It’s not a blip. It’s probably not reversible. So Coca-Cola’s new CEO, James Quincey, has finally accepted what the world has been telling his company for several years now: Coke is going out of fashion.
And as he takes over from Muhtar Kent this month, the 52-year-old Briton has become the first Coca-Cola CEO to plan to direct the iconic CPG mammoth as a “total beverage company” rather than as mainly the keeper and beneficiary of the Coke brand legacy that created an industrial legend.
Quincey is the latest CEO of an old-line CPG company to come face-to-face with the realities of the better-for-you revolution in food and beverage consumption worldwide. Western millennials have been driving the trend, favoring more healthful—often whole, organic and simple—fare over their parents’ processed favorites. Traditional titans including Kraft-Heinz, General Mills, Kellogg and others are also feeling the heat, but haven’t been able to transform themselves quickly enough to get ahead of the wave.
With carbonated-soft-drink sales in what is becoming a secular rather than any kind of cyclical decline, and as governments girdling the globe now are slapping taxes on sugary drinks, Quincey acknowledges he must find a way to direct Coca-Cola into a massive pivot toward dairy, tea, bottled water and other beverages.
“while 70% of global sales by volume is still soda, Quincey must find a way to direct a massive pivot toward dairy, tea, bottled water and other beverages.”
One challenge in that regard is that 70% of Coke’s global sales by volume is still soda. Another is the mere fact that Coca-Cola remains one of the world’s most valuable brands. Yet a third is that Quincey will have to overcome the huge internal legacy of employee loyalty to the Coca-Cola brand—loyalty that lately seems to have bordered on denial.
Quincey’s strategy includes officially giving Coke employees permission to say that Coke isn’t their favorite brand in the company’s portfolio, an admission that would have been blasphemous even a year ago, as the Wall Street Journal put it.
“If we are to be a total beverage company, it has to be OK for consumers to say something else is their favorite brand,” Quincey told the newspaper. “Therefore, it has to be OK for an employee to say something else is their favorite brand.”
Among other early stamps by Quincey after Kent’s eight-year run, the new CEO immediately created a role of chief innovation officer, who reports directly to him.
“Virtually all the big brands we own we either created ourselves or invested in something small and then helped grow it,” Quincey explained to Bloomberg. “We’re the leader in the beverage industry. You’d like to think we know something about it and that we should be able to come up with some brands.”
But alas, Quincey also knows there will never be another brand like Coca-Cola. And that the Coca-Cola brand will never be what it was.