1. Confidential Property of The Coca‑Cola Company
ISSUE #10 SPRING | MAY 2014 A Publication of The Coca‑Cola Company
COMMERCIAL LEADERSHIP TIMES
Coca‑Cola Hellenic Chief
Executive Officer Dimitris Lois
(right) and Metro Russia and
Kazakhstan General Manager
Pieter Boone pass the Olympic
Flame in Sochi.
The Year of
Marketplace Execution
Learn more in the Publisher’s Notes page 2.
Marketplace execution is moving front and center as one of
the Company’s top five priorities. The renewed focus includes
defined global Commercial Standards, critical metrics and more
support to build our commercial talent. Your contributions will
help us realize this annual incremental USD 5 billion opportunity.
TECHNOLOGY
Reality app links music,
young people, Coke®
Sales of Great Britain’s new 250ml
slim can are running ahead of
forecast in some measure due
to a ‘blip.’ The smartphone app
Blippar scans a code on the can and
rewards users with free music.
Read more on page 19
eCOMMERCE
CokeNet multi-bottler web
portal makes ordering easy
Brazil’s new CokeNet business-
to-business portal empowers
customers to create, place and
track orders 24/7. The single source
contact for customers also provides
an integrated system for the 10
bottlers it supports and drove fill
rates up six points.
Read more on page 18
GLOBAL TRENDS
You have to carry it
to sell it
Mexico is helping small customers
invest in and grow a lucrative stills
portfolio with the new “Specialty
Box” that mixes five brands across 16
bottles all in one easy-to-order SKU.
Read more on page 10
HIGHLIGHTS
Germany cuts large portfolio down to size
Reduces portfolio by 60% and gains supply chain efficiencies
continued on page 7
With one of the largest portfolios in the world (nearly 900 SKUs
in 2009) Germany knew numerous redundant and unprofitable
SKUs needed to be cut from the portfolio. They also knew that
carrying extra SKUs is not free – they take valuable cooler and
shelf space from more profitable brands and can complicate the
supply chain without adding sufficient value.
With an aggressive new SKU rationalization approach, they
reduced their total portfolio 60% in five years. That took them
from 852 to 340 active SKUs by the end of 2013.
“This effort has helped simplify our entire system in production,
supply chain and logistics,” said Arne Lauerwald, director of
planning for CCEAG. “We have eliminated many SKUs produced
in only one or two plants and transported long distances at higher
costs, as well as SKUs produced in small quantities that challenge
production lines.”
“Reductions also simplify merchandising and create more space
for stronger brands,” added Kirstin Meyer, CCEAG’s director of
pricing terms.
With supply chain and commercial working closely together,
CCEAG has been careful to only eliminate SKUs not contributing
to sales and margin success. They have grown volume and net
sales revenue at the same time.
The effort enabled them to hone in on the 231 SKUs that, despite
representing nearly 40% of the total portfolio, contributed only
1% of volume.
“Before these objective criteria were in place we were much less
likely to take decisive action because there was always what
seemed like at least one good reason to keep a certain SKU,”
continued on page 13
Being a major sponsor of the Olympic Winter
Games in Sochi is nothing like doing it in
Vancouver, Torino or Salt Lake City.
The emerging marketplace offered a very
different opportunity: the chance to build a
sustainable legacy of execution excellence and
permanently connect The Coca‑Cola System
(TCCS) with the new spirit of optimism and
possibility energizing Russia.
A streamlined portfolio has simplified operations to
enhance supply chain and logistics efficiencies.
Vlivaisya! Russia motivates System,
customers to “join in” for long-term growth
What’s Inside...
2014
“I was pleased to have an opportunity to host
our customers and our bottling partners in
Sochi where I saw our best ever activation of
an Olympic asset,” said Coca‑Cola Company
Chairman and Chief Executive Officer Muhtar
Kent. “Our local team and bottlers are doing an
excellent job in Sochi.”
They started with low share in a fragmented
and competitive marketplace in the South
Region. However, the Russia Business Unit (BU)
and Coca‑Cola Hellenic (CCH) completed their
three-year Olympic journey with double-digit
volume growth, a three-point share gain and
two percent jump with teens.
Here long after the last race
The Coca‑Cola Russia team understood from the
start that the big opportunity in the Olympics
was not only in the special activations promoting
3. May 2014 Page 3COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
Key steps in CCE Norway’s journey
• Changed from refillable to
non-refillable bottles
• Transitioned from direct store delivery to
central warehouse
• Moved order taking from the outlet to
the warehouse
• Negotiated new commercial terms
with customers
• Evolved sales team role from order taking to
growing customers’ businesses
Norway radically reinvents itself
and posts first volume, revenue and
share gains in more than a decade
When Coca‑Cola Enterprises (CCE) took over the Norway
business in 2010, it was clear that a business turnaround
was needed.
For more than a decade, sparkling beverage sales were flat
and Norway suffered significant share erosion (down nearly
30% in 10 years). Combined with a high cost to serve, strong
competition and a highly consolidated customer base,
the Coca‑Cola bottling business in Norway was quickly
becoming unsustainable.
Together with KO Norway, CCE quickly defined three
top priorities.
• Reignite growth in sparkling soft drinks
• Recapture lost SSD share, in the home and the
cold channels
• Establish a sustainable, profitable growth business in
the grocery channel for the Norway system
and customers
The turnaround demanded a complete business
transformation, including a USD 100 million investment in new
production lines, new recyclable non-refillable packs, and a
switch from direct store delivery to a centralized warehouse
Route to Market (RTM).
The investment is paying off. Following years of decline, volume
grew 2% in 2013 and The Coca‑Cola System (TCCS) percentage
share of the home channel sparkling segment volume is up two
points over last year. In the cold channel, share increased 14%
over 2011.
The growth has been driven by close collaboration with
customers, creating packaging freedom to drive share
with varied pack and price propositions, and significantly
strengthened consumer marketing support behind Coke Zero®
.
“We had to change to survive,” said Ignace Corthouts,
general manager of CCE Norway. “It was a huge transition,
unprecedented in scale, requiring world class collaboration
between every function within the system in Norway. But when
the critical changes we put in place showed positive effects
almost immediately, we knew we were on the right path.”
Shoppers and consumers are responding very positively to Norway’s distinctive new proprietary packaging in plant-based PET and wider choice of formats and price points. In photo at right, Stein
Rommerud (left), Vice President for Public Affairs and Communication for CCE Norway, hands over the last refillable bottle to Dag Andreassen from the Oslo Technical Museum while a Coca-Cola
collector kindly escorts the old-fashioned bottle to the museum with his vintage distribution truck.
Closer ties with customers
The key to success was customer engagement. CCE Norway
first embarked on an engagement program with customer chief
executives to share their vision for the category, and together
define how sparkling beverages could become a major part of
customers’ own growth strategies.
Based on a business plan formally aligned with each CEO, CCE
committed USD 100 million to invest in new infrastructure to
re-ignite growth.
New production lines and new
bottles make new RTM possible
To break free from the constraints of the existing refillable
packaging, CCE Norway invested in new production lines to
replace refillable PET with recyclable/non-refillable bottles.
Norway is the only country where all bottles are made from
plant-based PET.
The packaging change enabled CCE to develop a new RTM
approach. By moving from direct store delivery to a central
warehouse model, CCE was able to optimize logistical
operations by utilizing retailer trucks not operating at full
capacity and access central warehouses not equipped to handle
the old returnable packaging.
The new RTM also enabled CCE to introduce a new
commercial architecture which has formed the basis of future
profitable growth.
The change to a central warehouse system unfortunately
resulted in the elimination of 505 positions within the
organization. However, with strong support from the CCE
human resources team, all but 34 of the people who left the
bottler found new jobs within six months.
Changes resonate with
customers, consumers and
local authorities
Shoppers and consumers are responding positively to the wider
choice of formats and price points, the distinctive proprietary
packaging and the environmentally friendly plant-based PET.
Nearly every family in the country recently received a coupon
to receive free the new 1.5 liter Coke Zero®
, helping acquaint
more consumers with the brand.
u Revenue up 18% over 2012
u Comparable volume grows 2% over 2012
after years of decline
u Share increases 2 points over 2011
u Cold channel share up 14 points vs 2011
“Our customers are pleased with the supply chain optimization,
improving vehicle utilization and warehouse productivity,”
Corthouts added. “Importantly, they are now fully supporting
our category growth initiatives and benefiting from the value
creation this is driving.” The new price, terms and conditions
with customers are enabling CCE Norway to leverage greater
revenue growth management flexibility to drive transactions
and improve margins.
Transformation of the Norwegian bottling operation is also
generating significant sustainability improvements. The move
from refillable to non-refillable recyclable packages reduced
water usage from about 2.5 to 1.3 liters of water per liter of
finished product. Energy use at the Oslo bottling plant was also
significantly reduced, along with the number of trucks on the
narrow regional road network.
Competitors taking notice
“Our competitors are already trying to copy what we have
accomplished, moving toward non-returnable bottles and, in
some cases, retailer central warehouses.” Corthouts added. “It
is now critical for the system in Norway to take full advantage of
this massive infrastructure investment to continue to innovate
to stay ahead, and to ensure that we create long-term growth
for our customers and for our partners.”
