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Confidential Property of The Coca‑Cola Company

ISSUE #10 SPRING | MAY 2014 A Publication of The Coca‑Cola Company

COMMERCIAL LEADERSHIP TIMESCoca‑Cola Hellenic Chief Executive Officer Dimitris Lois (right) and Metro Russia and Kazakhstan General Manager Pieter Boone pass the Olympic Flame in Sochi.

The Year of Marketplace Execution

Learn more in the Publisher’s Notes page 2.

Marketplace execution is moving front and center as one of the Company’s top five priorities. The renewed focus includes defined global Commercial Standards, critical metrics and more support to build our commercial talent. Your contributions will help us realize this annual incremental USD 5 billion opportunity.

TECHNOLOGY

Reality app links music, young people, Coke®

Sales of Great Britain’s new 250ml slim can are running ahead of forecast in some measure due to a ‘blip.’ The smartphone app Blippar scans a code on the can and rewards users with free music.

Read more on page 19

eCOMMERCE

CokeNet multi-bottler web portal makes ordering easyBrazil’s new CokeNet business-to-business portal empowers customers to create, place and track orders 24/7. The single source contact for customers also provides an integrated system for the 10 bottlers it supports and drove fill rates up six points.


GLOBAL TRENDS

You have to carry it to sell itMexico is helping small customers invest in and grow a lucrative stills portfolio with the new “Specialty Box” that mixes five brands across 16 bottles all in one easy-to-order SKU.


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Germany cuts large portfolio down to sizeReduces portfolio by 60% and gains supply chain efficiencies

continued on page 7

With one of the largest portfolios in the world (nearly 900 SKUs in 2009) Germany knew numerous redundant and unprofitable SKUs needed to be cut from the portfolio. They also knew that carrying extra SKUs is not free – they take valuable cooler and shelf space from more profitable brands and can complicate the supply chain without adding sufficient value.

With an aggressive new SKU rationalization approach, they reduced their total portfolio 60% in five years. That took them from 852 to 340 active SKUs by the end of 2013.

“This effort has helped simplify our entire system in production, supply chain and logistics,” said Arne Lauerwald, director of planning for CCEAG. “We have eliminated many SKUs produced in only one or two plants and transported long distances at higher costs, as well as SKUs produced in small quantities that challenge production lines.”

“Reductions also simplify merchandising and create more space for stronger brands,” added Kirstin Meyer, CCEAG’s director of pricing terms.

With supply chain and commercial working closely together, CCEAG has been careful to only eliminate SKUs not contributing to sales and margin success. They have grown volume and net sales revenue at the same time.

The effort enabled them to hone in on the 231 SKUs that, despite representing nearly 40% of the total portfolio, contributed only 1% of volume.

“Before these objective criteria were in place we were much less likely to take decisive action because there was always what seemed like at least one good reason to keep a certain SKU,”

continued on page 13

Being a major sponsor of the Olympic Winter Games in Sochi is nothing like doing it in Vancouver, Torino or Salt Lake City.

The emerging marketplace offered a very different opportunity: the chance to build a sustainable legacy of execution excellence and permanently connect The Coca-Cola System (TCCS) with the new spirit of optimism and possibility energizing Russia.

A streamlined portfolio has simplified operations to enhance supply chain and logistics efficiencies.

Vlivaisya! Russia motivates System, customers to “join in” for long‑term growth

What’s Inside...

2014

“I was pleased to have an opportunity to host our customers and our bottling partners in Sochi where I saw our best ever activation of an Olympic asset,” said Coca-Cola Company Chairman and Chief Executive Officer Muhtar Kent. “Our local team and bottlers are doing an excellent job in Sochi.”

They started with low share in a fragmented and competitive marketplace in the South

Region. However, the Russia Business Unit (BU) and Coca-Cola Hellenic (CCH) completed their three-year Olympic journey with double-digit volume growth, a three-point share gain and two percent jump with teens.

Here long after tHe last raceThe Coca-Cola Russia team understood from the start that the big opportunity in the Olympics was not only in the special activations promoting

May 2014

Confidential Property of The Coca-Cola Company

COMMERCIAL LEADERSHIP TIMES

Commercial Leadership Times is a publication of Global Customer & Commercial Leadership. The next publication will be Fall 2014. Submit articles or topics to Tom Boyle at tboyle@coca‑cola.com or +1‑404‑676‑3049. Editor: Jean McAulay, [email protected].

©2014 by The Coca‑Cola Company (“TCCC”), Atlanta, GA, USA. All rights reserved. Created in the USA. TCCC is the owner of the trademarks “Coca‑Cola”, “Coke” and other intellectual property embodied in TCCC’s distinctive trade dress that may appear in “Commercial Leadership Times”. Other product names mentioned also are trademarks of TCCC or other vendors/companies.

Photography, illustration and text incorporated into the design of “Commercial Leadership Times” are copyrighted by TCCC or other owners. Downloading, screen capturing or copying these items in any manner for any use other than personally viewing the original document is prohibited by copyright law.

Publisher’s Notes

Tom Boyle

Inside This Issue

When Coca-Cola Chairman and Chief Executive Officer Muhtar Kent and the Operating Committee recently announced the Company’s top five priorities you may have felt a particular sense of excitement (and yes, pressure). They named 2014 the Year of Marketplace Execution.

Our global Commercial Leadership effort launched just 10 years ago and was updated as recently as 2009. However, rapid marketplace changes, and our now deeper understanding of the robust impact of commercial execution, mean it is time to transform Commercial Leadership in a more structured, consistent and even more powerful global approach.

We have extensive data on what works across the globe but we need to leverage these approaches with greater consistency to realize the opportunities and challenges in front of us.

