Collaboration Needed to Meet Evolving Shopper Needs

Argyle Executive Forum

Chicago, IL

May 12, 2011

Right this very minute, right here in Chicago, a young woman is walking into one of your stores, or visiting you on her mobile phone.

She's a single mother and the last couple of years have been tough. She has two young children, worries about her job, and money is tight. But she's getting by and today she selected your store. In the middle of her chaotic life, she trusted and chose your store. She picked your brand. And we're hopeful she'll also select one of our brands too while she's there.

We at Coca-Cola cherish this shopper occasion and want to optimize this opportunity with you. But we have to be more ambitious, to collaborate together on an entirely new level - collaborating on our strategies, on our business goals, our consumers... on our plans for this shopper who just entered your store. Together, we can help create unique meal bundles, targeted packaging alternatives, or family solutions.

Whatever it is, we must maximize this opportunity to make a positive impact in her hectic life. And when we do it well, she rewards us with her spending, her loyalty, and her frequency.

That is why we see today's consumer reality filled with growth potential. It's certainly different and probably more difficult than it's ever been. But for innovative, creative manufacturers and retailers, the opportunity is there.

There is a new paradigm unfolding.

For decades we have all grown by expanding distribution - more stores, more geographies, more formats - and we'll continue to see some of that for the coming years.

But, the days of getting bigger are being replaced with the days of getting better - better at retailing, better at serving shoppers' needs, better at anticipating our consumers' wants, and better at bringing solutions to market faster. Selling more and selling better within existing communities is critical to meeting our collective growth objectives.

That's because we've seen a real reset in consumer expectations. People have had their lives significantly shaken and must now re-orient against job insecurity, against upside down home equities, against multiple generations living under one roof to make ends meet, against the need to work multiple jobs, or against postponing retirement.

Their lives are now very different, which creates an altered reality in the retail sector. It's no longer about just opening new stores, but doing better with the stores you have... And dealing with a new consumer reality. Embedded in these two realities is our opportunity. Those of us that adapt, those of us that bring creative solutions to market against this reset of consumer expectations will be the ones shoppers reward and choose more frequently.

This is why I'm so optimistic about out business globally and right here in the United States.

 

Before I go into the reasons for even greater optimism, I've got to talk a little bit about my company, The Coca-Cola Company. I'm honored to have been a part of this Coca-Cola story for 23 years and in fact, just last Sunday, May 8th Coca-Cola celebrated our 125th Birthday. 125 YEARS YOUNG.

125 years ago, Dr. John Pemberton created Coca-Cola and his first action was to make a customer call with Jacobs' Pharmacy in Atlanta, where the product was launched. Without the support of that very first customer, our brand would have never seen the light of day. However, from that moment on, it's been our business model. Our DNA is about serving customers with winning, world-class brands that meet the needs of your shoppers. So from that one serving in one store, we've come a long way:

In fact, Interbrand rates Coca-Cola as the most valued brand in the world at $70 billion dollars.

Of course, we haven't gotten here by ourselves. Since day one, every ounce of our product, every brand we sell, every SKU sold - is in your retail environment. From the largest store to the independent shopkeepers, today we service - 20 million customers worldwide - we thank you for your support and belief in us.

Today 1.7 billion servings of Coca-Cola brands are enjoyed each day. By 2020, our plan is to serve 3 billion servings per day. That is the opportunity we see and is the basis of our 2020 Vision. And this is it. This is our 2020 Vision - it fits on one page! But don't be fooled, it's a very strategic, prioritized roadmap that is guiding the entire Coca-Cola system. It defines how we will do in nine years what took 125 years to do the first time.

Embedded in our 2020 Vision is this wording: "We will be the most preferred and trusted beverage partner by:

At that point of purchase, at the moment of truth where shoppers make their decision.

To do this, we must become more collaborative in our thinking and approaches, and together we must bring greater innovation with intensified speed to market. We know you have sales goals and in-store designs you want to accomplish. We also know that your shoppers are looking for our brands in different packages, at different price points, for different occasions. When we develop this category vision together, we can create and share even greater value with our shoppers and our businesses.

Why do we believe that opportunity for growth is out there? Why are we so optimistic? Consider a few key trends we see happening at a global level and right here in the United States:

And everywhere, we see a reset of consumer expectations. Technology is enabling shoppers to engage with brands in a dialogue, as opposed to a one-way monologue. Today's consumers in control. They are dictating what they want...how they want it... when they want it... and where they want it. And, particularly here in the U.S., they are focused on value.

Changing mindsets, changing media habits, changing dialogues, changing trends.

But in this change comes great opportunity. Extraordinary change enables extraordinary opportunity.

We're planning to be successful, no doubt, and we've set higher goals for ourselves. But these goals cannot be achieved by simply doing what we're currently doing, better.

Turning this vision into reality requires us to change how we do business. Specifically, how we conduct business with our retail partners. Our business alliance model must align with how shopping behavior is changing within these macro trends. It's how we work together on her behalf, the shopper that will ultimately determine whether either of us achieves our business objectives.

