When James Quincey took the helm of Coca-Cola in May 2017, he vowed to turn the business into a "total beverage company" and move further beyond its namesake sodas.
In more than two years overseeing the Atlanta-based company, Quincey has done just that through acquisitions and innovations in many of the more than 500 brands in its global portfolio.
To be sure, Coca-Cola and other manufacturers of sugary drinks face challenges to their core beverages as some consumers move away from these products. But Quincey's decision to increase the company's exposure to better-for-you teas, waters, sports drinks and coffees, while expanding the offerings of its core sodas, has better positioned the beverage company to withstand — and even thrive — despite headwinds in the industry.
"What it means to be a total beverage company is always going to evolve because people's tastes and needs will continue to evolve," Quincey wrote in response to questions submitted by Food Dive. "Five to 10 years from now, many brands may be different or might not exist. New ones will take their place. This journey doesn't end."
Quincey, who has been with Coca-Cola since 1996, said much of the recent success is tied to the fact that the company "has been putting aside what we think is best for consumers and making everything we do about listening and responding to them." He pointed to the company's decision to make products such as smaller cans or Coca-Cola Zero Sugar to reflect the fact that people want less of the sweetener. Coca-Cola also has added vitamins and protein to some drinks and dropped products people weren't buying in order to invest in others.
"We're changing in the ways we need to change," he said.
Since Quincey took over, Coca-Cola has done more to improve the sustainability of its products, an increasingly important concern for consumers when deciding what products to buy. Coca-Cola has pledged to collect and recycle the equivalent of all of its packaging and to use at least 50% recycled content in its bottles by 2030.
It also has overhauled it portfolio mix by adding more coffee, energy drinks, sports drinks and sparkling water options.
Coca-Cola acquired Topo Chico premium sparkling mineral water. It also teamed up with McDonald's to introduce a line of ready-to-drink McCafe Frappes in grocery stores, and purchased a minority stake in premium sports drink maker BodyArmor. In October, Coca-Cola announced it would launch the first Coke-branded energy drink in the U.S. in 2020. Its biggest deal, however, was the $5.1 billion purchase of Costa Coffee, a U.K brand with shops and retail products, in 2018. This positions Coca-Cola to be a bigger player in the hot and ready-to-drink coffee markets.
But Coca-Cola's transformation has gone beyond just M&A. Innovation also has played a major part. With soda still a lucrative part of the company's business, Coca-Cola has taken steps to refresh its drinks to better reflect what people want in their beverages.
Coca-Cola announced its first new flavors under the trademark in more than a decade — Orange Vanilla Coke and Orange Vanilla Coke Zero Sugar — in February. It overhauled its Diet Coke empire nearly two years ago with a taller, slimmer can and rolled out several new varieties that have turned around sales. In 2017, Coca-Cola replaced Coke Zero with Coca-Cola Zero Sugar by adjusting the blend of flavors to make it taste more like the original Coke.
John Boylan, a senior equity analyst with Edward Jones, told Food Dive these products are reflective of Coca-Cola's keen ability to reposition its portfolio in a way that reaches consumers at more points throughout their day.
"The organization seems a lot more nimble internally in that they're getting a lot more innovations to market quicker that seem more impactful. It's not just incremental line extensions anymore," Boylan said. "We've been pleased with what we've seen with Coke over the past couple of years."
The acquisitions and innovations appear to be paying off. Quincey told The Wall Street Journal in October that Coca-Cola Zero Sugar has grown 14% by volume globally so far this year, while unit sales of the company's 7.5 ounce mini cans have increased 15% this year in the U.S. During its recent third quarter, Coca-Cola said organic revenue rose 5% from the same period a year earlier, helped by a 4% jump in volume for its namesake beverage.
In an interview with The Wall Street Journal, Quincey said Coca-Cola's new offerings are bringing young adults back to soda who previously didn't drink it.
"I think what you're starting to see is, yes, some reconsideration of the category," he said.
Quincey told Food Dive that despite its recent success, Coca-Cola still has plenty of work ahead.
"We're not a total beverage company in every country and territory today, and we absolutely can be. There's so much room for us to grow in new categories in markets around the world," he said. "The key is figuring out how to give consumers the drinks and experiences they want in convenient, affordable, culturally relevant ways. That alone is going to keep us busy for years to come."