Coke "cracks" growth code

NEW YORK: Coca-Cola, the soft drinks giant, has "cracked the code" for growth by continuing to invest in marketing, brand building and innovation, Muhtar Kent, the company's chief executive, has argued.

Kent told Bloomberg that taking a long term view - such as by spending $10bn in North America over the last three years - has been vital to securing even modest sales improvements in key markets like the US.

He said: "We're generating that growth not because of what we've done in the last quarters, but what's happened in the last three years: how we've invested in our brands, how we've created an infrastructure, how we're communicating with our consumers and how we're generating and commercialising innovation."

"We have ramped up investments during this crisis, and that's why we are generating growth. We are able to crack that code for growth. Our brands are stronger than ever before."

A major factor seemingly working in Coca-Cola's favour is that it operates in a sector based more on emotional engagement than one requiring substantial outlay on the part of buyers.

"We're fortunate that we are in a business where we sell, in a way, moments of pleasure at cents at a time. So we're not selling refrigerators and we're not selling big ticket items," Kent said.

In reflecting broader popular preferences, Coke has recently introduced a range of smaller pack sizes, suiting the budgets of price-conscious shoppers.

"The consumer is telling us they would like more choice in this environment," said Kent. "Smaller sizes and different sizes and different price points generates more transactions, which leads to a healthier business."

Alongside these products, the company has also rolled out unusual offerings such as cans in the shape of the iconic Coke contour bottle, and drinks fountains capable of mixing several brands.

"Innovation can be, in our business, anything: the way we do business, packaging, products, equipment. As long as it generates aspiration at the point of sale for us, that's an innovation," said Kent.

Looking ahead, Kent suggested demographic trends should prove beneficial in the US, where only 25% of consumers will be over 60 years old in 2010, versus 32% in Europe and 41% in Japan.

"I think the United States is unique in its demographics, in its young population, in its diverse population. It is the youngest of all Western nations," he said. "We have a great future."

"Is it going to be a short road out of this tunnel? No. Is it going to be years and years of continued economic malaise? I don't think it is."

Data sourced from Bloomberg/Washington Post/CNBC; additional content by Warc staff, 22 September 2011

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