So today, I'm here to not only share our optimism for the future, but to explain how we will achieve it. Activating optimism and achieving our 2020 Vision comes down to three core tenets:

Today, consumers have access to the widest breadth of brands, products, styles and sizes imaginable such that you'd think no more are needed. Yet they demand more. And we create them to meet their ever-changing needs. At Coca-Cola, we are committed to providing your shoppers the widest breadth of products we can.

But just having the brands they want is not enough. We must provide access to these brands on their terms while connecting them to relevance in the lives of our shoppers.

Many want large multi-packs but others want cold immediate consumption. Others want smaller packs for special occasions. They want Coca-Cola, Odwalla juice, vitaminwater, Honest Tea, Fanta, Powerade, you name it.

Their desire for even more will continue - and we will be there to provide it to them. Yes it complicates our business and adds more complexity to operations, but it simplifies the lives of our shoppers. When we meet their needs, it ensures they will come back.

This is why we must simplify how we work together; to plan further out, establish long-term strategic plans that meet their needs and our objectives. When we do that, we have a longer perspective on our business.

Now we can innovate, bring pipelines together, coordinate with your marketing and operational calendars and build mutually beneficial long-term pans together.

Consumers are connected 24/7 through mobile technology, through Internet, through Twitter. The smartphone has become their remote control for their lives.

These connections become critical as we establish the emotional side of the retailer experience, which we feel is far more valuable than mere functional attributes.

Let me give you an example. Today, Coca-Cola has the largest Facebook page in the world with over 26 million and growing fast.

And we didn't create it. Our fans did. At first it was uncomfortable so we engaged our legal counsel in our traditional brand control mindset. Then we realized we had to let this happen. We may not like everything that gets posted, but what we have seen is that when the occasional negative comment arises, our fanbase stands up for us.

This level of connection confirmed our trust in them; and reaffirms our commitment to them each and every day. This bond fuels our commitment. It also fuels our growth.

Your customers trust you too! I bet you have a lot more fans than you think. You'd be surprised how many will connect with you when you give them the kind of personal touch they're looking for? It's a great opportunity you can leverage.

Because of the trust shoppers have in us, we owe it to our shoppers to be the best we can be. Shoppers, consumers, people - are counting on us. Not only Coca-Cola and you as their store of choice. But the both of us together. They view us as one unit.

Their shopping experience is holistic. They do not actively separate the store from the products on the shelf. They see each as an intertwined experience that either meets their needs or does not. Unless we, us in this room, can do a better job of meeting her needs, we neither of us will achieve our objectives.

A key to collaboration is understanding the passions that exist in each market, and then tapping into them in a relevant, meaningful manner. Sustainability is certainly on everyone's minds for both our retailer partners and our consumers. It is a really important social issue. From the global warming, carbon footprint, water availability, obesity, and malnutrition, there are real social issues we must face together.

There are so many ways we're working with our retailer partners to help address these issues. One is by creating more energy-efficient coolers. Another is or invention of and use of plant-based PET bottles sourced from wasted plant materials. We have a long-range plan to become water neutral in the production of our products worldwide.

And of course, we're collaborating on driving our business performance. By capitalizing on the trends, tapping into shopper passions, and aligning our growth agendas, we can develop better, smarter, more effective programs that deliver better results for us and more relevance for our shoppers.

But we cannot be as good as we cannot achieve these aspirations for our trusted shoppers without being truly aligned and committed to the success of each other. Our goals and dreams must be transparent and aligned for our partnership to work.

When our conversations are confined to transactional levels, expectations and opportunity are limited. When the dialogue is expanded to growing our partnership and capturing opportunity beyond next quarter, then the fruits of our labor will be far more robust. Now more than ever, collaboration on behalf of our consumers can be the X Factor.

If we're going to reach our 2020 Vision, and help you reach your goals, I challenge us to change the game together. We can and should take significant leaps to how we collaborate. We can create this culture change. This is our time.

I can tell you that all of us in the Coca-Cola system are embracing this customer-centric mindset and approach to evolving our business to win with you in the marketplace. We have seen the results and we are pursuing even higher levels of strategic collaboration with our retail partners. More open, more honest, and more transparent - about the challenges we must face so that our local teams can build sustainable plans together that are mutually beneficial and, at the end of the day, serve our shoppers better.

The woman who walked into your store a short while ago, is counting on us. She has already left your store and is headed home now. How did we do? Did we make her day a little bit better or did we miss this magic moment. We may never know, but she will. If our work together is tactical and transactional, her expectations may have been unfulfilled. But if we strategically put her at the forefront of our thinking, how good can we be? What if when we sit down together as business partners we really segmented and talked about our shoppers? What if we built a plan based on that? What if our collaborative partnership created unique packages and opportunities for purchase that don't even exist today?

Think how much more successful we'd both be. She is counting on us - Coca-Cola and you our retailer partners. Us.

From the Coca-Cola perspective you can count on us to continue to build and invest in winning brands and develop even better ways to connect with consumers that build brand preference and builds your business. But, at a deeper level, we look forward to working with you to make sure that, together, we help make the lives of shoppers, like the woman we've discussed, even better. Making her just a little bit Happier.

Thank you.