“We have tremendous headroom for growth for our core
business,” Corthouts said. “The scale of growth will only be
limited by our ambition. It is a time for boldness and action.”
4. May 2014Page 4
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
Europe gets hands-on with eCommerce, social
media, virtual reality, sustainability and supply chain
innovations in reimagined KO Lab
All new content, flexible channel settings, and digital capabilities
integrated throughout make the newly renovated Brussels KO
Lab Customer Innovation Center (the “Lab”) the best place
for Europe to see, touch and experience the latest insights
and innovations that will drive a common growth agenda
with customers.
Hands-on interaction plays a big part right from the start with a
giant interactive PITA model (population, incidence, transaction,
and amount). Participants can manipulate on-screen levers and
gauge how they can affect the size of the prize. A wall of video
screens also shows how customers and The Coca‑Cola System
(TCCS) can work together to co-create shopper-relevant
business solutions.
“The remodeling of the KO Lab was driven by four strategic
objectives: building the category and system trust, better
understanding our customers’ needs, co-creating relevant
solutions, and capturing category growth opportunities
together,” said Jean-Christophe Pion, director of the Brussels
KO Lab.
Immersed in a digital world
By experiencing digital technologies first hand, customers gain
deeper understanding of how they can add real value to their
businesses. A live Twitter feed enables customers to see in real
time what their shoppers and consumers are saying and helps
launch a conversation about how social media affect activations.
Extensive system research about the best way to present
products online helps set the stage for improving eCommerce.
The real impact comes when customers compare those insights
to their own and other websites in real time from touch screens
in the Lab.
Global customer Sodexo, for example, recently experienced
digital capabilities around consumer information and
An interactive PITA model, displays of available packs in the region, and meeting space with access to a wall of video screens with Internet access and a live Twitter feed set the tone for customer
collaboration in the Brussels KO Lab.
Virtual reality applications, digital menu boards and the latest
equipment help customers understand how new technologies
can work in their outlets.
promotions in the Lab specifically tailored to them, leading to
quicker and more informed decision making.
“We did not want one room that highlighted digital capabilities,”
explained Pion. “Rather, a digital presence is infused throughout
all of the experiences in the lab, reflecting the way the digital
world is woven throughout our daily lives.”
Augmented and virtual reality create
unique experiences
Through a partnership with an external company, participants
can scan a product with a tablet or smartphone and launch
a game where interactions with Coca‑Cola products lead to
rewards. They experience first-hand the same interaction a
shopper would have in the outlet or on the street scanning an
ad and learn how the technology can drive traffic.
The augmented reality application can even film participants
and then show them in a unique experience like playing with
Polar bears. “The idea isn’t that they need to create activations
around Polar bears, but rather to show them how to drive
immersive experiences with consumers,” Pion said.
It is much more effective to live the experience and get a sense
of how technology shapes the lives of shoppers and consumers
rather than simply listening to a description in a presentation.
Virtual reality also helps maximize use of the space by placing
customers into new environments without ever leaving the Lab.
During two-day sessions, customers can co-create multiple
ideas on day one and return on day two to see their chosen
concept fully realized in a virtual setting.
“We had a great day in the KO Lab,” said Ivan Schofield, general
manager of KFC Western Europe. “The team delivered a world-
class experience and I could feel the engagement of the people
involved. You truly have a brand with a purpose, and your
consumer thinking is terrific. I truly believe that you are able to
step change the consumer experience.”
Category vision for Europe
The Brussels Customer Innovation Center serves 37 countries
throughout Europe and aims to offer an equally relevant
experience for all of them. By focusing content around the
Category Vision approach shared across the continent it works
for users from Finland to Spain.
continued on page 16
5. May 2014 Page 5COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
You operate primarily in emerging regions. What
is the business outlook like in your marketplace?
This is such an exciting time for us. I am originally from
Kenya but have been away from the African market for
more than 10 years. Opportunity has absolutely come to
life here in that time.
Over the last couple of years we have been in the process
of investing about half a billion US dollars in infrastructure
to make sure we are well positioned to capitalize on the
potential before us and drive growth.
We are defining very precisely what competitive
advantage means here so we can expand into new
regions and immediately apply our expertise to set up an
effective Route to Market (RTM) very quickly.
We recently had a big kick-off conference in South
Africa on the theme of ‘Winning Together in 2014’. There
is an extraordinary level of passion, enthusiasm and
cooperation among our Coca-Cola Sabco countries as
well as a small, healthy dose of competition.
In fact, something we do well is “hot house” and share
our learnings and we are working on doing this even
more quickly so we can re-apply them from one region to
another with greater agility, and have one recognizable
Coca-Cola Sabco way of doing things.
You are experiencing strong growth in Africa
driven by a new Sales and Marketing Excellence
Framework. What are the key components to
your success?
The economies and the middle class are growing
significantly in the countries we serve (+31% income
growth from 2001 to 2010) and along with that are new
aspirations for ‘bigger and better.’ We are putting in place
all the right systems to meet those demands and clearly
codifying each element of the framework that will get us
there. It includes:
• Advantaged Route to Market
• Winning Price/Pack Portfolio (OBPPC)
• Brilliant Sales Execution
• Superior Marketing
If we do these things well, we will win in the marketplace.
Last year, we grew faster than the NARTD market in all of
our nine territories.
Overall, we notched 8.2% volume growth and we aim to
meet or beat that number in 2014.
What are the key strategies in your Advantaged
RTM?
We fundamentally believe that having significant scale RTM
strength provides an incredible competitive advantage.
To do that, we have to invest in and empower our
distribution centers. We have significant consolidation
work in many countries and some reward our best
distributors with the designation of Official Coca‑Cola
Distributor (OCCD). We offer especially strong support
to these small business owners, help them increase
mechanization and scale their businesses, and provide
tools like Sales Force Effectiveness (SFE) to ensure
continuous focus.
Cold inventory is also critical to driving consumption
and we are accomplishing amazing things, not only with
traditional electrical coolers but with solar coolers in
places like Uganda and even traditional ice chests.
In Mozambique, we are empowering women to enter the
business through the 5x20 program simply with the right
tools of the trade, an icebox and a block of ice, and the
right presence materials.
You might not expect it, but when we conduct an Every
Dealer Survey (EDS) in these regions, we are using the
best and most updated processes and tools. For instance,
we just completed this in Addis Ababa in Ethiopia and
geomapped the entire customer footprint so we have
every dealer represented on a grid so we can reach each
one with our new RTM.
What are you doing to create wins in price
and pack?
A real key for us has been ensuring affordability to
drive transactions and competitiveness on immediate
consumption (IC) packs while we are also building out
the future consumption opportunity.
We have also transitioned from glass to one-way
convenient packaging. We have built manufacturing
capacity around the new packs and now have fantastic
supply in place to meet consumer demand.
In addition, our industry has seen an increase in local
and regional competition. For example, in South Africa
last year we fundamentally reset our pricing to be more
competitive with other brands and bumped our position
from low single digit sales to 7% growth as we restored
and drove transactions in IC with the right pricing and
added accretive innovation with the launch of a fantastic
330ml PET pack at an R5.00 magic price point.
What leads to brilliant execution?
We have invested a lot of time in figuring out the best
approach to RED for us and how to create consistency
across regions. We launched RED in most of our business
last year and will add the rest by the end of 2014. We
have embedded measures related to our four pillars in the
execution scorecard.
We also embedded RED metrics into our executive
scorecard evaluation along with measures relating to the
other three strategic pillars so there is a lot of buy in and
focus around RED at all levels of the company.
Critical to this is the capability of our sales force and
last year, together with our learning and development
team, we created a Collaborating for Value training
program that we took to our front-line sales members.
The Coca‑Cola Company (TCCC) was so impressed that
the program has become the Coca‑Cola way of execution
training in emerging regions.
And “superior marketing”?
The partnership with Coca-Cola Sabco and TCCC has
become our towering strength. We operate in complex
and fragmented consumer and media environments but
our incredible brand strength in these countries enables
us to stand out from the crowd and connect with the
hearts and minds of consumers.
We launch massive activations tailored to the local
marketplaces that form powerful, iconic, relevant
connections and engagement with consumers.
Last year, for example, Kenya celebrated its 50th
anniversary of independence and we had very strong,
highly localized marketing activations around the event
to connect with both customers and consumers on a
granular level.
All of our efforts focus on growth driven by our core
brands but then continuing to innovate into adjacent
categories, like stills and energy drinks as consumers in
this part of the world too are increasing their
beverage repertoire.
What are your biggest challenges?
Competition is really heating up in this part of the
world with a new array of local and regional brands.
There is a major company in Tanzania for example that
produces flour that has recently entered the beverage
marketplace across categories including sparkling, juice,
water and energy. Brands like this have a strong local
heritage and a lot of traction with local people.
They often enter the beverage business with a value
proposition to gain a foothold. We have to ensure our
brands remain aspirational products consumers are
willing to pay more for.
We also face growing competition from other services
that make demands on consumers’ limited disposable
income. Recent surveys in Kenya showed consumers
were even willing to give up on food and beverages for
more telecomm airtime.
Logistics are also a big challenge because we operate
in many countries with very large geographies and well
dispersed populations. We have to get our logistics
absolutely right to ensure we meet demand and deliver
exceptional customer service while we manage the cost
to serve and ensure an acceptable return on investment.
