Coca-Cola Needs to Be More Than Just Coke, its Next Chief Says

By Jennifer Maloney 

Coca-Cola Co. has outgrown Coke, according to its next chief executive.

At an analyst conference on Thursday, James Quincey, Coke's current chief operating officer who will take the reins in May, said the 130-year-old company must speed up the development of products beyond soda to become "a total beverage company."

"The company needs to be bigger than the core brand," he said.

Mr. Quincey, 52 years old, said his plans include cutting corporate staff as well as the company's "sugar footprint," and introducing a new compensation system intended to encourage more research, development and innovation. He didn't say how many positions he expects to be eliminated.

His tone marks a shift from departing CEO Muhtar Kent, who has long called the Atlanta company's namesake cola its "oxygen."

"Change is in the air," Morgan Stanley analyst Dara Mohsenian wrote in a note Thursday. He called Mr. Quincey's presentation "a refreshing (literally and figuratively) assessment of where the company stands."

Coke's revenue has declined in each of the past four years. And despite a push into juice, bottled water, dairy and other beverages, soda still represents about 70% of company sales.

As consumers drink less soda, Mr. Quincey said, the company could still grow soda revenue by focusing on smaller, higher-priced packaging that would help it improve its margins. At the same time, he said, Coke must work more quickly to increase its market share in categories such as sports drinks, energy drinks, bottled water, dairy and ready-to-drink tea and coffee. The average person consumes eight 8-ounce beverages a day, he said, noting that globally, Coke currently provides about 4 of those ounces.

This year, Coke is rolling out new versions of Fanta and Sprite with less sugar and is continuing to introduce Coca-Cola Zero Sugar, which launched last summer in the U.K., to new markets.

"For sure, some of them won't work," Mr. Quincey said of the company's recipe-tinkering, but he added that Coke must behave more like a technology company, releasing regularly updated versions of new products and packaging.

The company for decades talked about putting its namesake cola "within an arm's reach of desire," Mr. Quincey said. Now, he said he and his colleagues must ask themselves: "Is everything we do within a click's reach of desire?"

Write to Jennifer Maloney at [e-mail]

(END) Dow Jones Newswires

February 23, 2017 17:18 ET (22:18 GMT)

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