Commercial execution is an annual incremental USD 5 billion opportunity so there is a lot at stake. We can realize that jump if we increase RED coverage from 42% to 70% of volume, expand Coca-Cola outlets from 51% to 80% and decrease out of stocks (OOS) from 11% to 7%.

The key tools are already here but we are not working them often enough and consistently enough in enough parts of the world to reach that prize today. Something has to change.

Relaunching now and going into full effect by July 2015, we will have shared Commercial Standards and related global metrics all across The Coca-Cola System (TCCS) to push us to our global goals and that 5 billion dollar prize.

Our Commercial transformation is built on three critical components:

Do what worksWe will focus on Commercial Standards proven to be strong drivers of marketplace success. The standards will be the same across TCCS and specific expectations developed for each one.

aRevenue Growth Management (RGM)/OBPPC aRight Execution Daily (RED) aImmediate Consumption (IC)/Cold Drink Equipment (CDE) aCustomer Management/Collaborating for Value aShopper Marketing aCustomer Service System and Route to Market (KO CSS+RTM)

An extensive set of tools already exists to support each standard.

Measure the driversDriven by the Commercial Standards, we have also identified the critical metrics every market must track to best manage their commercial efforts and enable comparison to like markets.

A group of eight bottler and Company commercial leaders representing all parts of the world has been meeting, debating and refining the Standards and metrics since November, 2013.

You are already familiar with these metrics. They include measures such as OOS, share of visible inventory (SOVI), cooler purity, cold drink equipment penetration, entry pack numeric distribution, IC and future consumption (FC) growth, and others. The key is to get everyone tracking the same thing in the same way to enable benchmarking and shared learnings.

All markets will use all of the tools and processes starting in 2014 and will begin reporting them July 1, 2015.

Build and leverage talent: inspire, transform, and deliverUnderpinning this entire process is a commitment to build and improve our commercial talent. To support this effort we have defined what it means to be a “commercial leader” and the expectations for people in critical roles like yours related to commercial execution.

You have the opportunity to transform the face of commercial and to make Commercial Leadership one of the core pillars of The Coca-Cola Company (TCCC).

The characteristics of our commercial leaders revolve around inspiring others and the system with commercial expertise to fully leverage capabilities and challenge old ways of thinking and doing. Transforming commercial disciplines with innovation and big ideas executed with excellence. And delivering go-to-market actions with a passion for agile, fast and focused implementation.

There is a lot more to come with more specifics and more support to carry out our shared charge. By implementing our best practices in Commercial Leadership even more pervasively and persistently, we will enable TCCS to realize a huge opportunity.

I am glad to be on this journey with you and look forward to the incredible contributions you will make. We know the power of perfect execution in the marketplace: now let’s show the world what we can do.

Tom

Sharing our best practices in CSS, RTM, IC, Shopper Marketing and RED with the Coca‑Cola people who make them happen.

05UNCAPPED INTERVIEW: GRAHAM ANDREWS Graham Andrews, group sales and marketing director for Coca-Cola Sabco explains how the African marketplace has come alive with opportunity and the investment Sabco is making to realize the potential there.

Story on page 5

20COCA‑COLA AND WALMART GET DINNER ON THE TABLE Drive time radio ads, billboard and gas pump ads within one mile of Walmart locations, and digital, social and mobile media reach mom with the effortless meals solution just when she needs help to get dinner on the table.

Story on page 20

17GERMANY TAKES SHARE A COKE® ONLINE With 25,000 names available online to personalize a Coke® for a special friend, Germany shares its learnings about creating a successful direct to consumer eCommerce initiative.

Story on page 17

14BIG FINDS BRIGHT LIGHTS DRIVE BIG SALESBottling Investments Group (BIG) is going big into LED cooler lighting in 2014 after global pilots show an average sales uplift of 9% compared to traditional lighting. Coca-Cola Amatil adds up lighting and scrolling messaging to break through visual clutter in certain locations.

Story on page 14

07CANADA TRIPLES SURVEYS, UPS COVERAGE WITH 3RD PARTIESThird-party RED audits are providing more objective, unbiased feedback and driving continuous improvement in Canada where Coca-Cola Refreshments (CCR) is striving for the perfect outlet every day.

Story on page 7

09BIG BOTTLERS ARE LEADING THE PACK WITH EARLY WINS IN RGM From a USD 5 million PTC opportunity in Shanghai to ¤4 million in revenue gains in Germany and potential to increase per capita consumption +16% in key zones in Uruguay, BIG is posting major RGM gains.

Story on page 9

The Year of Marketplace Execution2014

May 2014 COMMERCIAL LEADERSHIP TIMES


Key steps in CCE Norway’s journey• Changedfromrefillableto

non-refillable bottles• Transitionedfromdirectstoredeliveryto

central warehouse• Movedordertakingfromtheoutletto

the warehouse• Negotiatednewcommercialterms

with customers• Evolvedsalesteamrolefromordertakingto

growing customers’ businesses

Norway radically reinvents itself and posts first volume, revenue and share gains in more than a decade

When Coca-Cola Enterprises (CCE) took over the Norway business in 2010, it was clear that a business turnaround was needed.

For more than a decade, sparkling beverage sales were flat and Norway suffered significant share erosion (down nearly 30% in 10 years). Combined with a high cost to serve, strong competition and a highly consolidated customer base, the Coca-Cola bottling business in Norway was quickly becoming unsustainable.

Together with KO Norway, CCE quickly defined three top priorities.

• Reignite growth in sparkling soft drinks

• Recapture lost SSD share, in the home and the cold channels

• Establish a sustainable, profitable growth business in the grocery channel for the Norway system and customers

The turnaround demanded a complete bus iness transformation, including a USD 100 million investment in new production lines, new recyclable non-refillable packs, and a switch from direct store delivery to a centralized warehouse Route to Market (RTM).

