Coke’s big innovation bet paying off
Coca-Cola’s focus on acquisition and innovation while culling under performing products is paying off. The company posted better than expected quarterly results and said the rest of the year is looking good (Just Drinks).
Key points:
- Company posted Q2 organic revenue growth of 6 per cent to $10bn
- Coke Zero delivers seventh consecutive quarter of double digit sales growth
- Costa Coffee acquisition puts firm into $500bn hot drinks market, Coke plans to roll out ready-to-drink coffee in more markets
- Innocent, acquired in 2009, has become number one chilled juice in Europe, with Asia expansion planned
- Plans to “rapidly scale Coke Energy across our system”
- Almost 25% of revenue now from new or reformulated products, up from 15% two years ago
- So far this year, over 275 ‘zombie’ SKUs eliminated
Changing the components keeps the marketing machine keeps firing. As consumer tastes shift, Coke has moved with them. Zero sugar, juices, coffees, water, nutrient shakes and now energy drinks.
CEO James Quincy has continued the innovation drive since taking the reins in 2017, with new product development core to his strategy. Simultaneously, the company has been ruthless in calling underperformers – the 275 zombie SKUs cited in the earnings call.
Coke’s diversification and focus on innovation reflects its bid to find new customers while retaining those moving away from sugary fizzy drinks. Becoming a ‘total beverage company’ creates challenges for marketers attempting to manage 500+ brands. But Coca-Cola, which ditched the CMO role for a chief growth officer around the time Quincy took over, seems to be managing the transition – and boosting margin to boot.
It's also remembering to have some fun - as the 1985 New Coke reintroduction via Netflix smash Stranger Things attests.
