Muhtar Kent, chairman and CEO of The Coca-Cola Company explained five strategic actions to put company's business on the path to stronger growth.
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First, the company is making targeted, disciplined investments in its brands and its future. In 2014, this meant ramping up its spending to build company's brands - including a double-digit increase in media spend - and focusing on its strongest, most promising opportunities.
The company also announced strategic investments in Keurig Green Mountain, Inc. and Monster Beverage Corporation and expanded company's venture with Select Milk Producers, Inc. With the first, it is developing Keurig Kold, a new pod-based system that will enable people to produce Coca-Cola and other beverages at home, starting in late 2015.
Meanwhile, its expanded partnership with Monster will strengthen its position in the fast-growing energy drinks category. And the company introduced fairlife ultra-filtered milk in select U.S.cities, preparing for a national rollout of the value-added dairy brand in early 2015.
Second, the comoany brought an added emphasis to revenue and profit growth, starting with more distinct and clearly segmented roles for its markets. In emerging markets, Coca-Cola is striving to grow mostly via greater volume to drive awareness and build its brands. In developing markets, the company goes after a balance of volume and pricing. In developed markets, it sees price/mix as its most powerful growth lever.
The company announced that revenue growth would be added as a metric in the company's incentive plans starting in 2015.
Third, Coca-Cola began to refocus on its core business model of building brands and leading an unmatched global system of bottling partners. For 2014, this meant accelerating the refranchising process in North America—transferring ownership of company-owned bottling territories back into the hands of independent operators.
By year-end, it had moved about 5 percent of U.S. bottler-delivered volume to new and existing bottling partners. The company expects this pace to double in 2015 and double again in 2016. There was significant new investment in Coca-Cola Amatil Indonesia as well as the formation of a next-generation operating model with Coca-Cola Beverages Africa.
Fourth, the company aggressively stepped up company's productivity efforts. While its had already announced a plan to deliver cost savings to invest in its brands and business, it took action in 2014 to increase this to $3 billion in incremental annualized savings by 2019.
About half of these savings will come from being more efficient in the production and distribution of its beverages. Roughly a third will come from reducing operating expenses. The rest will come from marketing, where we've designed more effective and efficient global campaigns.
Fifth, Coca-Cola began streamlining and simplifying its operating model. This includes reducing the size of its group-level organizations around the world, standardizing its operating approach and key processes across business units and forming a single business unit in Western Europe, where it previously had three. ■