What keeps you up at night?
I love the expression “constructively discontent” that
Chairman and Chief Executive Officer, Mukhtar Kent,
and Mr. Robert Woodruff have used so well before. I
want to make sure we are on our toes doing everything
we can to maximize the incredible opportunity in front
of us. As our CEO, Doug Jackson, says “You are either
selling or supporting someone who is selling.”
I want to be sure Coca-Cola Sabco is doing everything
possible to turn our incredible sales and marketing
opportunities into realities, that we are driving this
culture of sales and marketing excellence and that we
are positively impacting the lives of our employees and
our communities as we do that. At the end of the day
for me, it’s all about delivering happiness.
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A candid conversation with Graham Andrews,
Group Sales and Marketing Director
Coca-Cola Sabco
Operating in South Africa, Namibia, Mozambique, Uganda,
Tanzania, Kenya, Ethiopia, Nepal and Sri Lanka
6. May 2014Page 6
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
Germany uses holistic RED approach to
translate deep shopper insights into
perfect execution
With 70% volume coverage in less than
three years, Germany’s RED launch has been
impressive. But the real impact is in how RED is
enabling bottler CCEAG to see the marketplace
through the eyes of a shopper, driving a holistic
culture of execution and adding value for
customers, the sales force and the System.
Each element of Germany’s new Picture
of Success (PicOS) has proven it can drive
volume per outlet. But when all of the elements
are executed in a coordinated partnership with
the customer, volumes nearly double. In fact,
CCEAG has seen in some customers that full
execution drives 2.5 times the volume of a
price-off discount only.
“RED is a key vehicle for providing more
reliable, accessible, responsible and proactive
customer service,” said Claudia Troullier,
director of customer service for CCEAG.
Clear activation standards
Using extensive shopper insights, the team
identified the key elements of a RED-activated
supermarket that create robust results when
the bottler’s CSS/RTM approach and customer
collaboration work seamlessly together.
• Four points of interruption (in the promotion
area, store entry, salty snacks and frozen
food sections) boosted outlet volumes 32%
• Clear definition of assortment and space at
the point of sale drove volume up 17%
• Two cooler placements (in the non-alcoholic
beverage and cashier zones) bumped sales
volume 47%
Expand, simplify, repeat
CCEAG has moved quickly to embed RED first
in the away-from-home channel and then in
the at-home channel, but key to their success
has been full management support, dedicated
organization and the creation of one standard
across Germany.
“Three years into the process, we are still
focused on getting into the minds and
hearts of our people and helping everyone
understand how they support the sales
effort,” said Norman Villalobos, director of
segmented execution.
They knew from experience that trying to
implement RED without total organization
alignment, superb communication and strong
buy-in was not going to work. Neither was
making things so complicated they could not
be implemented consistently in the outlet.
With a belief that they had “one shot” to launch
RED the right way, they put their money on
culture change and communication, linking
RED and CSS together from the start.
You are either selling or
helping someone else sell
A key strategy for CCEAG is to see all
employees as either a member of the sales
team or someone who helps the sales team
sell. They have created a clear, straightforward
and standardized sales strategy across the
country and concentrated organizational
energy and resources on removing roadblocks
to sales people selling.
“The content of the Picture of Success needs
to be both powerful and easy to understand,
remember and execute,” said Ulrik Nehammer,
chief executive officer of CCEAG. “I want
everyone in CCEAG to be able to walk into an
outlet and easily and quickly understand the
RED score and related opportunities.”
This is what they are doing to
make sales happen:
• Standardized the PicOS across the country
into one cohesive approach (down from
seven regional approaches with varied
standards of execution).
• Reduced administrative tasks or transitioned
them to other staff to increase sales time in
outlet. Created a new call center to solve
many customer issues without distracting
the sales rep from value-added activities.
• Created clear metrics to measure progress
and gauge the value RED is creating for the
customer and business.
• Replaced seven disperse warehouses
where sales reps traveled to obtain Point of
Purchase (POP) materials with one central
warehouse managed by a third party. Now,
sales reps order needed items online and
they are delivered directly to the outlet.
• Created a tablet-based sales force
automation tool now being piloted that uses
the PicOS as the survey and will improve
efficiency and drive RED performance.
Rather than investing hours in training to
use the prior laptop-based tool, a sales rep
will get up and running with the new tool
in about 15 minutes. Training can then focus
on using the right value stories, getting the
cooler in first position and other activities
that drive profits.
• Using RED in direct marketing expenses
(DME) planning to track the level of
investment in each outlet and how much
investment might be required to fix
trouble spots.
• Implementing Sales Force Effectiveness
(SFE) to create a more sales-centric
organization.
What’s next
Over the past three years, Germany has
focused on rolling out RED, streamlining and
fine-tuning the PicOS, and removing road
blocks to sales efficiency and success. Early
results are impressive and show the holistic
approach to perfect execution is driving
stronger sales volumes.
To make those gains stick and push them
even higher, they will next simplify the RED
process for ease and consistency of effective
implementation. They will also launch a Center
of Sales Excellence (“for the people, by the
people”) to continue to evolve the organization
culture to a total focus on creating value by
fully supporting the sales effort.
“We are constantly focused on testing and
demonstrating the value RED delivers for the
customer, sales force and our System,” said
Thomas Starz, commercial director and board
member. “Its real impact is in what it does for
our people.”
u Full execution of the PicOS drives 2.5 times
volume compared to a price-off discount only
u Four points of interruption drive outlet
volumes 32%
RED
“Three years into the
process, we are still
focused on getting
into the minds
and hearts of our
people and helping
everyone understand
how they support the
sales effort.”
Norman Villalobos
Director of Segmented Execution The activation of impulse points in both chilled and ambient displays next to the cashier zone are
key components of the Picture of Success for the home market.
In-store activations in the
On-the-Go channel feature
combo meals, a strong
menu board and first
position cooler placement.
7. May 2014 Page 7COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
Germany cuts large portfolio down to size
Continued from cover
UAE makes room
for better performers
Bottling Investments Group (BIG) in the United Arab Emirates
also recently targeted 10-15% of active SKUs that contribute less
than 1% of volume for rationalization. Excluding promotional
and non-standard packs, they considered 102 of 134 SKUs in
the portfolio.
Reduction funnel sorts out
weak performers
They use a systematic funnel approach with specific
criteria for evaluating every SKU.
u At the top of the funnel is volume. SKUs generating less than one
unit case per year drop out.
u The funnel narrows a bit more into the portfolio matrix step.
SKUs that have declined over prior year or grew but had
negative gross profit are considered for elimination.
u OBPPC Strategy is the next gatekeeper with an evaluation of each
SKU’s relevance to the portfolio. If it is not relevant, or a better
alternative exists, it drops out.
u The SKU’s impact on supply chain complexity is considered next.
u Sales is the final hurdle. If the SKU is not growing, a decision is
made to either revitalize it or it drops out.
Volume
filter
Active
KO SKUs
“Losers”+
“Vol. Builders”
(w/neg. GP)
w/o
Strategic
Relevance
Production
Complexity
(no filter)
Approved
compensation
list & volume
risk identification
1
OBPPC
Strategy
filter
3
Sales
filter5
Portfolio
(2by2)
Matrix filter
2
Supply Chain
Complexity
Check
4
Prelim.
Decision
Making
Final
list for
decision
Out-phasing
Final
Decision
Meeting
Segment Skus And Rationalize
Low Performers
They segmented the SKUs into those that produced 80% of
volume, 15% of volume and only 5% of total volume. The bottom
5% consisted of 46 SKUS.
They further segmented the bottom 46 based on four weighted
factors: volume impact, gross margin, strategic importance and
production constraints.
Eliminate 13% of total SKUs
They elminated 13 SKUs contributing only 0.3% of total volume.
“These products take valuable cooler and shelf space away from
faster moving SKUs with the potential to generate far more
gross margin,” said Antoine Chaccour, national head for modern
trade and key accounts for BIG in the UAE.
Canada moves to 3rd party, iRED to more than
double surveys
The maple leaf at the center of Canada’s
flag is not the only thing sporting a deep red
these days. The country is positioning itself to
nearly double RED coverage in 2014 through a
combination of third-party and iRED surveying
by the sales team.
Until now, Coca‑Cola Refreshments Canada
(CCRC) district sales managers conducted self-
audits, completing about 42,000 RED surveys
per year. In 2014, CCRC will up RED visits to
106,000. The increase will bump monthly
volume coverage from 28% to nearly 40% and
biannual coverage from 50% to 65%.
Objective data raise standards
With a strong belief in RED’s ability to drive
sustainable business growth, CCRC was ready
to take their lumps when they went looking
for the most accurate outlet data to help them
raise execution performance.
As anticipated, the initial transition from self-
audits to third-party audits provided more
objective, unbiased feedback and caused
RED scores to drop at first. Nevertheless, the
objective data enabled the bottler to create a
more accurate baseline and to focus effort and
investment on continuous improvement.
“Our ultimate goal is to execute the Look of
Success (the perfect outlet), with every customer,
every day,” said Jeff Kirkland, vice president,
field operations for CCRC. “Our investments
reflect our commitment to that and ensuring we
continue to win at point of sale.”
With the new approach in full swing, scores are
already on the rise.
