-Cola Co.’s established brands and categories. These efforts not only serve as a growth model for the company but also are helping consumers have more choice and control about the products in which they spend their hard-earned dollars.
In addition to the accomplishments, The Coca-Cola Co. also remains at the forefront of the next-generation sustainability goals and measures across the supply chain.
For these reasons and much more, Beverage Industry has named Quincey as the publication’s 2018 Executive of the Year.
Lead by example
As The Coca-Cola Co.’s latest president and CEO, Quincey’s recognition by Beverage Industry is latest among his predecessors, such as Muhtar Kent and Neville Isdell, whom also have received this honor.
“I’m humbled and honored,” Quincey says. “Coca-Cola has been around for more than 132 years, and there is a long line of legendary executives that came before me. For my name to be included in that group, it’s truly an honor.”
Quincey’s tenure with The Coca-Cola Co. dates back to 1996 when he joined as director of learning strategy of the Latin America Group. He then served numerous roles throughout the company with the most recent being named president and chief operating officer in August 2015. Quincey’s legacy with the company across various regions and markets helped prepare him for the role that he serves today.
“To understand Coca-Cola, you have to work out in the business, or what we call the field. Because of those experiences, I came to a job at the headquarters in Atlanta with a pretty thorough understanding of how our business actually works,” he explains. “I also make it a priority to study what consumers want. That has always been a big part of all the jobs I’ve held.”
In that role, Quincey has encouraged a work environment that commissions his leadership team be nimble decision-makers.
“I focus on inclusion, empowerment and accountability,” he explains. “I give my leadership team and all employees the license to make decisions. Everyone in the company has the freedom to be agile and curious, but there is also accountability for your work. I try to lead by example.
“Having a staff that is empowered to make decisions — and make mistakes at times — has allowed us to move quickly,” Quincey continues. “Our North America business, for example, spent only a month on the process of investing in BodyArmor.”
Quincey explains that his leadership style was influenced by some of his early interactions at The Coca-Cola Co.
“Early in my career, I spent nine months in Mexico working as executive assistant to Jose Octavio Reyes, who was president of the Latin America Group at the time,” he describes. “Even though I served in the role briefly, it had a significant impact on me. Pacho — as everyone calls him — has retired and left a great legacy at this company. He was an influence not only on me but on several of our current executives, including Brian Smith, Alfredo Rivera and Francisco Crespo.”
When Quincey assumed the top executive position, The Coca-Cola Co. already was in the process of refranchising its North America bottling network. In the United States, the endeavor was completed in October 2017, while Canada announced its completion earlier this year.
Quincey explains that the process always was driven by the goal of finding the right partners for its business. “The end of refranchising in North America is gratifying in large part because of the bottlers who have expanded or joined the system for the first time,” he says. “It shows that this is a great industry with great growth opportunities ahead.”
The experience has resulted in a stronger relationship between the beverage manufacturer and its bottlers. “[The relationship] has been re-energized,” Quincey notes. “We are working together to drive results.”
Those results now come from placing merchandising and delivery control back with those who are in the communities on a day-to-day basis.
“There are many benefits, but the biggest one is that ownership of bottling operations returns the system to where it performs best — in the hands of local and regional bottling partners who know their territories really well,” Quincey says. “Even the largest companies benefit from localizing. People and relationships drive growth.”
Yet, a re-energized bottling network is just the surface of accomplishments for Quincey. Earlier this year, The Coca-Cola Co. and Whitestone, N.Y.-based BodyArmor entered into a definitive agreement through which The Coca-Cola Co. acquired a minority ownership stake in BodyArmor.
Through the agreement, BodyArmor has gained access to the Coca-Cola bottling system, enabling the fast-growing brand to accelerate its growth to meet consumer demand for its premium line of sports performance and hydration drinks, the companies stated at the time of the announcement.
Quincey details the value that the premium hydration category offers as well as the position that BodyArmor holds in that market.
