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

by WarriorForum.com Administrator
8 replies
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."
#cocacola #cutting #half #innovation #lead #portfolio #stronger
Avatar of Unregistered
  • 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!
    {{ DiscussionBoard.errors[11630027].message }}
  • Profile picture of the author seobro
    This is a very BAD sign. Hey, we need to have a growing company. Most trees die if enough branches you prune. A firm typically starts to down size brands and branches until it does not exist any more. Look at sears. Ah yes, they started reducing the number of brands they did carry. Walmart did the opposite and here we are.
    {{ DiscussionBoard.errors[11636820].message }}
  • Profile picture of the author Radcliff
    Every business small or big needs a change like that every now and then. It helps in creating new ideas which in turn helps with the growth of the company.
    {{ DiscussionBoard.errors[11636862].message }}
    • Profile picture of the author Jeffery
      Originally Posted by Radcliff View Post

      Every business small or big needs a change like that every now and then. It helps in creating new ideas which in turn helps with the growth of the company.
      True. The biz just needs to be very careful.
      Signature
      In the minute it took me to write this post.. someone died of Covid 19. RIP.
      {{ DiscussionBoard.errors[11636868].message }}
  • Profile picture of the author GordonJ
    A MEASLY 2% of billions? See, CC didn't obtain these brands willy-nilly, each acquisition was evaluated...they didn't blindly start buying things. This is a signal, and it is the start of seeing the slowdown the Covid Pandemic has created.

    The metaphor is a battleship in the ocean which needs MILES to turn around, or a train which can't stop on a dime. This is a reflection of the supply chain, and imports, and truckers, and transportation and mfgrs...

    And is being presented in a different light, for investor sakes, God forbid Warren gets scared about his CC stock...

    I hope I'm wrong. Truly. But this is just the beginning and the new president is going to face an economic crisis, we are totally unprepared for.

    To believe this is good corporate stewardship is to drink the Kool-Aid, and not the Coke.

    GordonJ


    Originally Posted by WarriorForum.com View Post

    A new article on

    CEO, James Quincey spoke on the decision refeencing 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:



    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:
    {{ DiscussionBoard.errors[11636865].message }}
    • Profile picture of the author Jeffery
      Originally Posted by GordonJ View Post

      A MEASLY 2% of billions? See, CC didn't obtain these brands willy-nilly, each acquisition was evaluated...they didn't blindly start buying things. This is a signal, and it is the start of seeing the slowdown the Covid Pandemic has created.

      The metaphor is a battleship in the ocean which needs MILES to turn around, or a train which can't stop on a dime. This is a reflection of the supply chain, and imports, and truckers, and transportation and mfgrs...

      And is being presented in a different light, for investor sakes, God forbid Warren gets scared about his CC stock...

      I hope I'm wrong. Truly. But this is just the beginning and the new president is going to face an economic crisis, we are totally unprepared for.

      To believe this is good corporate stewardship is to drink the Kool-Aid, and not the Coke.

      GordonJ
      Well said Gordon.
      Signature
      In the minute it took me to write this post.. someone died of Covid 19. RIP.
      {{ DiscussionBoard.errors[11636870].message }}
  • Profile picture of the author Jeffery
    Owed to Covid many small businesses in my Geos were forced to close their doors and end their businesses. That created opportunities for entrepreneurs to buy-out those businesses assets.

    In my case, I created co-ops of different entrepreneurs and a new brand. Something to look into when a large corp or a significant number of small-businesses scale down because new doors are open to a new infrastructure and a new way to market products that are still in demand.
    Signature
    In the minute it took me to write this post.. someone died of Covid 19. RIP.
    {{ DiscussionBoard.errors[11636872].message }}
  • Profile picture of the author Hydicedyo
    Is it true that they transport their products all over the world? Even in the coronavirus, the company had no problem with this?
    {{ DiscussionBoard.errors[11667486].message }}
Avatar of Unregistered

Trending Topics