Global beverage giant Coca Cola has some new ideas after the epidemic has stimulated the growth of home consumption and online orders.
Xiaoshidai noticed that recently, James Quincey, chairman and CEO of Coca Cola, attended the 37th annual strategic decision-making meeting of Bernstein alliance. He spent a lot of time elaborating Coca Cola’s overall thinking on e-commerce business, and also mentioned his views on developing new businesses such as energy drinks and Costa coffee.
James Quincey, chairman and CEO of Coca Cola
Let’s get to know.
“Natural challenge” of beverage E-commerce
“Due to the heavy weight of beverage products, do you think this means that the penetration rate of e-commerce of beverage products will always lag behind that of other consumer products?” Xiaoshidai noticed that at the meeting, Zhan kunjie was asked about the “problems” faced by the beverage brands in the development of e-commerce business.
“Let me break down the e-commerce business into four parts.” He said: first, e-commerce of cola system for customers (i.e. retailers); Secondly, the e-commerce of the whole grocery channel; Third, generally speaking, it refers to the takeout that meets the immediate consumption of food and beverage. Fourth, the company’s direct sales channels to consumers.
He said that each e-commerce segment has its own development trend and future“ Let me talk about the last one, that is, direct to consumers (online sales). We have a whole set of things. For example, in the United States, we have an app called mycoke. You can order products, and you can also order some drinks in special packaging. “
“But the reality is that this is a cola only app, in which all new orders are cola, which is unlikely to become a major part of our (e-commerce) business.” “The reason is obvious – people don’t wake up on Sunday morning and go to different websites to order every category of products they need in life,” he said
Therefore, Zhan kunjie said that in the end, generally speaking, the challenge faced by the beverage category is that because its order value is always very small, and many times the product is also very heavy, it is often not so suitable for shipping to consumers if only selling its own products.
Increase beverage sales in catering takeout
Let’s take out.
“Obviously, during the epidemic, this kind of consumption has surged. Our top priority is to help these third-party takeout platforms increase the ordering rate of drinks in their orders. In fact, it is also good for them to improve their profit margin to some extent, because no matter what the food has to be delivered (there is already a fixed cost), you can attach drinks. ” Zhan kunjie said.
Some products of Coca Cola in China
However, he also pointed out that compared with the consumption of drinks in restaurants, the probability of drinks included in food take out orders delivered to home is often lower“ Obviously, it’s very likely that consumers already have a drink at home. ” He said.
Zhan kunjie said that the epidemic has obviously promoted the development of takeout business, but it is worth noting that “most third-party takeout platforms do not make money, so I think the industry is still experiencing shocks.”.
“But from our point of view, we do see more and more food delivery. Our goal is to promote the development of this business.” In fact, thanks to Coca Cola’s high market share and strong relationship with catering customers, the company has “done relatively well” in this business, he said.
“The key here is to help catering customers get extra sales (from coca cola drinks), whether they are selling directly to consumers or through a third-party take away platform.” Zhan kunjie said.
It won’t develop as fast as make-up
Then let’s look at the e-commerce business of the grocery channel.
Zhan kunjie said that in this regard, retailers have made many attempts, such as sending them to consumers’ homes, placing orders online, picking them up offline, or providing other forms“ Their e-commerce business has made progress, and I think it has opened up some new growth points. But as just mentioned, there is a pressure on the economy to deliver (drinks) to consumers. “
“Of course, some people can place large enough orders and get free delivery, or some people are willing to pay for delivery, and there are markets around the world where people will invest in subsidizing the whole system. But for the average grocery retailer, it will still dilute profits. ” He said.
Based on the various reasons mentioned above, Zhan kunjie believes that in e-commerce, food and beverage will not develop as fast as music, movies, beauty personal care and other categories. These other categories may be completely digital, or the value of goods is much higher than the transportation cost.
But he still believes that food and beverage will continue to grow in the field of e-commerce, “in this respect, we have been working with customers.”.
Finally, when it comes to sales to retailers, Zhan kunjie said that there are still huge opportunities for Coca Cola to digitalize its cooperation with retailers, and that it can do better in terms of sales and distribution efficiency. He believes that, just like large retailers, in the future, independent customers will mainly use e-b2b to order, “manual orders will be a few.”.
All meet the “charging” needs
Xiaoshidai noticed that at the meeting, Zhan kunjie was also asked about the latest plans for the development of Coca Cola energy drinks and Costa coffee business.
“There are two biggest growth drivers in the beverage industry, which are diametrically opposite to each other to some extent.” He said that on the one hand, aiming at consumers’ demand for energy, recovery and “charging”, a series of beverage categories and brands are growing“ When consumers want to recharge, they will know that the drinks they choose will contain calories, caffeine or other ingredients to help them recover their energy. “
Bodyarmor, Coca Cola’s sports drink brand
Another kind of demand is to enjoy drinks“ But I want it to be calorie free, and I want it to be tasty with as few ingredients as possible, just like seasoning soda in the U.S. market. ” Zhan kunjie said that these two trends continue, “they continue during the epidemic and will continue after the epidemic.”
To this end, Coca Cola has taken a series of actions.
Zhan kunjie mentioned that in response to the consumer demand of “energy recovery”, Coca Cola brand has entered the field of energy drinks. The cooperation between Coca Cola and monster continues to perform well, and other categories also perform well, including sports drink brand bodyarmor.
Interestingly, Coca Cola also regards coffee as a beverage category that can meet the “charging” demand.
“When we think of coffee, it’s a consumption scene to drink coffee in a coffee shop, but there are still a lot of coffee consumption, including instant coffee, which focuses on the charging demand. As far as this is concerned, (coffee) is not much different from other beverage categories that may supplement energy. There are a lot of opportunities for us. ” He said.
Costa’s new ready to drink coffee product launched in China in April this year
However, Zhan kunjie also pointed out that it takes time to cultivate new product business.
He said that although it is called “fast consumer goods industry”, the “fast” is related to the fast turnover of store goods and the fast consumption of consumers. However, if it is used to describe the industrial structure, it is a big mistake“ The overall change of global industrial structure is relatively slow. It takes time to build a new big brand. It also takes time to grow from small scale to medium scale, to large scale, and then to leadership. “
This is true of any brand, he said, and Costa’s business will grow outside the UK, but it will take time“ Take innocent, another UK refrigerated fruit juice brand. When we invested in innocent in 2009, its scale was 20% of that of the leading refrigerated fruit juice manufacturer in Europe. Ten years later, innocent has become an undisputed leader. But it took 10 years. “
“Therefore, we need to continue to promote marketing and continue to innovate to steadily build these brands over time.” Zhan kunjie said that this is what Coca Cola was doing before the epidemic. “At that time, we were at the top of the income growth range (5% to 6%), steadily increasing the market share every year. As we strengthen our product portfolio, we can get back on that track. “