The investment is paying off. Following years of decline, volume grew 2% in 2013 and The Coca-Cola System (TCCS) percentage share of the home channel sparkling segment volume is up two points over last year. In the cold channel, share increased 14% over 2011.

The growth has been driven by close collaboration with customers, creating packaging freedom to drive share with varied pack and price propositions, and significantly strengthened consumer marketing support behind Coke Zero®.

“We had to change to survive,” said Ignace Corthouts, general manager of CCE Norway. “It was a huge transition, unprecedented in scale, requiring world class collaboration between every function within the system in Norway. But when the critical changes we put in place showed positive effects almost immediately, we knew we were on the right path.”

Shoppers and consumers are responding very positively to Norway’s distinctive new proprietary packaging in plant-based PET and wider choice of formats and price points. In photo at right, Stein Rommerud (left), Vice President for Public Affairs and Communication for CCE Norway, hands over the last refillable bottle to Dag Andreassen from the Oslo Technical Museum while a Coca-Cola collector kindly escorts the old-fashioned bottle to the museum with his vintage distribution truck.

closer ties witH customersThe key to success was customer engagement. CCE Norway first embarked on an engagement program with customer chief executives to share their vision for the category, and together define how sparkling beverages could become a major part of customers’ own growth strategies.

Based on a business plan formally aligned with each CEO, CCE committed USD 100 million to invest in new infrastructure to re-ignite growth.

new production lines and new bottles make new rtm possibleTo break free from the constraints of the existing refillable packaging, CCE Norway invested in new production lines to replace refillable PET with recyclable/non-refillable bottles. Norway is the only country where all bottles are made from plant-based PET.

The packaging change enabled CCE to develop a new RTM approach. By moving from direct store delivery to a central warehouse model, CCE was able to optimize logistical operations by utilizing retailer trucks not operating at full capacity and access central warehouses not equipped to handle the old returnable packaging.

The new RTM also enabled CCE to introduce a new commercial architecture which has formed the basis of future profitable growth.

The change to a central warehouse system unfortunately resulted in the elimination of 505 positions within the organization. However, with strong support from the CCE human resources team, all but 34 of the people who left the bottler found new jobs within six months.

cHanges resonate witH customers, consumers and local autHoritiesShoppers and consumers are responding positively to the wider choice of formats and price points, the distinctive proprietary packaging and the environmentally friendly plant-based PET. Nearly every family in the country recently received a coupon to receive free the new 1.5 liter Coke Zero®, helping acquaint more consumers with the brand.

u Revenue up 18% over 2012

u Comparable volume grows 2% over 2012 after years of decline

u Share increases 2 points over 2011

u Cold channel share up 14 points vs 2011

“Our customers are pleased with the supply chain optimization, improving vehicle utilization and warehouse productivity,” Corthouts added. “Importantly, they are now fully supporting our category growth initiatives and benefiting from the value creation this is driving.” The new price, terms and conditions with customers are enabling CCE Norway to leverage greater revenue growth management flexibility to drive transactions and improve margins.

Transformation of the Norwegian bottling operation is also generating significant sustainability improvements. The move from refillable to non-refillable recyclable packages reduced water usage from about 2.5 to 1.3 liters of water per liter of finished product. Energy use at the Oslo bottling plant was also significantly reduced, along with the number of trucks on the narrow regional road network. competitors taking notice“Our competitors are already trying to copy what we have accomplished, moving toward non-returnable bottles and, in some cases, retailer central warehouses.” Corthouts added. “It is now critical for the system in Norway to take full advantage of this massive infrastructure investment to continue to innovate to stay ahead, and to ensure that we create long-term growth for our customers and for our partners.”

“We have tremendous headroom for growth for our core business,” Corthouts said. “The scale of growth will only be limited by our ambition. It is a time for boldness and action.”

May 2014



Europe gets hands‑on with eCommerce, social media, virtual reality, sustainability and supply chain innovations in reimagined KO Lab

All new content, flexible channel settings, and digital capabilities integrated throughout make the newly renovated Brussels KO Lab Customer Innovation Center (the “Lab”) the best place for Europe to see, touch and experience the latest insights and innovations that will drive a common growth agenda with customers. Hands-on interaction plays a big part right from the start with a giant interactive PITA model (population, incidence, transaction, and amount). Participants can manipulate on-screen levers and gauge how they can affect the size of the prize. A wall of video screens also shows how customers and The Coca-Cola System (TCCS) can work together to co-create shopper-relevant business solutions.

“The remodeling of the KO Lab was driven by four strategic objectives: building the category and system trust, better understanding our customers’ needs, co-creating relevant solutions, and capturing category growth opportunities together,” said Jean-Christophe Pion, director of the Brussels KO Lab.

Immersed in a digital worldBy experiencing digital technologies first hand, customers gain deeper understanding of how they can add real value to their businesses. A live Twitter feed enables customers to see in real time what their shoppers and consumers are saying and helps launch a conversation about how social media affect activations.

Extensive system research about the best way to present products online helps set the stage for improving eCommerce. The real impact comes when customers compare those insights to their own and other websites in real time from touch screens in the Lab.

Global customer Sodexo, for example, recently experienced digital capabilities around consumer information and

An interactive PITA model, displays of available packs in the region, and meeting space with access to a wall of video screens with Internet access and a live Twitter feed set the tone for customer collaboration in the Brussels KO Lab.

Virtual reality applications, digital menu boards and the latest equipment help customers understand how new technologies can work in their outlets.

promotions in the Lab specifically tailored to them, leading to quicker and more informed decision making.

“We did not want one room that highlighted digital capabilities,” explained Pion. “Rather, a digital presence is infused throughout all of the experiences in the lab, reflecting the way the digital world is woven throughout our daily lives.”

