Food Business News - October 31, 2017 - 10

THE COCA-COLA CO.

Bringing small and premium businesses to scale is
seen as a driver of future growth around the world
ATLANTA - A major transformation is under way at the Coca-Cola Co. The company is shedding its image as a carbonated
soft drink manufacturer and focusing
on becoming a "total beverage company," where new categories and premium segments around the world will
play key roles in the company's future
growth, said James Robert B. Quincey,
president and chief executive officer.
"We are growing our portfolio in
multiple ways whilst leveraging the
strength of our core brands at its foundation," he said during a conference call
with analysts to discuss the company's
financial results for the third quarter of
fiscal 2017.
A key component to Mr. Quincey's
strategy is bringing smaller brands to
scale. An example he cited is Topo Chico, a premium brand of sparkling water
from Mexico that the company recently
acquired.
"Our Venturing and Emerging
Brands (V.E.B.) unit will serve as an
incubator for Topo Chico and will
guide the development of the brand's
distribution footprint," Mr. Quincey
said. "Within V.E.B., this approach
has been highly successful for other

10

Food Business News

investments, like Honest Tea, maintaining the essence of the brand and the
entrepreneurial culture of the company whilst supporting its rapid growth
phase within the power of the Coca-Cola system."
Management is also in the process
of scaling its V.E.B. model to other
regions of the world.
"For example, in Central and Eastern Europe, we recently launched a unit
in partnership with our bottling partner, Coca-Cola Hellenic," Mr. Quincey
said. "We will seek emerging brands for
potential partnerships, but we will start
by testing premium brands in high-value outlets and channels through a
separate and dedicated sales force.
Many of these, like smartwater, ZICO,
Appletiser, will be lifted and shifted
from other places. Products will follow
the incubate, grow and scale path, with
a goal to expand fast and discontinue
quickly, if necessary."
The focus and execution against
small, premium brands and products
doesn't mean the company is shifting
away from its core carbonated soft
drink strength. Initiatives are in place
to grow the business through such

Coke Zero Sugar is
gaining traction
around the world,
according to The
Coca-Cola Co.

THE COCA-COLA CO.

Change is a key component
of Coca-Cola's growth strategy

innovation as the introduction of Coke
Zero Sugar in markets around the
world.
During the call an analyst asked
how the introduction of Coke Zero Sugar may affect other components of the
company's C.S.D. portfolio.
"It's lifting the whole franchise,"
Mr. Quincey said. "Yes, it is cannibalizing at times either Coke Light or sometimes Coke Original, but in the net, there
is additional volume and additional consumers coming back into the franchise. I
think it's unrealistic to expect cannibalization to be zero, but obviously, the key
is that to be a net positive."
The company is also in the process
of refranchising its operations. Mr.
Quincey said the company will complete the U.S. phase of the project in
"the coming weeks" and will conclude
efforts in Canada and Africa in 2018.
During the third quarter ended
Sept. 29, the Coca-Cola Co.'s net income
rose 38% to $1,447 million, equal to 33c
per share on the common stock. Sales
during the quarter fell 15% to $9,078
million.
The refranchising of the bottling
operations was the primary reason for
the sales decline during the quarter,
said Kathy N. Waller, chief financial
officer. Adjusting for the divestitures,
organic revenue rose 4% during the
quarter, with positive performances
from all business units, she said.
"Comparable gross margin increased over 150 basis points, reflecting
the benefit from refranchising our bottling businesses and strong price/mix,
partially offset by increased commodity
costs and a slight currency impact," Ms.
Waller said. "Comparable operating
margin grew over 400 basis points,
driven by the divestitures and continued productivity, including the ongoing
removal of stranded costs in Coca-Cola
Refreshments."
Costs associated with the hurricanes that affected Florida and Texas
will be accounted for in the fourth
quarter, Ms. Waller said. She estimated the costs will be in the range of $50
million and reflect the disruption of the
company's supply chain. FBN
October 31, 2017



Table of Contents for the Digital Edition of Food Business News - October 31, 2017