Execution influences
compensation
RED strategic execution priorities are now
part of the annual compensation package for
the sales team, helping to inspire new ways of
thinking and new behaviors. Introduced at 10%
of total variable compensation in Q1, they plan
to raise the figure to 20% by year-end.
“Our sales managers are now focused on
providing the coaching and feedback that
our frontline associates have been asking for,”
said Paul Howden, sales unit vice president,
Western Canada. “And the execution results,
gathered by an objective third party, provide
an impartial view that enables us to recognize
superior performance,” he added.
Both the field execution teams and national
sales teams are increasing engagement with
RED execution culture. “Having credible,
external data is helping the national force
build in specific elements about the Look of
Success into the annual Customer Marketing
Agreement,” explained Paul Herring, regional
sales director for capabilities and head of the
RED effort for CCRC.
CCRC has also developed a system to track
customer compliance against commitments
using the RED survey data.
Using both outlet photos and surveys, they
uncovered with one customer where agreed-
to display racks were either not present or
not executed properly. In addition, in Walmart
stores surveyors are checking for sparkling
activations with food and looking for a sleek
can, 237ml glass or one-liter activation as well.
“By catching commercial execution issues like
these early and quickly through more robust
surveying we expect to see RED scores and
volume go up in the outlet,” Herring said.
“We have already seen those improvements
in Walmart.”
“We’re working together, collaboratively, to
understand executional opportunities and
to build customer plans that will address
the gaps,” explained Trevor Lamb, Canada’s
director of national sales for Walmart. “What
we achieved in 2013 with Walmart Canada, one
of our largest customers, is a great example of
what we can do when we are all focused on a
common goal.”
u RED surveys will grow from
42,000 to 106,000
u Monthly volume coverage to
rise 10+%
TaraSpencer(right),districtsalesmanager,
usesiREDtocoachAnneFrench,salesleadership
associate,toenhanceexecutionperformance.
Meyer added. “Now, if a strong case can be made to keep
it, we will, but we also realize that we can make the entire
portfolio stronger by weeding out low performers.”
Tweaking the process for greater
acceleration
Not content to sit back and enjoy what they had already
accomplished, the German team quickly identified ways
to accelerate SKU rationalization as an ongoing process.
Toward that end they:
• Transitioned from an annual to a quarterly
rationalization process
• Changed the gross profit assessment from above/below
average to greater or less than 0.2% of total gross profit
• Changed the volume assessment from greater
or less than 5% of total volume to simply
growing/declining
They may be one of the few groups in The Coca‑Cola
System (TCCS) engaged in such constant re-evaluation of
the portfolio. “We found if you don’t evaluate the portfolio
regularly it just grows and grows,” Lauerwald added. “The
reduction funnel takes the guesswork out and gives us an
objective, streamlined process to follow every month. We
may get to a point where there are no SKUs eliminated in
a quarter.”
Slicing things even thinner
They plan to rationalize another 40 SKUs as they trim the
final 1% of volume down from 26% of existing SKUs to only
20% .They have set clear targets for appropriate SKU levels
by category (CSD, water and stills) and by returnable and
non-returnable packs.
Related storyRELATED
8. May 2014Page 8
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
Germany figures out how to make
emerging brands part of the family
Silvana Marino, a Venturing and Emerging Brands (VEB) sales representative, shows off one of her star performers. Germany’s VEB team is getting behind Glacéau vitaminwater and other
emerging brands with a dedicated sales team, unique Picture of Success and strong connection with wholesalers.
Being part of a big, famous family can be great but sometimes
you have to fight for your share of the spotlight.
Emerging brands within The Coca‑Cola System (TCCS) don’t
always fit easily into RTM routines built around large scale
efficiencies that suit core brands with global recognition, huge
volumes and attractive economies of scale. But a new team in
Germany is showing that, with the right support, these future
stars can shine.
Bring on the unconditional love
It takes a special eye to recognize potential and the heart to
nurture it. “You have to have patience and passion to take care
of these brands,” said Alexandra Megid, director of Venturing
and Emerging Brands (VEB), an innovative new team in the
Germany Business Unit (BU). “You may get knocked down
20 times and have to get back up to fight for them again
and again.”
She has good reason to stay in the game. Germany projects
that emerging brands will deliver 70 million incremental unit
cases (bumping their contribution to total volume from 0.5%
in 2012 to 7% by 2020) in high-value segments with functional
and adult beverages.
It is an especially good time for these brands to get their due.
Germany’s population is aging and demand for soft drinks
is decreasing among those age 30+. More than 70% of the
population will be over 30 by 2020 and by 2060 every third
person will be at least 65. Demand for specialty waters, coffee,
and health-oriented drinks is on the rise.
Leveraging Germany’s existing portfolio that includes ZICO™
coconut water, Glacéau vitaminwater™, Relentless™ energy
drink, JianChi™, and Chaqwa™ coffee will keep these consumers
within the KO family.
Bottler-BU hybrid boosts personal
attention
The VEB team is a group of internal renegades. Not quite a
marketing department or commercial group, they are a BU-
bottling hybrid that handles everything from warehouse and
logistics to RTM, promotions, and consumer marketing for
emerging brands. That’s key because the brands cannot survive
within existing sales and distribution systems.
The VEB launched its emerging brands portfolio in the away
from home channel targeting influential zones in influential
cities, first making the brands available where the target
consumers work, live and play.
They use face-to-face conversation with dedicated sales people
who act as brand ambassadors. They invest far more sales time
than the bottler’s sales force would normally have to explain
the benefits of the new products to customers.
Wholesalers key to making it work
“You can’t just go into a wholesaler and ask them to allocate
space for these brands because we think they might sell,” Megid
explained. Instead, the sales team created a unique deal. They
let wholesalers know they are launching a new product they
are going to want. To prove it, all the customers the VEB team
brings on board and the sales they generate for the first three
months go directly to the wholesaler.
“The wholesaler doesn’t have to do anything but wait for the
revenue to roll in and we don’t have to pay wholesaler listing
fees while we focus on selling the products into premium
supermarkets, kiosks, cafes, fitness centers and yoga studios,”
Megid added. “Bonding with the wholesaler and getting them
invested in the product is critical.”
Armed with a three-month track record, the VEB team goes
back to the wholesaler to negotiate warehouse space.
New products create new connections
“These brands enable us to open new customers and new
channels to the KO portfolio,” Megid said. “We can’t get into
an organic supermarket with classical Coke®
, but we can with
JianChi™ and Zico™.”
Early success is measured in number of outlets carrying the
products, volume per outlet, customer re-purchase rates and
consumer research. Glacéau vitaminwater™ is now in 1,700
German outlets with a volume per outlet of 34 and a customer
re-purchase rate of 85%. Zico™ is in 140 new outlets with a re-
purchase rate of 65%. Relentless™ has grown from 1.8 million
unit cases in 2011 to 2.4 million in 2013.
“It will take some time to get these brands fully integrated into
customer outlets and consumer mindsets but we are making
steady progress,” Megid said. “We are running a marathon here,
not a sprint.”
Key Learnings:
Emerging Brands Need
• Dedicated sales team
• Unique PicOS and merchandizing rules
• Early involvement of the wholesaler
• A hybrid effort with the BU, bottler
and wholesaler
Emerging brands represent an 18 billion unit case opportunity globally
with TCCS’s share capable of generating USD 1.8 billion in new revenue.
9. May 2014 Page 9COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
BIG bottlers set the pace for RGM wins
As early adopters of a renewed system
commitment to Revenue Growth Management
(RGM) and co-creators of the global web-
based RGM Tool, Bottling Investments Group
(BIG) is quickly moving from how-to to ‘already
doing it.’
Several BIG bottlers are already landing major
wins with the tools and others are creating new
infrastructure to put RGM front and center for
The Coca‑Cola System (TCCS).
New finance “force”
moves RGM to top of
agenda, drives ¤4 million
in revenue gains
They call them the Green Berets because,
like the U.S. Army units, they are a special
operations task force with a defined mission:
put RGM at the top of the organizational
agenda and search out new revenue
growth opportunities.
CCEAG’s new RGM Analysis Team of data
crunchers and finance experts functions
separately from the normal operational
routines of the finance department. “The Green
Berets work as a think tank and incubator
for RGM ideas only and work to ensure they
are implemented in sustainable ways,” said
Alexander Hoppe, team lead for revenue
growth analysis.
The team is focused on integrating more
external data sources into decision making and
using advanced analytical tools to dive into
greater detail at the customer and SKU level.
Project-based missions
One of the task force’s first assignments was
to review Price, Terms and Conditions (PTC) in
detail. They often found customers receiving
rebates without performing the agreed to
service. Others were grouped into the wrong
category for drop size rebates and received
too high of a rebate.
Each case is handled individually and with
plenty of input from the sales team. The sales
force is then armed with all the data to work
through communication about necessary
changes with the customer directly.
The Green Berets also serve as gatekeepers
for sales promotions to ensure only those that
meet financial expectations are executed.
The team has already realized ¤4 million in
revenue improvements from first-year projects
and estimates potential improvements of up to
¤26 million from all projects currently in the
pipeline. CCEAG grew net sales revenue by
more than ¤82 million in 2013 vs. prior year.