“It’s one of the fastest-growing trademarks in retail value in the entire [non-alcoholic ready-to-drink] (NARTD) industry this year in the U.S.,” he says. “We believe now is the right time to partner with BodyArmor, allowing them to continue to grow their business in a sustainable manner that will maintain the brand edge that has made them so successful.
Quincey adds that BodyArmor aligns with Coca-Cola’s existing lineup for hydration, with each brand serving specific need states.
“BodyArmor competes in the expansive and fast-growing premium hydration category and is a complement to our broader hydration lineup in North America: Powerade, vitaminwater, smartwater and Dasani,” he says. “Each brand has a unique role.”
In conjunction with that, The Coca-Cola Co. sees more potential with the bottled water market in the United States and abroad. Through household names such as Dasani, vitaminwater and smartwater the company has the ability to leverage consumers’ brand recognition when developing next-generation bottled water solutions.
“Worldwide, we’ve focused on segments of the water market where we can create value,” Quincey says. “You’ve seen our success with smartwater, for example, which is a premium product. We recently announced innovations for smartwater in North America next year, with the addition of antioxidant and alkaline extensions. We are being deliberate and selective about our water portfolio, and we’re continuing to invest in the profitable, fast-growth segments we see. In the U.S., for instance, the alkaline and antioxidant sub-segments of water have grown substantially.”
One also can see the commitment that The Coca-Cola Co. has made in the sparkling water segment. For example, Dasani Sparkling water was introduced to the market four years ago and has seen sales triple in that time, Quincey details.
In addition to Dasani Sparkling, the company’s portfolio includes smartwater sparkling and it acquired Topo Chico last year. However, traditional retail outlets are not the only avenue in which the sparkling water market has potential for growth, and The Coca-Cola Co. remains committed to supporting that growth.
“Sparkling water is becoming more and more common in restaurants, and consumers are willing to pay a premium for their favorite brands,” Quincey says. “We’ve also done well with our Barrilitos Aguas Frescas in the foodservice channel in the United States, which is an example of an innovation to meet growing consumer demand in the category.”
Some like it hot
Beyond pushing forward with a commitment to the premium hydration market, Quincey’s leadership with The Coca-Cola Co. also has shown that the total beverage company is willing to make a strong investment on the hot beverage market.
At the end of the third quarter of 2018 calendar year, the company announced that it reached a definitive agreement to acquire Costa Ltd. from parent company Whitbread PLC for $5.1 billion, thereby giving The Coca-Cola Co. a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion, it said at the time of the announcement.
Costa operations include nearly 4,000 retail outlets with highly trained baristas, but it also holds value beyond these retail outlets. “Costa is much more than a brand or a coffee retailer,” Quincey says. “Their portfolio includes a coffee vending business, at-home coffee solutions and a roastery. What we’re getting with Costa is a coffee platform that allows us to grow in coffee and hot beverages business worldwide.”
Because Costa’s operations reside outside of the United States, those focused on the North American market might not be as familiar with the reach that the brand offers.
“Costa is an impressive business and brand with a large reach,” Quincey explains. “It’s in more than 30 countries. There are about 4,000 Costa retail outlets and 8,000 Costa Express vending machines. It has been named U.K.’s favorite coffee shop eight years in a row.”
As a native from the United Kingdom, Quincey was familiar with Costa’s deep heritage within the market, but also acknowledges that its platform makes it a right fit at the right time for The Coca-Cola Co.
“For the first time, we’re expanding beyond ready-to-drink coffee into more parts of the business, and we’re doing it in more parts of the world,” he says. “For us to truly be a total beverage company, we need to have a position in hot beverages — an area we have historically been lacking.”
Although the acquisition, which is subject to close in the first half of 2019, brings The Coca-Cola Co. into the hot coffee market, Quincey notes that Costa could offer potential for a RTD format.
“Costa offers great opportunity in ready-to-drink beverages,” Quincey explains. “Coca-Cola has bottled and canned coffees in a few markets such as Georgia coffee in Japan. The Costa brand has potential for expansion into ready-to-drink coffee across many markets globally.”
