There’s no doubt that new Coca Cola chief executive officer James Quincey has a number of challenges to deal with in his new job, but the first one is one that none of his predecessors will never have had to worry about, the effect the growth of online shopping is having on Coca Cola.
With online shopping growing year-on-year, the more people shop on smartphones and tablets and get goods delivered to their home, it means they’re spending less time in malls and on the high streets. And this means that people aren’t out buying Coke at mall vending machines or in the food court. Whilst most media coverage concerning the effects of online shopping has focused on retailers who are suffering against their online counterparts, it’s often forgotten that big brands like Coca Cola are suffering too says Quincey.
“Digital is changing the way you behave,” he said. “It affects other categories that are not the primary reason you thought about making the shopping trip.”
It’s not just the growth of online shopping that represents a challenge to Coca Cola says its new chief executive. According to James Quincey thinks that for too long, the company has been far too focused on its main brand, limiting its chances to diversify successfully.
“It was probably culturally unacceptable internally to say that Coca-Cola wasn’t the preferred brand,” Mr Quincey told the Financial Times. “And if you have that as your culture, your self-limiting growth of other categories. The liberation of cutting through that cultural barrier is going to allow us to more sharply focus on what it is that consumers are really doing.”
Coca Cola’s carbonated sales that include Coca Cola itself, Fanta and Sprite still account for over 70% of the company’s worldwide sales according to Beverage Digest, and many analysts have criticised the company for being too slow to diversify. This lack of diversification according to many industry commentators has been the cause of the company’s shares rising just 13% over the last five years. In comparison, PepsiCo, which has had a much more active diversification programme over the same period has experienced its shares rise by a staggering 69%. Dr Pepper Snapple, another major rival of Coca Cola has seen its share price double over the same period, again thanks to a proactive diversification process.
Quincey knows the Coca Cola company inside out, having worked in the business for over twenty years, working in locations as diverse as Mexico and Argentina. He thinks that the company needs to take a “more investment portfolio view”.
“Coca-Cola has and always will be the heart and soul of the company, but the company can be bigger than that”.
Other challenges that Coca Cola faces are a world that is continually becoming more and more ‘sugar free’, moe reasons for the Coca Cola company to diversify their offering.