Augmented and virtual reality create unique experiencesThrough a partnership with an external company, participants can scan a product with a tablet or smartphone and launch a game where interactions with Coca-Cola products lead to

rewards. They experience first-hand the same interaction a shopper would have in the outlet or on the street scanning an ad and learn how the technology can drive traffic.

The augmented reality application can even film participants and then show them in a unique experience like playing with Polar bears. “The idea isn’t that they need to create activations around Polar bears, but rather to show them how to drive immersive experiences with consumers,” Pion said.

It is much more effective to live the experience and get a sense of how technology shapes the lives of shoppers and consumers rather than simply listening to a description in a presentation.

Virtual reality also helps maximize use of the space by placing customers into new environments without ever leaving the Lab.

During two-day sessions, customers can co-create multiple ideas on day one and return on day two to see their chosen concept fully realized in a virtual setting.

“We had a great day in the KO Lab,” said Ivan Schofield, general manager of KFC Western Europe. “The team delivered a world-class experience and I could feel the engagement of the people involved. You truly have a brand with a purpose, and your consumer thinking is terrific. I truly believe that you are able to step change the consumer experience.”

Category vision for EuropeThe Brussels Customer Innovation Center serves 37 countries throughout Europe and aims to offer an equally relevant experience for all of them. By focusing content around the Category Vision approach shared across the continent it works for users from Finland to Spain.

continued on page 16



You operate primarily in emerging regions. What is the business outlook like in your marketplace?This is such an exciting time for us. I am originally from Kenya but have been away from the African market for more than 10 years. Opportunity has absolutely come to life here in that time.

Over the last couple of years we have been in the process of investing about half a billion US dollars in infrastructure to make sure we are well positioned to capitalize on the potential before us and drive growth.

We are defining very precisely what competitive advantage means here so we can expand into new regions and immediately apply our expertise to set up an effective Route to Market (RTM) very quickly.

We recently had a big kick-off conference in South Africa on the theme of ‘Winning Together in 2014’. There is an extraordinary level of passion, enthusiasm and cooperation among our Coca-Cola Sabco countries as well as a small, healthy dose of competition.

In fact, something we do well is “hot house” and share our learnings and we are working on doing this even more quickly so we can re-apply them from one region to another with greater agility, and have one recognizable Coca-Cola Sabco way of doing things.

You are experiencing strong growth in Africa driven by a new Sales and Marketing Excellence Framework. What are the key components to your success?The economies and the middle class are growing significantly in the countries we serve (+31% income growth from 2001 to 2010) and along with that are new aspirations for ‘bigger and better.’ We are putting in place all the right systems to meet those demands and clearly codifying each element of the framework that will get us there. It includes:

• Advantaged Route to Market • Winning Price/Pack Portfolio (OBPPC) • Brilliant Sales Execution • Superior Marketing

If we do these things well, we will win in the marketplace. Last year, we grew faster than the NARTD market in all of our nine territories.

Overall, we notched 8.2% volume growth and we aim to meet or beat that number in 2014.

What are the key strategies in your Advantaged RTM?We fundamentally believe that having significant scale RTM strength provides an incredible competitive advantage.

To do that, we have to invest in and empower our distribution centers. We have significant consolidation work in many countries and some reward our best distributors with the designation of Official Coca-Cola Distributor (OCCD). We offer especially strong support to these small business owners, help them increase mechanization and scale their businesses, and provide tools like Sales Force Effectiveness (SFE) to ensure continuous focus.

Cold inventory is also critical to driving consumption and we are accomplishing amazing things, not only with traditional electrical coolers but with solar coolers in places like Uganda and even traditional ice chests.

In Mozambique, we are empowering women to enter the business through the 5x20 program simply with the right tools of the trade, an icebox and a block of ice, and the right presence materials.

You might not expect it, but when we conduct an Every Dealer Survey (EDS) in these regions, we are using the best and most updated processes and tools. For instance, we just completed this in Addis Ababa in Ethiopia and geomapped the entire customer footprint so we have every dealer represented on a grid so we can reach each one with our new RTM.

What are you doing to create wins in price and pack?A real key for us has been ensuring affordability to drive transactions and competitiveness on immediate consumption (IC) packs while we are also building out the future consumption opportunity.

We have also transitioned from glass to one-way convenient packaging. We have built manufacturing capacity around the new packs and now have fantastic supply in place to meet consumer demand.

In addition, our industry has seen an increase in local and regional competition. For example, in South Africa last year we fundamentally reset our pricing to be more competitive with other brands and bumped our position from low single digit sales to 7% growth as we restored and drove transactions in IC with the right pricing and added accretive innovation with the launch of a fantastic 330ml PET pack at an R5.00 magic price point.

What leads to brilliant execution?We have invested a lot of time in figuring out the best approach to RED for us and how to create consistency across regions. We launched RED in most of our business last year and will add the rest by the end of 2014. We have embedded measures related to our four pillars in the execution scorecard.

We also embedded RED metrics into our executive scorecard evaluation along with measures relating to the other three strategic pillars so there is a lot of buy in and focus around RED at all levels of the company.

Critical to this is the capability of our sales force and last year, together with our learning and development team, we created a Collaborating for Value training program that we took to our front-line sales members. The Coca-Cola Company (TCCC) was so impressed that the program has become the Coca-Cola way of execution training in emerging regions.

And “superior marketing”?The partnership with Coca-Cola Sabco and TCCC has become our towering strength. We operate in complex and fragmented consumer and media environments but our incredible brand strength in these countries enables us to stand out from the crowd and connect with the hearts and minds of consumers.

We launch massive activations tailored to the local marketplaces that form powerful, iconic, relevant connections and engagement with consumers.

Last year, for example, Kenya celebrated its 50th anniversary of independence and we had very strong, highly localized marketing activations around the event to connect with both customers and consumers on a granular level.