Potential USD 5 million
PTC opportunity in
Shanghai
With escalating investments in trade spending
but no formal system to track them and
measure return on investment (ROI), BIG China
launched the Price, Terms and Conditions
(PTC) project to evaluate existing contractual
trade terms and the past year’s total trade
spend with key account (KA) customers
in Shanghai.
Digging deep for data
transparency, opportunities
They selected one operating unit (Shenmei
bottler) that contributes one-third of their
key account business and looked at both
conditional trade spends (investments made
in exchange for a customer’s promotion or in-
store activation) and unconditional spending.
They dug deep to uncover all spend elements
including price discounts, direct marketing
expenses, promotional spend, all costs
related to outlet display fixtures, cold drink
equipment, and even the cost of sales reps and
merchandisers who serviced each customer.
They identified a total of USD 5 million to be
potentially realized if all unconditional terms
are removed and remaining trade terms fully
executed by customers.
Focus on fueling
customer growth
“Getting this objective data helps us know
where the gaps are and is setting the stage for
conversations with our customers on drivers
of growth during the joint business planning
sessions and as we renegotiate expiring
contracts,” said Justin Pher, group capability
head for key accounts in BIG China.
With the PTC output charts completed (stage
one) and ideal PTC defined (stage two) they
are now developing engagement strategies
to influence and negotiate with customers
(stage three).
Uruguay goes deeper with
segmentation to identify
new opportunities,
quantify potential
Searching for ways to capture more revenue,
Monresa Bottling in Uruguay used the
Opportunity Mapping and OBPPC work
streams to correlate income levels with
potential consumption in specific zones.
They have identified an opportunity to increase
per capita consumption +16% (from 258 to
300) and are targeting a 5% jump in 2014.
“Segmenting households into even more
specific categories enabled us to find areas
with the largest gaps between household
income and anticipated consumption levels,”
said Rosana Miguez, commercial strategy
senior manager for Monresa. “With that
information, we prioritized the opportunity
based on where we saw the biggest gaps and
targeted investment in those zones.”
Honing in on the biggest payoffs
They identified two zones that contained 75%
of the opportunity for development.
“The RGM Toolkit helped us divide and analyze
the marketplace into meaningful segments
so we could evaluate where our investment
would have the greatest payoff as well as
the channels, products and price points that
would work most effectively in those zones,”
said Guillermo Chonichesky, commercial
planning manager.
Finding (and delivering) what’s
right for each zone
By diving deeper into segmentation, Uruguay
identified that one high-potential area offered
a strong opportunity to block a competitor’s
brand by relying more heavily on refillable
packs in the core portfolio to create more
competitive price points. They also saw a
gap in their cooler presence and upped their
investment in cold drink equipment (CDE).
Opportunity mapping is
enabling Monresa Bottling
to direct its investments to
the channels, products and
price points with the biggest
potential payoffs.
Competitive price points and refillable
packs in the core portfolio help Monresa
Bottling block competitor brands.
10. May 2014Page 10
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
Mexico mixes 5 top stills to
create one “Specialty Box”
for small stores
u Volume triples among ARCA CONTAL small customers
u Powerade™ volume up 122%
thank
The Bottler-Bu
who brought thes
FR
ARCA CON
Leonel
Commercial Manage
Francisc
Emerging Beve
Oscar
Emerging Beve
FR
THE BUSI
Felipe
General Manage
Diego G
Stills Operation and
Carlos
Operations Se
Andres B
Stills Capabilites
Small customers may want to try carrying high-margin still
beverages but the sticking point can be having enough funds
to invest in their regular portfolio while still finding money to
experiment with new products. Ordering full cases is out of
the question.
The Mexico Business Unit (BU) and ARCA CONTAL did the
research and learned that small customers typically reinvest
about 70% of daily revenue into ordering new merchandise.
Of that amount, about half is targeted for beverages with an
average of USD 12 invested in Coca‑Cola and USD 9 invested
in other portfolios.
Next, they got creative to help small customers invest in a
broader and more lucrative portfolio of still brands with a
unique “Specialty Box”.
Thinking inside a box
“Availability is the key hurdle,” said Juan Ramon Rodriguez,
ARCA CONTAL’s South Pacific zone director. “We had to
find a way to give small customers access to new products
while addressing the reality of their financial limitations and
not eating into investments they were already making in
carbonated beverages.”
They looked at the bestselling stills SKUs carried by customers
with larger distribution and sales and chose the top five. Next,
they created a unique stills portfolio “specialty box” based on
those five brands that small customers could purchase for no
more than USD 9 per day.
The specialty box includes six cans of juice, three bottles of
water, three bottles of fruit drink, two teas and two bottles
of Powerade™. Despite featuring 16 bottles comprised of
five different brands, the customer simply orders the box as
one SKU.
Keeping the details straight
“We need tremendous logistics coordination with the
warehouse to make this work efficiently and cost effectively,”
explained Leonel Medina, operations manager. “For example,
the warehouse pulls six-packs and four-packs with damaged
outer wrappings that can’t be used for other customers and
pulls them apart to create a unique four-pack of mixed products
for the specialty box.”
Tracking is also tricky because the single SKU for the customer
must be entered into ARCA CONTAL’s sales system as multiple
SKUs for product tracking and tax purposes.
Growing small into medium
The extra effort is paying off with growing sales and converting
numerous small customers into medium ones. “Once customers
see that they are selling out of these new products they typically
evolve into buying solid packs,” said Ramon Rodriguez.
“It might start with them first telling us they can now buy
an unbroken six-pack of water which then allows us to
move the water into a normal order and place a new brand
in the specialized box in its place,” explained Carlos Samora,
operations senior manager for Coca‑Cola Mexico.
ARCA CONTAL launched with just two routes and within two
weeks saw strong enough results that they quickly expanded
to eight routes. Today, they have 70 routes serving about 3,800
small customers with the “SKU in a box”. They rely on the same
distribution system that serves carbonated beverages.
When you carry it, you can sell it
“SKU in a box” enabled ARCA CONTAL to increase the number
of customers stocking juices by 114%, teas 138%, water 146%,
fruit drinks 171% and Powerade™ 250%.
Sales volumes jumped 37% for
water, 41% for Fuze™, 50% for
juice, 42% for fruit drinks and 122%
for Powerade™. Volume among
these outlets has tripled under the
new program.
And there’s room to grow.
“Nationally there are about 900,000
customers who meet the criteria
for the program and I think we can
reach 50% of them,” said Andres
Bartoluchi, NCBs capabilities senior
manager for Coca‑Cola Mexico. “As
we grow, we will not only reach
more customers but continue
adding new beverages to the mix.
This offers tremendous potential
to help us expand the reach of our
diverse portfolio.”
The sales force also reports
customers reallocating money
previously used to purchase from
competitors to buy the new brands
due to their strong results.
Other bottlers are launching similar
pilots based on ARCA CONTAL’s
learnings.
Strong logistics coordination with the warehouse is enabling ARCA CONTINENTAL to create its unique “Specialty Box” of still products for small customers.
11. May 2014 Page 11COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
Mexico creates separate pre-sale team for stills and
boosts customer investments
k you!
usiness Unit team
se projects to life...
ROM
NTINENTAL
Medina
er, South Pacific Zone
co Gourcy
erages Manager
Gomez
erages Manager
ROM
INESS UNIT
e Nuñez
er, Still Beverages
Gonzalez
d Execution Director
Zamora
enior Manager
Bartoluchi
s Senior Manager
A Coca‑Cola preseller walks into an outlet . . . (no, this is
not the start of a bad joke) and the store manager probably
already knows how much he plans to spend on our products.
He is likely to spread that amount across the total variety of
products offered, giving new items less attention or taking
funds allocated in his usual order to try a new product.
That scenario got people at Mexican bottler ARCA CONTAL
thinking. If they created a specialized sales force just for the new
stills portfolio, would they be better able to serve customers
and grow sales?
Two visits can lead to two budgets
“Creating a specialized preseller force with people strictly
dedicated to selling still beverages is giving these new products
the added attention they need and helps customers see their
interaction with different sales team members as two separate
transactions with separate budgets,” explained Guillermo Adam
Faisal, emerging beverages director for ARCA CONTAL.
“They make their customary investment in the traditional
portfolio but when customers work with a specialized preseller
who is very knowledgeable about the stills portfolio, they are
motivated to set aside additional funds for these transactions,”
added Felipe Nuñez, general manager for still beverages in the
Mexico Business Unit.
The new approach is driving increased daily average volume.
Since the specialized stills presellers were introduced, stills
volume has grown from 287 daily unit cases on the specialized
routes in 2011 to 320 cases in 2012 and 334 cases per day
in 2013.
Expanding across the country, the specialized stills routes
have grown from 169 in 2011 to 230 stills routes in 2013. With
an average volume of 335 incremental cases for each stills
preseller, the program quickly surpassed its 150-case break-
even point.
Dedicated presellers David Garcia and Alejandro Sanches Martinez are helping ARCA CONTINENTAL drive increased daily average stills volume with strong knowledge
of the products, a unique value dialogue for each brand and more time in outlet to introduce new products.
The volume mix
contribution from these
customers has also grown
from 21% in 2011
to 30% in 2013.
“This program is already a strong success but it also has robust
potential,” said Adam Faisal. “At our current number of routes
we are still only covering 20% of our total universe.”
