The new chief executive of Coca-Cola, James Quincey, has announced that the company will be accelerating its investments in a number of new start-ups as it moves to diversify its business into new trends and healthier beverages.
Calling for a move away from past practices that had historically been focused on promoting its own brand above all else, the new CEO said that “it was probably culturally unacceptable internally to say that Coca-Cola wasn’t the preferred brand.” His concern is that this approach automatically limits the options for a company to grow in other fields beyond those it is focused on. By widening the scope of investment in time and money, Mr Quincey suggests that the company will be able to “sharply focus on what it is that consumers are really doing.”
The change in the rate at which investments are being made is an increase begun by his predecessor, Mr Muhtar Kent, who continues as the chairman at Coca-Cola. The last ten years have seen forty two brands in the US alone either built from scratch or invested in as a broadening of portfolio, with nine new brands in teas and still fruit drinks, such as Fuze, pulling in more than a billion dollars a year in sales.
Seventy two percent of the company’s volume of sales around the world however still come from carbonated drinks such as Coca-Cola, Fanta, and Sprite. Criticism has come from several analysts that the company has continued to be too slow to diversify and this seems to be born out in the sluggish rise in its share prices over the last five years – by comparison Coca-Cola’s biggest rival, PepsiCo, has gained sixty nine percent in its share prices over the same period, while Dr Pepper Snapple has more than doubled in value.
Mr Quincey brings over twenty years of experience working for Coca-Cola to his new role.
Born in the UK and growing up in the US, he has worked for the company around the globe, including Argentina and Mexico. He has stated that “Coca-Cola has, and always will, be the heart and soul of the company, but the company can be bigger than that.” His argument is that the company needs to view its investments as a portfolio and accept that some of those investments will work, and some will not. At the same time he also reaffirmed the company’s drive to continue to redevelop existing drinks as well as bring new ones to market in-house.
This all comes at a challenging time for the soft drinks industry. Growth in major markets has slowed across the board, especially as governments continue to push to reduce obesity rates through taxation and regulatory review of sugary products. Concerns about the ability of Coca-Cola to continue to grow organically have been shot down quickly in Mr Quincey’s interviews, especially as the markets continue to talk about possible takeover targets for Anheuser-Busch InBev who are alleged to be looking at a long list of possible names.
Addressing conversations about a wave of consolidations in the food and drink industries world-wide, he said that he didn’t see Coca-Cola in that category of companies needing to merge to survive: “We see ourselves as having more growth. People are spending more on food and beverages; they’re just doing it in a different way.”