Coca-Cola on North America: ‘It’s a big business, with big opportunity’

By Rachel Arthur

- Last updated on GMT


Related tags North america United states Coca-cola

Building strong brands and creating customer value will help Coca-Cola continue to build on its success in its flagship North American market, says incoming president for Coca-Cola North America, Jim Dinkins.

Coca-Cola’s Venturing and Emerging Brands (VEB) unit will be an important part of this strategy, as it seeks to identify and nurture small, trendy brands with big, billion-dollar potential.  

Building capabilities to maintain and repeat results is a third pillar for the company’s North American strategy.

‘Something that might be new to you is how much growth opportunity there is in North America’

Coca-Cola’s flagship North American market features some 360+ million consumers, with an industry retail value of $210bn. In its FY2016 it grew 4%, outperforming total retail value growth for both the non-alcoholic RTD beverages industry and US consumer packaged goods companies.

Sparkling drinks still make up the majority of the portfolio – taking a share of 57% - but other drinks are important too. Hydration accounts for 13%; juice, dairy and plant beverages account for 14%; tea and coffee at 9%, and energy at 8%. Coca-Cola enjoys a number one position in many of those categories, said Dinkins.

Speaking at Coca-Cola’s investor day this month, Dinkins – who will take the reigns as Coca-Cola North American president in January – said that, although considered a developed market, there is still plenty of opportunity in North America.

“Something that might be new to you is how much growth opportunity there is in North America,” ​he said.

“There’s over $30bn of growth over the next three years. And in that, $20bn of that growth is going to come from categories where we have a 25% or less share, and there will be over $7bn of growth in categories where we have a leading share.

“So, I feel like coming into this role - although I've worked in North America for 25 years - that North America is a big market with big opportunity.”

North America’s beverage industry retail value growth for 2017-2020 predicts a 3% CAGR resulting in $30bn worth of growth: something that promises “a compelling growth opportunity across all category clusters, including sparkling,”​ says Dinkins.

The most promising category to watch is tea and coffee, with a projected 5-6% CAGR resulting in a growth of $8bn.

Hydration follows with a 4-5% CAGR resulting in $7bn growth, while the juice, dairy and plant category can expect to enjoy a 2-3% CAGR.

Sparkling soft drinks will still see growth but at a slower rate to other categories – around 1-2% CAGR.

Dinkins sets out three pillars for Coca-Cola in North America: building strong brands; creating customer value; and building capabilities to sustain and repeat results.

Dinkins says that Coca-Cola will continue to use its growth model for North America: such as focusing on three advantage routes to market: a strong food service business, a DSD business with bottlers, and one of the largest warehouse chilled businesses in the US.

The next billion dollar brand

Coca-Cola’s Venturing and Emerging Brands (VEB) unit has been key in identifying small brands with big potential: Honest Tea, Zico, fairlife and Suja are all brands that the unit works with.

The unit looks at how the beverage will evolve in 5-10 years’ time – and the brands that will thrive in this new environment.

Dinkins takes fairlife, the ultra-filtered milk brand that has around 50% more natural protein than ordinary milk, as a good example of a brand ‘with real edge’.

“We were able to find fairlife and see that edge that it had,”​ explains Dinkins.

“The edge really fell in three areas. One is that one of the founders was a veterinarian, and that veterinarian believed there was a better way to run a dairy farm.

“The second was a patented filtration system where we could actually take the best parts of milk and provide them to the consumer.

“The third was state-of-the-art manufacturing to make sure we could get to market quickly with these brands, and the fourth was leveraging the model in the marketplace that [we have with our] Coca-Cola brands.”

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