Coca-Cola says cutting portfolio in half will lead to stronger innovation

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A new article on Marketing Week reports that Coca Cola is pleased with a move it made to cut its list of brands in half, saying downsizing its portfolio has helped it deliver even greater innovation.

CEO, James Quincey spoke on the decision referencing a results call that occurred on the 22nd of October, 2020. He points out that Coca Cola's decision to cut a large chunk of its portfolio actually benefited the company and resulted in more, rather than less, innovation. He also states that Coca Cola's revenue per innovation has already doubled in 2020 in comparison to last year.

He explained:

"The reduction of the portfolio by about half is going to allow us to bring stronger innovation to the table. This is not about less innovation and less ability to tap into local insight, it's actually leveraging the most successful vehicles to do that. It's about combining platforms of the global and regional brands to connect to local insights. That is part of the art of bringing [innovation] to life."
Coca Cola took such drastic action with their brand line up because three months ago, it had 400 master brands - and more than half of them had very little scale, accounting for a measly 2% of company revenue. The total revenue accumulated by these products was just not worth the time and money and was taking efforts away from bigger and more lucrative areas - so, brands needed to get cut out.

The CEO noted that Coca Cola now had a more transparent process for making decisions about when to invest and when to back off:

"The question of how long do you wait to pull this innovation. We have some pretty clear metrics. The first is what is the innovation for? What is it's objective? Are we trying to get into a new category? Are we trying to do a flavour extension on a brand? Is it a packaging innovation? Each one has its mission and has its goal and we are very focused tracking how doing and [will cut it] as and when rational hope is no longer there."
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  • Profile picture of the author Matthew Stanley
    A nice reminder that a little "ruthless prioritization" (of brands, stocks in a portfolio, marketing strategies, etc etc) can be needed no matter how big or successful the person or entity. Also kind of crazy to see they had 400 brands!
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