All of our efforts focus on growth driven by our core brands but then continuing to innovate into adjacent categories, like stills and energy drinks as consumers in this part of the world too are increasing their beverage repertoire.

What are your biggest challenges?Competition is really heating up in this part of the world with a new array of local and regional brands. There is a major company in Tanzania for example that produces flour that has recently entered the beverage marketplace across categories including sparkling, juice, water and energy. Brands like this have a strong local heritage and a lot of traction with local people.

They often enter the beverage business with a value proposition to gain a foothold. We have to ensure our brands remain aspirational products consumers are willing to pay more for.

We also face growing competition from other services that make demands on consumers’ limited disposable income. Recent surveys in Kenya showed consumers were even willing to give up on food and beverages for more telecomm airtime.

Logistics are also a big challenge because we operate in many countries with very large geographies and well dispersed populations. We have to get our logistics absolutely right to ensure we meet demand and deliver exceptional customer service while we manage the cost to serve and ensure an acceptable return on investment. What keeps you up at night?I love the expression “constructively discontent” that Chairman and Chief Executive Officer, Mukhtar Kent, and Mr. Robert Woodruff have used so well before. I want to make sure we are on our toes doing everything we can to maximize the incredible opportunity in front of us. As our CEO, Doug Jackson, says “You are either selling or supporting someone who is selling.”

I want to be sure Coca-Cola Sabco is doing everything possible to turn our incredible sales and marketing opportunities into realities, that we are driving this culture of sales and marketing excellence and that we are positively impacting the lives of our employees and our communities as we do that. At the end of the day for me, it’s all about delivering happiness.

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A candid conversation with Graham Andrews, Group Sales and Marketing DirectorCoca‑Cola Sabco

Operating in South Africa, Namibia, Mozambique, Uganda, Tanzania, Kenya, Ethiopia, Nepal and Sri Lanka

May 2014



Germany uses holistic RED approach to translate deep shopper insights into perfect execution

With 70% volume coverage in less than three years, Germany’s RED launch has been impressive. But the real impact is in how RED is enabling bottler CCEAG to see the marketplace through the eyes of a shopper, driving a holistic culture of execution and adding value for customers, the sales force and the System.

Each element of Germany’s new Picture of Success (PicOS) has proven it can drive volume per outlet. But when all of the elements are executed in a coordinated partnership with the customer, volumes nearly double. In fact, CCEAG has seen in some customers that full execution drives 2.5 times the volume of a price-off discount only.

“RED is a key vehicle for providing more reliable, accessible, responsible and proactive customer service,” said Claudia Troullier, director of customer service for CCEAG.

clear activation standardsUsing extensive shopper insights, the team identified the key elements of a RED-activated supermarket that create robust results when the bottler’s CSS/RTM approach and customer collaboration work seamlessly together.

• Four points of interruption (in the promotion area, store entry, salty snacks and frozen food sections) boosted outlet volumes 32%

• Clear definition of assortment and space at the point of sale drove volume up 17%

• Two cooler placements (in the non-alcoholic beverage and cashier zones) bumped sales volume 47%

expand, simplify, repeatCCEAG has moved quickly to embed RED first in the away-from-home channel and then in the at-home channel, but key to their success has been full management support, dedicated organization and the creation of one standard across Germany.

“Three years into the process, we are still focused on getting into the minds and hearts of our people and helping everyone understand how they support the sales effort,” said Norman Villalobos, director of segmented execution.

They knew from experience that trying to implement RED without total organization alignment, superb communication and strong buy-in was not going to work. Neither was making things so complicated they could not be implemented consistently in the outlet.

With a belief that they had “one shot” to launch RED the right way, they put their money on culture change and communication, linking RED and CSS together from the start.

you are eitHer selling or Helping someone else sellA key strategy for CCEAG is to see all employees as either a member of the sales team or someone who helps the sales team sell. They have created a clear, straightforward and standardized sales strategy across the country and concentrated organizational energy and resources on removing roadblocks to sales people selling.

“The content of the Picture of Success needs to be both powerful and easy to understand, remember and execute,” said Ulrik Nehammer, chief executive officer of CCEAG. “I want everyone in CCEAG to be able to walk into an outlet and easily and quickly understand the RED score and related opportunities.”

tHis is wHat tHey are doing to make sales Happen:

• Standardized the PicOS across the country into one cohesive approach (down from seven regional approaches with varied standards of execution).

• Reduced administrative tasks or transitioned them to other staff to increase sales time in outlet. Created a new call center to solve many customer issues without distracting the sales rep from value-added activities.

• Created clear metrics to measure progress and gauge the value RED is creating for the customer and business.

• Replaced seven disperse warehouses where sales reps traveled to obtain Point of Purchase (POP) materials with one central warehouse managed by a third party. Now,

sales reps order needed items online and they are delivered directly to the outlet.

• Created a tablet-based sales force automation tool now being piloted that uses the PicOS as the survey and will improve efficiency and drive RED performance. Rather than investing hours in training to use the prior laptop-based tool, a sales rep will get up and running with the new tool in about 15 minutes. Training can then focus on using the right value stories, getting the cooler in first position and other activities that drive profits.

• Using RED in direct marketing expenses (DME) planning to track the level of investment in each outlet and how much investment might be required to fix trouble spots.

• Implementing Sales Force Effectiveness (SFE) to create a more sales-centric organization.

wHat’s nextOver the past three years, Germany has focused on rolling out RED, streamlining and fine-tuning the PicOS, and removing road blocks to sales efficiency and success. Early results are impressive and show the holistic approach to perfect execution is driving stronger sales volumes.

To make those gains stick and push them even higher, they will next simplify the RED process for ease and consistency of effective implementation. They will also launch a Center of Sales Excellence (“for the people, by the people”) to continue to evolve the organization culture to a total focus on creating value by fully supporting the sales effort.