Select outlets rigorously to
safeguard profits
Not all customers have the potential to warrant a stills preseller
so ARCA CONTAL created its own methodology to identify
appropriate customers and ensure profitability. Customers
are selected based on total product portfolio, location along
a desirable existing route, how competitive the customer is
and the potential they represent to win business from other
suppliers and drive incremental sales in stills.
“On average, appropriate outlets for this level of support will be
large and extra-large customers (more than 30 physical cases
per week) where we can expect a 100% increase in volume,”
said Ricardo Piedras, NCBs capability manager for Coca‑Cola
Mexico. “We need to know, if that happens, will their sales level
justify the expense of the specialized sales force with dedicated
resources making daily visits,” said Piedras.
Distribution and delivery are still carried out jointly for sparkling
and non-carbonated beverages.
Create unique value dialogue
for each brand
Several key elements make the program successful. The stills
preseller has a more in-depth knowledge of the brands from
working with them every day and selling only the stills portfolio.
ARCA CONTAL has also created a unique value dialogue for
each brand and preseller compensation varies by category so
focusing on top bottler priorities earns greater commissions.
The stills presellers are also able to devote the time required to
follow up with customers who may have bought a product last
month but have not purchased it more recently.
“They have an intimate knowledge of the customer’s business
related to stills and how they can best utilize our portfolio to
increase their business,” said Alejandro Wong, NCBs capabilities
manager for Coca‑Cola Mexico.
These relationships translate not only into placing more stills in
the outlet but the more comprehensive negotiations also lead
to better product positioning within the outlet. Some outlets
have even doubled their Coca‑Cola presence with a new rack or
cooler in first position dedicated to non-carbonated beverages.
Indirectly, the universal presell routes dedicated to sparkling
soft drink development also benefit from more time and greater
focus in the point of sale, translating to greater volumes.
12. May 2014Page 12
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
CCR unlocks category value with new
retail strategy that closes gap between
high/low price fluctuations
Coca‑Cola Refreshments (CCR) knew the
traditional focus on promotion-priced 12-pack
cans was limiting their ability to drive long-term
value by training shoppers to focus on price,
squeezing profit margins, and making other
packs look expensive. There had to be a better
way to re-engage shoppers and re-energize
the category.
They found it through extensive study of
customer analytics and recently launched
a new retail strategy that uses a radically
different approach to ensure the right pack is
always available at the right price at the right
time and place, and with the right messaging.
Built on extensive learnings with one of the
largest supermarket chains in the United States,
the new retail strategy takes a three-pronged
approach to build category value:
“Value Plus” Pricing
available every day that
rewards shoppers for
buying more
Brand Stratification in lieu
of traditional line pricing
Occasion-based
packaging that
increases incidence
“Our 2014 non-alcoholic sparkling retail
strategy addresses the question, ‘How can
we modify our promotional approach to both
increase category participation with shoppers
and improve margins for our retail partners?,’”
said Dan Hayes, senior vice president, CCR
revenue growth management.
“Value Plus” pricing strategy
The “Value Plus” strategy simplifies pricing for
the shopper and builds purchase incidence by
offering shoppers an everyday value (EDV)
“must buy” that rewards them for buying
multiple packs. For example, a shopper might
pay USD 4.99 for one 12-pack but can buy
three packs for just USD 12 with the everyday
value “must buy.”
“The everyday value helps protect margins on
a daily basis and thus allows us to offer more
competitive feature pricing when needed to
stimulate purchases during key times, such as
the first week of the month,” said Eric Gorli, vice
president, planning and pricing at CCR.
“The final part of the strategy enables CCR to
maximize sales and increase profitability during
high demand periods, such as holidays, without
deep discounting,” he added.
In retailers that have implemented “Value Plus,”
category visits per household have increased as
the shopper gains predictable value on every
shopping trip. Category dollars and units per
household also increased because there is an
incentive to trade up to the deal.
Retailers using “Value Plus” have maintained
or seen up to a one-point increase in margin
percentage as shoppers buy more during
EDV weeks.
Brand Stratification
Recognizing that different shoppers have
different needs and brand preferences, CCR
replaced its single pricing strategy with one
that matches brand strength with price.
“Even though Coke®
and Fanta®
are often
listed at the same price, in reality Coke®
can
command a higher price due to exceptionally
strong brand equity and a favorite brand score
that is twice that of its primary competitor,”
said Janine Shearer, vice president, category
advisory for CCR.
Flavors, such as Fanta®
, are purchased twice
as often by multicultural shoppers who tend
to be more price sensitive. Lower retail prices
on flavors encourages more frequent purchases
from value-seeking shoppers and satisfies
variety seekers looking for brand choice.
By reducing Fanta®
prices 16%, CCR drove an
83% jump in volume. The key is to match the
optimal retail strategy to the brand.
Occasion-based packaging
Package variety is critical to take advantage
of occasion-based opportunities. The team
established a three-pronged approach to using
occasion-based packages to grow incidence
and profit.
• Drive sales of current occasion packages
with greater emphasis from a merchandising
and messaging perspective.
• Fill occasion packages gaps through
packaging innovation to drive incidence with
fill-in trips and lighter purchase shoppers.
• Maximize on-the-go occasion through a shift
in on-the-go package choices and retails.
Offering more packages drove a larger spend
because they met more needs. CCR introduced
the “Sixer” to successfully engage smaller
households, satisfy fill-in and convenience trips,
and meet the needs of variety seekers.
Occasion packages delivered more than half
(69%) of category growth for CCR in the past
two years.
Putting it all together
CCR implemented the new retail strategy
throughout Kroger stores in 2013. With a
Quarter 4 investment of USD 1.5 million in
the Houston, Texas region, they reached 85%
of Houston consumers and drove Coca‑Cola
volume up .6% vs. control stores and up 1.1%
vs. total U.S.
“As our consumers and shoppers continue
to face pressure and our customers remain
challenged to improve performance, as a
category leader, it is our responsibility to
bring new thought leadership to the table,”
said Hayes. “Our new retail strategy does
this by increasing category participation and
improving margins.”
RIGHT
BRANDS
RIGHT
PACKAGES
RIGHT
PRICE
RIGHT
PLACE
RIGHT
MESSAGES
Provide
brand choices
(and prices) that
satisfy value-seekers
and multiculturals
The new Retail Strategy is a holistic approach to
re-engage the shopper and re-energize the category
Increase focus on
occasion-based
packages
to grow incidence
and profit
Implement
“Value Plus”
to drive store loyalty
and transactions
Refocus
merchandising assets
on non-holiday weeks
to drive higher value
(and profit) packages
Connect with
Shoppers through
compelling
occasion-based
messaging
u Everyday Value
rewards shoppers
for buying
multiple packs
u Pulsing deeper
pricing on key weeks
to drive demand
u Margins rise with
less discounting
when shoppers
willing to pay more
u Matching price to brand
drives volume + 83%
u Occasion-based packaging
contributes 69% of category
growth
CCR is increasing
sales and profit by...
u Providing brand choices
(and prices) that satisfy
value-seekers and
multiculturals
u Increasing focus on
occasion-based packages to
grow incidence and profit
u Implementing “Value Plus”
pricing to drive store loyalty
and transactions
u Refocusing merchandising
assets on non-holiday weeks
to drive higher value (and
profit) packages
u Connecting with shoppers
through compelling
occasion-based messaging
CCR introduced the “Sixer” to successfully
engage smaller households, satisfy fill-in
and convenience trips, and meet the needs of
variety seekers.
13. May 2014 Page 13COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
the event. Rather, they saw the potential in harnessing the
excitement, vitality and human connection of the Olympics
to energize TCCS employees, forge stronger relationships
with customers and build brand love with consumers for the
long haul.
They decided to create a legacy for the Russian system.
1
Unlock the pride, passion and love for Coca‑Cola among
our 14,000+ system employees.
Employee engagement scores in the BU rose from 82%
to 85% and engagement scores in CCH rose from 49%
to 65%.
TCCS employees in Russia were invited to nominate colleagues
to be Olympic Torchbearers in the longest domestic torch relay
in Olympic history. Individuals were chosen based on their
positive influence in their communities and demonstration of a
healthy, active lifestyle.
As soon as the London-Sochi handover was complete, Russia
began building momentum internally. With so many employees
who wanted to volunteer for the Coca‑Cola team in Sochi,
they launched a process to select top performers to serve as
ambassadors in Sochi and implement first-class execution.
Finally, 250+ employees were ‘qualified’ to work in the Olympic
venues during the Games.
2
Be recognized as the most trusted company in Russia.
Coca‑Cola Russia increased its reputation and trust in
the eyes of consumers, the Russian government and
key stakeholders kicking-off a long-term Active Healthy
Living Program targeting youth, moms and system
employees.
Annual reputation surveys show that consumer trust
of TCCS grew significantly over last year (+3%), and
among key stakeholders trust scores grew +89% (36
points in 2012 vs. 68 points in 2013).
One of TCCS’s four global commitments to inspire a healthier,
happier world is to get people moving by supporting physical
activity programs everywhere we do business. Russia reinforced
its commitment to wellbeing through the Active Healthy Living
initiative (AHL).