Quincey also recognizes that the hot coffee market is not the only area in which The Coca-Cola Co. could expand its portfolio. However, any venture would need to align with the Coca-Cola system.
“As a total beverage company, we’re always exploring new ways to expand our portfolio,” he says. “The hot beverage category is a very large portion of the global business, so we’re looking at options. Our focus is always about what is the best potential fit for our system.”
Listening to consumers
Although analysts have highlighted the challenges the carbonated soft drink (CSD) market has experienced the past decade, sparkling beverages still are a vital component to the global beverage market. Through its legacy brands, The Coca-Cola Co. is delivering the innovation that consumers demand.
“The sparkling market continues to grow, both in the United States and around the world,” Quincey says. “In some places, it’s about growing volume. In the U.S., it’s about growing the value of the category. In 2017, for instance, the NARTD beverage industry grew in value by about $2 billion in the U.S. alone. About half of this growth came from traditional sparkling soft drinks and energy drinks. As always, it’s vital to follow the consumer. You can see our success with Coca-Cola Zero Sugar. Packaging is also important, as shown by the growth of smaller package sizes.”
In addition to smaller pack sizes, The Coca-Cola Co. also is using packaging to connect consumers with its soft drink brands through the Share a Coke platform.
“Consumers love personalization,” Quincey says. “It’s fun to look through bottles and cans in hopes of finding one that is special to you. Share a Coke has been successful because it continues to surprise people. We have introduced song lyrics, sports logos and most recently stickers.”
The program’s success also has influenced the company to bring the platform outside of the United States. “We have learned that personalization works, and we’ve used the idea in other markets,” Quincey says. “China, for example, has introduced cans for individual cities. We want to make buying one of our products a fun experience related to that brand.”
But packaging innovations are not all that The Coca-Cola Co. has brought to the CSD market in the past year. Earlier this year, the company announced the relaunch of Diet Coke with a bold new look and four new flavors: Diet Coke Ginger Lime, Diet Coke Feisty Cherry, Diet Coke Zesty Blood Orange and Diet Coke Twisted Mango.
Diet Coke remains available in its original formula and packaging; however, the flavor evolutions are packaged in 12-ounce sleek cans.
Given the importance of Diet Coke to the company, The Coca-Cola Co. wanted this innovation to encompass the diversity of today’s Diet Coke consumers, Quincey says.
“Diet Coke is a very important part of our portfolio, particularly in the North American market,” he says. “We wanted to re-energize the brand. We designed flavors that would appeal to the next generation of Diet Coke drinkers, and we’ve seen early success.”
Although it still is in its infancy, the line extension has helped return Diet Coke to growth in North America while the company has been growing the overall revenue for the brand, Quincey notes.
Like most industries, the beverage market is no stranger to impact of digital technology on its operations. Most prominent among those technologies has been the eCommerce channel. As a proactive leader, Quincey continues to monitor developments within this channel and works with The Coca-Cola Co.’s partners to support its brands in that arena.
“eCommerce already has a huge impact on our industry, and that impact will continue to grow,” he says. “Our strategy is to work closely with our customers on eCommerce to ensure we create shared value. We’re expanding our efforts in this area.”
For example, in China, the company developed a Sprite eCoupon at McDonald’s, which resulted in 5 million transactions, Quincey says.
Quincey adds that the company recognizes the strategic benefits that can be realized through digital technology, and as such, is part of its growth priorities. “It’s essential we get this right,” he says. “We’re working on modernizing our internal digital platforms and digitizing how we do business in the marketplace. In North America, for instance, we just named a new chief digital integration officer to help support this work in our flagship market.”
This is just one of the focuses for The Coca-Cola Co. going forward. As the beverage market continues to evolve, Quincey and his leadership team remain committed to that nimble empowerment that has brought them to where they are today.
“We’re focused on growing the right way,” he says. “We will continue to expand our portfolio and offer more options. We’ll experiment and take risks and, when something doesn’t work, we’ll move on quickly. We’re going to meet the consumers where they are. The beverage industry continues to have a great future, and so does The Coca-Cola Co.” BI