“We are constantly focused on testing and demonstrating the value RED delivers for the customer, sales force and our System,” said Thomas Starz, commercial director and board member. “Its real impact is in what it does for our people.”

u Full execution of the PicOS drives 2.5 times volume compared to a price-off discount only

u Four points of interruption drive outlet volumes 32%RE

D

“Three years into the process, we are still focused on getting into the minds and hearts of our people and helping everyone understand how they support the sales effort.” Norman VillalobosDirector of Segmented Execution The activation of impulse points in both chilled and ambient displays next to the cashier zone are

key components of the Picture of Success for the home market.

In-store activations in the On-the-Go channel feature

combo meals, a strong menu board and first

position cooler placement.



Germany cuts large portfolio down to sizeContinued from cover

uae makes room for better performers Bottling Investments Group (BIG) in the United Arab Emirates also recently targeted 10-15% of active SKUs that contribute less than 1% of volume for rationalization. Excluding promotional and non-standard packs, they considered 102 of 134 SKUs in the portfolio.

Reduction funnel sorts out weak performersThey use a systematic funnel approach with specific criteria for evaluating every SKU.

u At the top of the funnel is volume. SKUs generating less than one unit case per year drop out.

u The funnel narrows a bit more into the portfolio matrix step. SKUs that have declined over prior year or grew but had negative gross profit are considered for elimination.

u OBPPC Strategy is the next gatekeeper with an evaluation of each SKU’s relevance to the portfolio. If it is not relevant, or a better alternative exists, it drops out.

u The SKU’s impact on supply chain complexity is considered next.

u Sales is the final hurdle. If the SKU is not growing, a decision is made to either revitalize it or it drops out.

Volume filter

ActiveKO SKUs

“Losers”+“Vol. Builders”

(w/neg. GP)

w/oStrategicRelevance

ProductionComplexity(no filter)

Approvedcompensationlist & volume

risk identification

1OBPPCStrategyfilter

3 Salesfilter5

Portfolio(2by2)Matrix filter

2Supply ChainComplexityCheck

4

Prelim.DecisionMaking

Finallist fordecision

Out-phasingFinal

DecisionMeeting

SEGMENT SKUS AND RATIONALIzE LOW PERFORMERSThey segmented the SKUs into those that produced 80% of volume, 15% of volume and only 5% of total volume. The bottom 5% consisted of 46 SKUS.

They further segmented the bottom 46 based on four weighted factors: volume impact, gross margin, strategic importance and production constraints.

ELIMINATE 13% OF TOTAL SKUSThey elminated 13 SKUs contributing only 0.3% of total volume. “These products take valuable cooler and shelf space away from faster moving SKUs with the potential to generate far more gross margin,” said Antoine Chaccour, national head for modern trade and key accounts for BIG in the UAE.

Canada moves to 3rd party, iRED to more than double surveys

The maple leaf at the center of Canada’s flag is not the only thing sporting a deep red these days. The country is positioning itself to nearly double RED coverage in 2014 through a combination of third-party and iRED surveying by the sales team.

Until now, Coca-Cola Refreshments Canada (CCRC) district sales managers conducted self-audits, completing about 42,000 RED surveys per year. In 2014, CCRC will up RED visits to 106,000. The increase will bump monthly volume coverage from 28% to nearly 40% and biannual coverage from 50% to 65%.

objective data raise standardsWith a strong belief in RED’s ability to drive sustainable business growth, CCRC was ready to take their lumps when they went looking for the most accurate outlet data to help them raise execution performance.

As anticipated, the initial transition from self-audits to third-party audits provided more objective, unbiased feedback and caused

RED scores to drop at first. Nevertheless, the objective data enabled the bottler to create a more accurate baseline and to focus effort and investment on continuous improvement.

“Our ultimate goal is to execute the Look of Success (the perfect outlet), with every customer, every day,” said Jeff Kirkland, vice president, field operations for CCRC. “Our investments reflect our commitment to that and ensuring we continue to win at point of sale.”

With the new approach in full swing, scores are already on the rise.

execution influences compensationRED strategic execution priorities are now part of the annual compensation package for the sales team, helping to inspire new ways of thinking and new behaviors. Introduced at 10% of total variable compensation in Q1, they plan to raise the figure to 20% by year-end.

“Our sales managers are now focused on providing the coaching and feedback that our frontline associates have been asking for,” said Paul Howden, sales unit vice president, Western Canada. “And the execution results, gathered by an objective third party, provide an impartial view that enables us to recognize superior performance,” he added.

Both the field execution teams and national sales teams are increasing engagement with RED execution culture. “Having credible, external data is helping the national force build in specific elements about the Look of Success into the annual Customer Marketing Agreement,” explained Paul Herring, regional sales director for capabilities and head of the RED effort for CCRC.

CCRC has also developed a system to track customer compliance against commitments using the RED survey data. Using both outlet photos and surveys, they uncovered with one customer where agreed-to display racks were either not present or not executed properly. In addition, in Walmart stores surveyors are checking for sparkling activations with food and looking for a sleek can, 237ml glass or one-liter activation as well.

“By catching commercial execution issues like

these early and quickly through more robust surveying we expect to see RED scores and volume go up in the outlet,” Herring said. “We have already seen those improvements in Walmart.”

“We’re working together, collaboratively, to understand executional opportunities and to build customer plans that will address the gaps,” explained Trevor Lamb, Canada’s director of national sales for Walmart. “What we achieved in 2013 with Walmart Canada, one of our largest customers, is a great example of what we can do when we are all focused on a common goal.”

u REDsurveyswillgrowfrom42,000 to 106,000

u Monthly volume coverage to rise 10+%

Tara Spencer (right), district sales manager, uses iRED to coach Anne French, sales leadership associate, to enhance execution performance.