Grounded in research about the state of health and wellbeing of
Russian citizens, the initiative utilized the Sochi 2014 Games as a
catalyst, along with digital technologies, real world experiences,
and relationships with public health, science and sports
Vlivaisya! Russia motivates System, customers to “join in” for long-term growth
Continued from cover
authorities to implement a long-term approach for advocating
wellness behaviors across the population.
As its centerpiece, the initiative in Russia defines “active healthy
living” through the prism of ‘Movement is Happiness’ using six
integrated projects:
• An Active Healthy Living Advisory Board
• The Active Healthy Living ‘V Dvizhenii’ (on the move)
website (www.v-dvizhenii.com)
• Active Healthy Living Showcase “V Dvizhenii!”, a traveling
experience to engage communities in tangible experiences
of active healthy living
• Active Healthy Employee, to promote wellness behaviors
through the workplace
• Active Healthy Living Science Capability & Thought
Leadership, advancing the science of active healthy
living through partnerships with science and
educational programs
• Active Healthy Living Legacy project, an installation
of sport grounds for street workouts in Russian cities,
supported through The Coca‑Cola Foundation
TCCS’s sponsorship of the Sochi 2014 Olympic Torch Relay
also celebrated those who are making a difference in their
communities and drove unique Coca‑Cola community
engagement, increasing the reputation and trust of Coca‑Cola
in Russia in the eyes of consumers, the Russian government
and key stakeholders.
3
Grow Coca‑Cola, enabling the brand to become integral
to the new spirit of Russia across all generations.
Over the last three years, we have continued with
double-digit volume growth: in 2013 volume was up
11% over last year growing from 110 million unit cases
in 2011 to 149 muc in 2013.
Share is up 3%.
Share among teens is up 2%.
The Coca‑Cola Olympic marketing plan was created through
seven marketing “moments,” each of them highlighting
the remarkable activation around the Olympic Games. The
moments range from the handover of London to Sochi through
to the torchbearer nomination campaign and the Olympic
Torch Relay and Olympic Christmas right before the start of
the Games in 2014.
The Torch Relay nomination campaign inspired more than 90,000
nominations for torchbearers. More than 14 million people voted
online to select the finalists who represented Coca‑Cola values
of active healthy living in the 40,000-mile plus relay.
During 123 days, the Sochi 2014 Olympic Torch Relay was a
unique opportunity to touch all Russian hearts and minds.
Coca‑Cola ambassadors gave away 2.5 million flags, 1.7 million
Coca‑Cola mini can samples, and 250,000 unique Olympic glow
bottles that helped to cheer the torchbearers along the Olympic
Torch Relay.
Engaging key customers as torchbearers also helped forge
stronger relationships outside of the daily routine and built
their pride in TCCS.
“People living in the big cities have lots of opportunities to
experience top brands and major attractions,” said Ljubo Grujic,
Russia and Belarus general manager, The Coca‑Cola Export
Corporation. “The torch relay brought us into the homes, hearts
and minds of people living in more remote areas. They became
better acquainted with the Coca‑Cola brand, but also with The
Coca‑Cola System and our people.”
4
Expand our leadership and highlight our execution
excellence led by the southern region, home to the city
of Sochi.
Grew share of NARTD to 39% with a 43% share in Sochi,
the Russian “birthplace” of Coca‑Cola’s top competitor.
Pepsi entered Russia at the end of the 1970s, well ahead of
Coca‑Cola. Although we caught up quickly and today register a
larger share of the beverage landscape, Sochi and the southern
region remained one of the few areas where the competition
still held a stronger position with the trade and in the minds
of consumers.
To change that, Russia placed their strongest talent in Sochi on
the Black Sea coast and the cities around Sochi to spread their
enthusiasm for the brand.
Small sales teams laid the groundwork throughout the summer
high season, building relationships with storeowners, installing
specialized activations, bringing business-building tools to the
outlets, and turning Sochi into a model of perfect execution.
“You can paint the marketplace red for a short period of time,
but sustainable progress comes from investing in the local
retailers and becoming part of the local community,” said
Alexey Seliverstov, director region operations CCH Russia. “We
have created a new reality here and the KBIs bear that out.”
Coca-Cola ambassadors gave
out 2.5 million flags, 1.7 million
Coca‑Cola mini can samples,
and 250,000 unique Olympic
glow bottles that helped to cheer
the torchbearers along the
Olympic Torch Relay.
Russia hosted the longest
domestic Torch Relay
in Olympic history.
14. May 2014Page 14
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
BIG looks at results, commits to purchase nearly all
LED-equipped coolers for brighter light intensity
LED proves worthy global standard
The idea made sense from the beginning: brighter LED lighting
in the cooler should attract more shopper attention and drive
transactions while decreasing energy costs for customers and
shrinking our carbon footprint. Now the proof is in.
Multiple pilots around the globe have confirmed it. LED
lighting, when done right, delivers an average sales uplift of
9% compared to coolers with traditional lighting. And, it does it
while lowering energy and labor costs. LED lighting only needs
to be replaced every five years, compared to every one to two
years with traditional fluorescent tubes.
The numbers make the case
Bottling Investments Group (BIG) in India conducted tests
with LED cooler lighting in 18 stores in 2013 using manual
observation and video recording to capture consumer
engagement. They followed up with extensive interviews with
both customers and shoppers.
They found brighter LED lighting boosted engagement and
sales in both self-serve and counter environments. The LED
lighting increased the average time shoppers interacted with
the cooler from 7.03 seconds to 8.02 seconds.
u India drives 9+% increase in incidence with
switch from fluorescent to LED
u Ups interaction time with cooler
They tested two different lighting propositions, half the stores
with Philips LED tube lights and half with Optocore LED strips.
Coolers with the Philips tubes delivered a 5.27% uplift and the
Optocore coolers a 9.23% uplift.
The difference appears to be due to the Philips LED tubes
delivering light intensity that both customers and consumers
felt was very similar to conventional cooler lighting with
fluorescent tubes. The Optocore’s LED strip delivered more light
intensity with less variance and fewer dark spots so products
stood out.
“Based on these findings, BIG INDIA decided to buy all coolers
in the future with the LED strip and the vendors have been
approved accordingly with this technology,” said MN Srinath,
vice president for cold drink equipment (CDE) and vending.
The data confirm consumer research in the United States,
Mexico and England that also found stronger purchase intent
among consumers when cooler lighting is brighter.
The global standard for “brighter” is 150 LUX with minimal
variance of light intensity (no spot less than 75 LUX or greater
than 700 LUX) throughout the cooler so the full range of
products can be seen equally well.
BIG goes “massive” into LED
“Nearly all of the cold drink equipment we buy across BIG
this year will be equipped with LED lighting to our new global
standard,” said Romero Moura, strategic CDE director for BIG.
“We are going massively into LED lighting because we have
seen the proof that it works. It enables us to move two key
levers: better engagement with consumers and increased
sustainability.”
“I really don’t see any relevant downsides with switching
to LED,” Moura added. “You just need to make sure you are
evaluating the whole situation. It may appear more expensive at
first because LED lighting costs more to purchase up front. But
it is ultimately cheaper because it uses less energy and saves
1.5 visits to the cooler for lighting tube changes.”
He also cautions that when ordering an LED-equipped cooler
you should confirm with the vendor that the lighting meets
the 150 LUX global standard. “A vendor may use lights that are
cheaper and less efficient or simply increase the space between
the lights creating less light intensity,” he added.
At least 25% of retailers in the control stores in BIG India’s test
switched off the cooler light at least once a day for several
hours to reduce energy costs. Armed with the data about the
impact of LED lighting and its lower energy consumption, we
can better educate retailers that turning off cooler lights means
turning off potential sales.
BIG will also begin testing up lighting and scrolling message
technology to determine their impact beyond standard LED
strip lighting (see related article Australia proves up lighting
effective option to cut through visual clutter opposite page).
What the research says about LED lighting when executed to new global standard
• Triggers engagement and
thereby purchase
• Increases consumer interaction
with the cooler
• Enhances product visibility
and makes it easier to tell
products apart
• Induces perception of freshness
and high quality
• Uplifts overall appearance and
impression of the store
• Adds feeling of festivity
• Leads shoppers to reach out to
the cooler more proactively
• Should be bright enough to catch
the eye of a shopper
from a distance
• Makes the product sparkle and
increases expectations about
the beverage
• Products appear chilled, thereby
tempting the shopper
• Makes small shops stand out in
crowded shopping areas
• Shows the refrigerator is working
The power
of bright
SHOPPERS SAY:
“The cold drinks look
sparkling and bright and
they are clearly visible.
They look absolutely fresh.”
“It makes the shopping
experience much better
because the lighting overall
is very tempting. It is
something that forces me to
open the fridge myself.”
15. May 2014 Page 15COMMERCIAL LEADERSHIP TIMES
Confidential Property of The Coca-Cola Company
Australia proves up lighting effective option to cut
through visual clutter
Coca‑Cola Amatil (CCA) took LED lighting a step further with
up lighting (additional lighting under the product on each shelf
edge) and drove a 20% lift in outlet and a three-point lift in
conversion to Coca‑Cola brands.
