Coca-Cola North America grows under new president’s leadership, restructure and reinvestment

12-Sep-2023 - Last updated on 12-Sep-2023 at 13:39 GMT

Source: Getty/Chinnachart Martmoh

Less than a year since Jennifer Mann took the helm of Coca-Cola Co. North America as president, the segment’s revenue is up and its margins, value share and volume share have all expanded thanks in part to structural and investment shifts she helped spearhead.

“I started the role with a tremendous amount of listening – both internally and externally. … I was looking for areas of opportunity around how we can grow faster, and the feedback I got from everybody was very consistent, which is our org structure was very complex. We were spreading ourselves across too many priorities,” she told attendees Barclays’ annual Consumer Staples Conference in Boston last week.

“And so,” she added. “I really focused in on a few areas this year since I’ve taken over the role. … And I am happy to say that the results, the first half of the year have been good. We’ve had revenue growing at 9%. We have expanded margins, and we’ve grown both value and volume share.”

A simplified structure

One of the first changes Mann helped oversee in her new position was a reorganization that she said helped simplify the division’s structure, route to market and right-size the needs and resources for each of the foodservice business, nutrition business and bottler delivered businesses.

This included creating a new customer care team to oversee the company’s equipment and services and creating a dedicated nutrition team that will house the company’s dairy and juice business, according to an internal memo from Mann following her appointment but before she officially stepped into her current role.

Investments in frontline marketing, innovation pay off

Mann said she also reallocated resources to more frontline marketing and more frontline customer and sales teams.

“We’ve also reinvested into capabilities, both into people in terms of their development but also into some of our commercial capabilities around revenue growth management and digital,” she said at the Barclays event.

For example, she noted that the company invested in a B2B platform for its customers called My Coke, in which about two-thirds of the business’ primary customers are currently enrolled and which provides data and insights that Mann says will help it grow over time.

At the consumer level, the division’s renewed focus on marketing and innovation helped it “earn” price increases necessary to offset inflation, including a 16.5% increase in its sparkling category this year, she said.

As an example, Mann noted, the company is “really focused on affordable packs,” which includes launching a 1.25 liter.

“It’s a journey. It’s multiyear. We’ve got over 80% distribution now, and the consumer is responding. Household penetration on that package is also part of the reason that we’re recruiting people into the Coke franchise. We’re seeing good results from that perspective, but that requires constant investment back into [the company] and not just taking [revenue growth management] as it is, but to the next level and then the execution focus,” she said.

Marketing and innovation have also helped the company hold off on promotions despite price increases.

“For the US, we’ve actually reduced our volume on promotion by 500 basis points since 2019. I think the data is helpful. What we’re doing now, this year, is being very surgical about our promotions going in by retailer, by pack price …. [and] again, looking at the total picture and are we driving increasing units, increasing transactions and increasing profitability and keeping all of these factors balanced,” Mann explained.

She added that she sees “a huge amount of upside” within sparkling. She said she also sees upside in premium beverages and within nutrition, including Fairlife, which Mann described as “on fire” with eight years of double-digit consecutive volume growth.

Room for improvement

While Mann says she feels good about most of North America’s portfolio, she said she is not happy with its sports beverages and particularly with BodyArmor – which has struggled to integrate since purchasing the remaining shares in late 2021 after an initial buy-in of 15% in 2018.

“I am not happy with where we are on BodyArmor. There is a lot of work to do, but we’ve got a very focused action plan with better marketing, more innovation and better execution in the marketplace,” she said, adding, “We’re starting to see some progress against that action plan.”

The company recently launched BodyArmor Flash IV, which claims to offer superior hydration and electrolytes from coconut water and vitamins.

Last week the company also announced it will expand BodyArmor into both Canada and Mexico in 2023.

Finally, Mann said, BodyArmor and Powerade will be combined under one leadership team. And while she said the company is still working out the business plan for the joined brands, she added, “we really believe in the power of that and what that gives from a growth perspective.”