Meyer added. “Now, if a strong case can be made to keep it, we will, but we also realize that we can make the entire portfolio stronger by weeding out low performers.”

tweaking tHe process for greater accelerationNot content to sit back and enjoy what they had already accomplished, the German team quickly identified ways to accelerate SKU rationalization as an ongoing process. Toward that end they:

• Transitioned from an annual to a quarterly rationalization process

• Changed the gross profit assessment from above/below average to greater or less than 0.2% of total gross profit

• Changed the volume assessment from greater or less than 5% of total volume to simply growing/declining

They may be one of the few groups in The Coca-Cola System (TCCS) engaged in such constant re-evaluation of the portfolio. “We found if you don’t evaluate the portfolio regularly it just grows and grows,” Lauerwald added. “The reduction funnel takes the guesswork out and gives us an objective, streamlined process to follow every month. We may get to a point where there are no SKUs eliminated in a quarter.”

slicing tHings even tHinnerThey plan to rationalize another 40 SKUs as they trim the final 1% of volume down from 26% of existing SKUs to only 20% .They have set clear targets for appropriate SKU levels by category (CSD, water and stills) and by returnable and non-returnable packs.

RELATED STORYRELATED

May 2014



Germany figures out how to make emerging brands part of the family

Silvana Marino, a Venturing and Emerging Brands (VEB) sales representative, shows off one of her star performers. Germany’s VEB team is getting behind Glacéau vitaminwater and other emerging brands with a dedicated sales team, unique Picture of Success and strong connection with wholesalers.

Being part of a big, famous family can be great but sometimes you have to fight for your share of the spotlight.

Emerging brands within The Coca-Cola System (TCCS) don’t always fit easily into RTM routines built around large scale efficiencies that suit core brands with global recognition, huge volumes and attractive economies of scale. But a new team in Germany is showing that, with the right support, these future stars can shine.

Bring on the unconditional loveIt takes a special eye to recognize potential and the heart to nurture it. “You have to have patience and passion to take care of these brands,” said Alexandra Megid, director of Venturing and Emerging Brands (VEB), an innovative new team in the Germany Business Unit (BU). “You may get knocked down 20 times and have to get back up to fight for them again and again.”

She has good reason to stay in the game. Germany projects that emerging brands will deliver 70 million incremental unit cases (bumping their contribution to total volume from 0.5% in 2012 to 7% by 2020) in high-value segments with functional and adult beverages.

It is an especially good time for these brands to get their due. Germany’s population is aging and demand for soft drinks is decreasing among those age 30+. More than 70% of the population will be over 30 by 2020 and by 2060 every third person will be at least 65. Demand for specialty waters, coffee, and health-oriented drinks is on the rise.

Leveraging Germany’s existing portfolio that includes ZICO™ coconut water, Glacéau vitaminwater™, Relentless™ energy drink, JianChi™, and Chaqwa™ coffee will keep these consumers within the KO family.

Bottler‑BU hybrid boosts personal attentionThe VEB team is a group of internal renegades. Not quite a marketing department or commercial group, they are a BU-bottling hybrid that handles everything from warehouse and logistics to RTM, promotions, and consumer marketing for emerging brands. That’s key because the brands cannot survive within existing sales and distribution systems.

The VEB launched its emerging brands portfolio in the away from home channel targeting influential zones in influential cities, first making the brands available where the target consumers work, live and play.

They use face-to-face conversation with dedicated sales people who act as brand ambassadors. They invest far more sales time than the bottler’s sales force would normally have to explain the benefits of the new products to customers.

Wholesalers key to making it work“You can’t just go into a wholesaler and ask them to allocate space for these brands because we think they might sell,” Megid explained. Instead, the sales team created a unique deal. They let wholesalers know they are launching a new product they are going to want. To prove it, all the customers the VEB team brings on board and the sales they generate for the first three months go directly to the wholesaler.

“The wholesaler doesn’t have to do anything but wait for the revenue to roll in and we don’t have to pay wholesaler listing fees while we focus on selling the products into premium supermarkets, kiosks, cafes, fitness centers and yoga studios,” Megid added. “Bonding with the wholesaler and getting them invested in the product is critical.”

Armed with a three-month track record, the VEB team goes back to the wholesaler to negotiate warehouse space.

New products create new connections“These brands enable us to open new customers and new channels to the KO portfolio,” Megid said. “We can’t get into an organic supermarket with classical Coke®, but we can with JianChi™ and Zico™.”

Early success is measured in number of outlets carrying the products, volume per outlet, customer re-purchase rates and consumer research. Glacéau vitaminwater™ is now in 1,700 German outlets with a volume per outlet of 34 and a customer re-purchase rate of 85%. Zico™ is in 140 new outlets with a re-purchase rate of 65%. Relentless™ has grown from 1.8 million unit cases in 2011 to 2.4 million in 2013.

“It will take some time to get these brands fully integrated into customer outlets and consumer mindsets but we are making steady progress,” Megid said. “We are running a marathon here, not a sprint.”

Key Learnings: Emerging Brands Need•Dedicatedsalesteam

•UniquePicOSandmerchandizingrules

•Earlyinvolvementofthewholesaler

•AhybrideffortwiththeBU,bottlerand wholesaler

Emerging brands represent an 18 billion unit case opportunity globally with TCCS’s share capable of generating USD 1.8 billion in new revenue.



BIG bottlers set the pace for RGM winsAs early adopters of a renewed system commitment to Revenue Growth Management (RGM) and co-creators of the global web-based RGM Tool, Bottling Investments Group (BIG) is quickly moving from how-to to ‘already doing it.’

Several BIG bottlers are already landing major wins with the tools and others are creating new infrastructure to put RGM front and center for The Coca-Cola System (TCCS).