“Our goal is to transition 90% of our coolers to up lighting
because we have seen its power in the marketplace,” said
Adam Haddad, equipment innovation specialist for CCA. “The
up lighting created an impressive point of differentiation that,
even in a very developed marketplace like Australia, enabled us
to move from 14% of shoppers purchasing a Coca‑Cola product
to 17%.”
“The LED up lighting just makes the product shine,” Haddad
explained. “It makes a standard cooler look as if it isn’t even
turned on.”
Test stores prove the hypothesis
They tested the concept with video observation and outlet
analytics across three immediate consumption (IC) outlets in
Sydney, Australia and analyzed conversion to Coca‑Cola brands
over five weeks.
Store one featured a cooler with up lighting only, store two used
a cooler with up lighting and a scrolling message on the header,
and the third location featured a cooler with up lighting as well
as a scrolling message on the header and on two shelves.
“Even in mom and pop outlets with a relatively low incidence
rate due to high competitive presence, we saw we could
strengthen our position by converting one in five shoppers to
purchase a Coca‑Cola product,” said Ashley Gualter, channel
manager for immediate consumption with the Australia
Business Unit.
u Drives 20% lift in outlet
u 3% uplift in conversion to
Coca‑Cola products
“The results validate what we had guessed about better
lighting improving sales,” Gualter added. “Just highlighting the
product in the cooler far better than the competitor creates
incidence uplift.”
Bells, whistles and sales
“This is just phase one,” Haddad explained. “There are so many
options for the future in terms of controlling individual shelf
lighting, having the entire fridge go black and then highlighting
one shelf very dramatically, flashing lights and messages, and
being able to remotely change content across the country from
one location.”
Gualter agrees and points to the strong power of LED up
lighting to cut through the clutter of message-rich environments
such as food courts. “We can create some pop and movement
with this technology that can attract people from far away and
draw people to the cooler,” he said.
He points out that many products such as Sprite®
, Fanta®
,
Powerade™ and Glaceau vitaminwater™ illuminate particularly
well and appear to glow like colored lights.
Match lighting options to location
Based on their experience, Australia suggests a segmented
approach for the scrolling message and shelf activation options.
They are best suited to gold outlets and locations where the
cooler can be viewed from a direct, head-on vantage point. The
added bells and whistles can also help cut through clutter in
visually busy locations.
The cost per one-door cooler for the LED up lighting is about
300 Australian dollars (AUD) and the scrolling technology
for the header and two shelves is about 600AUD. Gualter
cautions that the technology is more complex than they
first thought in terms of balancing light output vs energy
consumption, reliability in a cold and wet environment and
avoiding product fading.
How to do
lighting right
DO
• Invest in LED lighted coolers now to create a
key point of differentiation against competitor
coolers still using traditional fluorescent lighting.
• Choose LED strip lighting instead of
tubes for greatest differentiation from
conventional coolers.
• Locate LED lighting in coolers in outlets with
competitor coolers where they can increase
differentiation and drive conversion.
• Start with LED up lighting and consider scrolling
messaging as potential upgrade for gold outlets
with good cooler visibility.
• Locate LED coolers in areas where shoppers
can see the full range on offer and make their
purchase choice.
• Talk to BIG India and Coca‑Cola Amatil and learn
from the investments they have already made.
DON’T
• Weigh the upfront cost of LED lighting as an
increase – the total cost will be lower than
traditional lighting based on energy savings and
less frequent tube changes. It also significantly
reduces the customers’ electricity costs, often a
barrier to CDE placement.
Coca‑Cola Amatil (CCA) has
found up lighting (additional
lighting under the product on
each shelf edge) can drive a 20%
lift in outlet and a three-point
lift in conversion to Coca‑Cola
brands in the right locations.
16. May 2014Page 16
Confidential Property of The Coca-Cola Company
COMMERCIAL LEADERSHIP TIMES
TAP INTO THE LATEST TECHNOLOGYSOCIAL MEDIA
Coca‑Cola and Family Dollar
move beyond collaboration
Together they author shared media campaign
Europe gets hands-on with
eCommerce, social media
and virtual reality
Continued from page 4
Sustainability, channels and supply chain new
areas of focus
The dedicated sustainability room focuses on the Me, We, World theme
emphasizing how customers and TCCS can collaborate around active
healthy living, ingredients, recycling, and energy efficiency.
Three new channels zones (grocery, foodservice and C-stores) allow
presentation of ideas, strategies, dedicated solutions and experiences
in the customer’s own environment.
A new area demonstrates various supply chain opportunities for end-
to-end value creation by winning from the pallet. Dedicated supply
chain solutions, like ready-to-sell displays, engage the customer to
improve product availability for shoppers and supply chain efficiency.
“TheKOlaboffersthe
opportunitytoscanthehorizon
forfuturetrends,further
understandeachother’sbarriers
andtriggersforgrowth,and
createasetoftopicstoworkon.
Allinjustoneday.”
Bas Bakkers
Senior Manager National Key Accounts
Coca‑Cola Enterprises Netherlands
It is rarely easy to get departments
within one organization to work
together seamlessly. Getting two
separate companies to pull it off
is nothing short of impressive –
and powerful.
Openly sharing existing data
and insights from each company
and then jointly commissioning
proprietary research to fill the gaps,
The Coca‑Cola Company (TCCC) and
retailer Family Dollar have taken their
relationship beyond collaboration to
co-create a highly integrated shopper
program that tilts heavily toward
digital and social media.
Know thy shopper
Both organizations studied Family
Dollar shopper motivations and
decision making along the path to
purchase in depth. Then, they pulled
Family Dollar’s objectives and TCCC’s
objectives into one cohesive strategy.
Executives from both companies even
jointly presented the approach at
the annual Shopper Marketing Expo
in 2013.
Their research showed the Family
Dollar shopper is looking for ways
to give her family a treat without
spending a lot. She values these
moments of family togetherness and
wants help to enhance them and make
more of them possible.
They also learned the Family Dollar
shopper is strongly influenced by
social media.
Putting insights
into action
The insights have translated into a
program of shared media outreach
and launched in store with permanent
display racks that “help her say yes to
more moments of family happiness.”
It partners Mondelez snacks with
Coca‑Cola products and informs
Family Dollar shoppers how they can
get the deal and receive an occasion-
based reward to enjoy with their
family along with the snack, such as
a music or movie download.
After purchasing the snack
and Coca‑Cola beverages,
the shopper scans her
receipt to download
her reward right to her
phone. The music and
movie rewards reinforce
the family togetherness
occasion and never include
price discounts.
The brand experience is
extended through the
digitally delivered reward,
the opportunity to vote for next
week’s ‘crowd-choiced’ reward,
encouraging her to share news
about her rewards via social media,
and giving her a reason to return to
the store.
“This project has provided the
framework and approach to how
we at Family Dollar want to partner
with The Coca‑Cola Company and
Mondelez...it has shown what is
possible,” said Jocelyn Wong, chief
marketing officer for Family Dollar.
“Coke was the ideal partner for
several reasons,” she continued.
“One, they have tremendous brand
equity that clearly resonates with
our customer. Two, Family Dollar
and Coca‑Cola have a long-standing
relationship. And three, we both were
aligned on the end goal.”
We’re all in this
together
The data were shared between both
organizations to keep everyone
on the same page as they jointly
formed consumer insights. The visual
identity for both companies within
the campaign was also co-authored.
“Typically, we tend to create a whole
program and then show it to the
customer and tell them this is what
we want to implement in their store,”
said Kelly Boatright, senior shopper
marketing manager for TCCC.
“This time, everything was developed
together step by step right from the
beginning. The result has been a
much closer working relationship
and greater insights from much more
open, two-way communication,”
Boatright added.
TOP: A convenience store setting within the Lab enables customers to
experiment with new opportunities in the channel before putting them
into effect in the outlet.
BOTTOM: Contemporary meeting space fosters communication between
Coca‑Cola and customers with the latest interactive technologies and
extensive information about critical topics, such as supply chain.
KEY LEARNINGS:
• Make sure you understand
the real path to purchase
before developing outreach
• Create a triple win for
the shopper, customer
and TCCC
• Ensure the approach is
scalable and flexible to vary
with changing budget levels
Family Dollar objectives
• Connect emotionally with
shoppers
• Become trusted
neighborhood store
• Leverage established
brands
• Provide value
• Help her say “Yes”
more often
TCCC objectives
• Focus on occasions of
Moments of Happiness
• Inspire optimism
• Provide value &
enhance brand
• Drive sales
INDIVIDUAL COMPANY OBJECTIVES
SHAPE SHARED OBJECTIVES
Mapping the path
to purchase
The two companies used the
insights to build a holistic
program to target shopper
needs pre, during and post-
shop with extensive use of
social media.
PRE-SHOP (generate
awareness with radio, bus
shelter ads, store circular)
• Establish Family Dollar as
a reliable destination for
Coca‑Cola products and
national brand snacks at
low prices.
SHOP (motivate purchase
at store entrance and with
destination racks that feature
occasion based messaging
and bundles)
• Make it easy for the Family
Dollar core shopper to grab
a bottle or can of Coca‑Cola®
and snack solution.
• Convert shoppers to buyers
(help her relate to the
occasion and see the solution
with national brand drinks
and snacks).
POST-SHOP (nurture advocacy
by rewarding her for digital
word of mouth)
• Give core shoppers
compelling reasons to help us
spread the word and amplify
our message.