Food Business News - October 31, 2017
DAIRY BUSINESS NEWS - Clean label approach: From the farm to the fridge
Contents
WEB CONTENTS
FROM THE EDITOR - Difficult realities confront industry leaders seeking growth
Change is a key component of Coca-Cola’s growth strategy
McDonald’s ratchets up value in 2018 with price points
Utz Quality Foods to acquire Inventure Foods
Danone sales accelerate in third quarter due to demand in Specialized Nutrition
Danone restructures leadership team
NACS SHOW 2017- C-store operators seeking to upgrade image and offerings
Ferrero Group expanding in U.S. with Ferrara Candy acquisition
WASHINGTON - Report prods F.D.A. to speed inspection pace and firmly address violations
MARKET INSIGHT - Ample red meat, poultry supplies keep pressure on prices
INGREDIENT TRENDS - Adding NUTS to new applications
INGREDIENT INNOVATIONS - Targeting texture
NEW FOOD PRODUCTS
Ingredient Market Trends - Soybean harvest near average pace, but corn harvest still lags
INGREDIENT MARKETS
SUPPLIER INNOVATIONS
CLASSIFIEDS
MARKETPLACE
Ad index
Food business in the news
Food Business News - October 31, 2017 - DAIRY BUSINESS NEWS - Clean label approach: From the farm to the fridge
Food Business News - October 31, 2017 - 2
Food Business News - October 31, 2017 - 3
Food Business News - October 31, 2017 - Contents
Food Business News - October 31, 2017 - 5
Food Business News - October 31, 2017 - WEB CONTENTS
Food Business News - October 31, 2017 - 7
Food Business News - October 31, 2017 - 8
Food Business News - October 31, 2017 - FROM THE EDITOR - Difficult realities confront industry leaders seeking growth
Food Business News - October 31, 2017 - Change is a key component of Coca-Cola’s growth strategy
Food Business News - October 31, 2017 - 11
Food Business News - October 31, 2017 - McDonald’s ratchets up value in 2018 with price points
Food Business News - October 31, 2017 - 13
Food Business News - October 31, 2017 - Utz Quality Foods to acquire Inventure Foods
Food Business News - October 31, 2017 - 15
Food Business News - October 31, 2017 - Danone sales accelerate in third quarter due to demand in Specialized Nutrition
Food Business News - October 31, 2017 - Danone restructures leadership team
Food Business News - October 31, 2017 - NACS SHOW 2017- C-store operators seeking to upgrade image and offerings
Food Business News - October 31, 2017 - 19
Food Business News - October 31, 2017 - 20
Food Business News - October 31, 2017 - 21
Food Business News - October 31, 2017 - 22
Food Business News - October 31, 2017 - 23
Food Business News - October 31, 2017 - 24
Food Business News - October 31, 2017 - 25
Food Business News - October 31, 2017 - Ferrero Group expanding in U.S. with Ferrara Candy acquisition
Food Business News - October 31, 2017 - 27
Food Business News - October 31, 2017 - WASHINGTON - Report prods F.D.A. to speed inspection pace and firmly address violations
Food Business News - October 31, 2017 - 29
Food Business News - October 31, 2017 - MARKET INSIGHT - Ample red meat, poultry supplies keep pressure on prices
Food Business News - October 31, 2017 - 31
Food Business News - October 31, 2017 - INGREDIENT TRENDS - Adding NUTS to new applications
Food Business News - October 31, 2017 - 33
Food Business News - October 31, 2017 - INGREDIENT INNOVATIONS - Targeting texture
Food Business News - October 31, 2017 - 35
Food Business News - October 31, 2017 - 36
Food Business News - October 31, 2017 - 37
Food Business News - October 31, 2017 - 38
Food Business News - October 31, 2017 - 39
Food Business News - October 31, 2017 - 40
Food Business News - October 31, 2017 - 41
Food Business News - October 31, 2017 - NEW FOOD PRODUCTS
Food Business News - October 31, 2017 - 43
Food Business News - October 31, 2017 - 44
Food Business News - October 31, 2017 - Ingredient Market Trends - Soybean harvest near average pace, but corn harvest still lags
Food Business News - October 31, 2017 - INGREDIENT MARKETS
Food Business News - October 31, 2017 - 47
Food Business News - October 31, 2017 - 48
Food Business News - October 31, 2017 - 49
Food Business News - October 31, 2017 - 50
Food Business News - October 31, 2017 - 51
Food Business News - October 31, 2017 - 52
Food Business News - October 31, 2017 - 53
Food Business News - October 31, 2017 - 54
Food Business News - October 31, 2017 - 55
Food Business News - October 31, 2017 - SUPPLIER INNOVATIONS
Food Business News - October 31, 2017 - 57
Food Business News - October 31, 2017 - CLASSIFIEDS
Food Business News - October 31, 2017 - MARKETPLACE
Food Business News - October 31, 2017 - 60
Food Business News - October 31, 2017 - Ad index
Food Business News - October 31, 2017 - Food business in the news
Food Business News - October 31, 2017 - 63
Food Business News - October 31, 2017 - 64
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