Coca-Cola Co. replaces its pre-COVID volume-focused strategy with a data-driven approach that uses AI to more effectively target consumers across incomes, explained President and CFO John Murphy at Deutsche Bank’s dbAccess Global Consumer Conference.
The company’s solution to navigating the K-shaped economy means attracting premium and value customer bases concurrently.
The post-pandemic era marked by inflation and geopolitical uncertainty also is driving the company to focus on undeveloped markets under the leadership of incoming CEO Henrique Braun, formerly the company’s chief operating officer, who took the helm in March.
Coca-Cola’s global reach
Coca-Cola is setting its sights on less developed markets within its global network, Murphy explained.
Braun, who spent nearly three decades at Coca-Cola before succeeding James Quincey as CEO, brings an “ambition,” “new energy” and “sharper thinking into areas that we need to be better at,” Murphy said.
That includes further development of the 200-plus brands across more than 200 countries in Coca-Cola’s global portfolio.
“You don’t need all of them to be working at the same time to deliver, but that can lead to some complacency in a number of areas that you’re not that focused on,” Murphy said. “So the idea of demanding more from more markets is something that he’s bringing loud and clear into our system.”
K-shaped strategy
Coca-Cola is taking a different approach to building its customer base in the post-pandemic era that focuses on precision market development over indiscriminate pushes for greater volume, Murphy said.
“Many years ago it was very much a volume share mindset that drove the equation; we’ve seen that move to being much more of a value equation,” he said.
In the two to three years following the pandemic, Coca-Cola managed inflationary pressures through price increases, which the company realized consumers were largely willing to pay.
“Doing it for a couple of years does not mean it’s the right thing to do for many years,” he said.
Consumers around the world are under strong financial pressure, Murphy said: “We have a choice to stay relevant with them or not.”
To address this K-shaped consumer base – those facing financial pressure versus those who are not – Coca-Cola is using artificial intelligence to develop marketing strategies to continue growing its customer base, Murphy said.
Retail growth with AI
Artificial intelligence is often seen by corporations as a way to cut costs by workforce reduction, but Murphy said he thinks about AI differently.
“I see it as more of a growth enabler than a cost reducer,” he said.
That’s because Coca-Cola is using AI to power its retail growth management (RGM) system to develop premium and value product lines.
The goal is to stay relevant with a large consumer base that includes all income levels. That could mean expansion into new categories that provide higher margins per transaction. Murphy cited Coca-Cola’s Core Power, a high‑protein shake brand made by Fairlife, as an example.
Global strength hedge volatility
Segmenting customers is as important in China as it is in North America, and Coca-Cola’s global presence is a strength that enables the company to hedge its bets from market to market.
“We’ve seen in the developing world more volatility in performance over the last few years, and I’m not sure that I can sit here today and say that’s going to stop, but I think the opportunity we have when I look at our global portfolio is to continue to do what’s right for these markets longer term,” Murphy said.
He described the massive complex global system as an advantage over competitors enabling Coca-Cola to innovate with greater precision in developing customer segments.
“Sometimes complexity means that nobody else can do it … and in its own way that offers us an advantage in the United States,” he said.