New finance “force” moves RGM to top of agenda, drives ¤4 million in revenue gainsThey call them the Green Berets because, like the U.S. Army units, they are a special operations task force with a defined mission: put RGM at the top of the organizational agenda and search out new revenue growth opportunities.

CCEAG’s new RGM Analysis Team of data crunchers and finance experts functions separately from the normal operational routines of the finance department. “The Green Berets work as a think tank and incubator for RGM ideas only and work to ensure they are implemented in sustainable ways,” said Alexander Hoppe, team lead for revenue growth analysis. The team is focused on integrating more external data sources into decision making and using advanced analytical tools to dive into greater detail at the customer and SKU level. project-based missionsOne of the task force’s first assignments was to review Price, Terms and Conditions (PTC) in detail. They often found customers receiving rebates without performing the agreed to service. Others were grouped into the wrong category for drop size rebates and received too high of a rebate.

Each case is handled individually and with plenty of input from the sales team. The sales force is then armed with all the data to work through communication about necessary changes with the customer directly.

The Green Berets also serve as gatekeepers for sales promotions to ensure only those that meet financial expectations are executed.

The team has already realized ¤4 million in revenue improvements from first-year projects and estimates potential improvements of up to ¤26 million from all projects currently in the pipeline. CCEAG grew net sales revenue by more than ¤82 million in 2013 vs. prior year.

Potential USD 5 million PTC opportunity in ShanghaiWith escalating investments in trade spending but no formal system to track them and measure return on investment (ROI), BIG China launched the Price, Terms and Conditions (PTC) project to evaluate existing contractual trade terms and the past year’s total trade spend with key account (KA) customers in Shanghai.

digging deep for data transparency, opportunitiesThey selected one operating unit (Shenmei bottler) that contributes one-third of their key account business and looked at both

conditional trade spends (investments made in exchange for a customer’s promotion or in-store activation) and unconditional spending.

They dug deep to uncover all spend elements including price discounts, direct marketing expenses, promotional spend, all costs related to outlet display fixtures, cold drink equipment, and even the cost of sales reps and merchandisers who serviced each customer.

They identified a total of USD 5 million to be potentially realized if all unconditional terms are removed and remaining trade terms fully executed by customers.

focus on fueling customer growtH“Getting this objective data helps us know where the gaps are and is setting the stage for conversations with our customers on drivers of growth during the joint business planning sessions and as we renegotiate expiring contracts,” said Justin Pher, group capability head for key accounts in BIG China.

With the PTC output charts completed (stage one) and ideal PTC defined (stage two) they are now developing engagement strategies to influence and negotiate with customers (stage three).

Uruguay goes deeper with segmentation to identify new opportunities, quantify potential Searching for ways to capture more revenue, Monresa Bottling in Uruguay used the Opportunity Mapping and OBPPC work streams to correlate income levels with potential consumption in specific zones.

They have identified an opportunity to increase per capita consumption +16% (from 258 to 300) and are targeting a 5% jump in 2014.

“Segmenting households into even more specific categories enabled us to find areas with the largest gaps between household income and anticipated consumption levels,” said Rosana Miguez, commercial strategy senior manager for Monresa. “With that information, we prioritized the opportunity based on where we saw the biggest gaps and targeted investment in those zones.”

Honing in on tHe biggest payoffsThey identified two zones that contained 75% of the opportunity for development.

“The RGM Toolkit helped us divide and analyze the marketplace into meaningful segments so we could evaluate where our investment would have the greatest payoff as well as the channels, products and price points that would work most effectively in those zones,” said Guillermo Chonichesky, commercial planning manager.

finding (and delivering) wHat’s rigHt for eacH zoneBy diving deeper into segmentation, Uruguay identified that one high-potential area offered a strong opportunity to block a competitor’s brand by relying more heavily on refillable packs in the core portfolio to create more competitive price points. They also saw a gap in their cooler presence and upped their investment in cold drink equipment (CDE).

Opportunity mapping is enabling Monresa Bottling to direct its investments to

the channels, products and price points with the biggest

potential payoffs.

Competitive price points and refillable packs in the core portfolio help Monresa

Bottling block competitor brands.

May 2014



Mexico mixes 5 top stills to create one “Specialty Box” for small stores

u VolumetriplesamongARCACONTALsmallcustomers

u Powerade™ volume up 122%

thank you!The Bottler-Business Unit team

who brought these projects to life...

FROM ARCA CONTINENTAL

Leonel MedinaCommercial Manager, South Pacific Zone

Francisco GourcyEmerging Beverages Manager

Oscar GomezEmerging Beverages Manager

FROM THE BUSINESS UNIT

Felipe NuñezGeneral Manager, Still Beverages

Diego GonzalezStills Operation and Execution Director

Carlos zamoraOperations Senior Manager

Andres BartoluchiStills Capabilites Senior Manager

Small customers may want to try carrying high-margin still beverages but the sticking point can be having enough funds to invest in their regular portfolio while still finding money to experiment with new products. Ordering full cases is out of the question.

The Mexico Business Unit (BU) and ARCA CONTAL did the research and learned that small customers typically reinvest about 70% of daily revenue into ordering new merchandise. Of that amount, about half is targeted for beverages with an average of USD 12 invested in Coca-Cola and USD 9 invested in other portfolios.

Next, they got creative to help small customers invest in a broader and more lucrative portfolio of still brands with a unique “Specialty Box”.

Thinking inside a box“Availability is the key hurdle,” said Juan Ramon Rodriguez, ARCA CONTAL’s South Pacific zone director. “We had to find a way to give small customers access to new products while addressing the reality of their financial limitations and not eating into investments they were already making in carbonated beverages.”

They looked at the bestselling stills SKUs carried by customers with larger distribution and sales and chose the top five. Next, they created a unique stills portfolio “specialty box” based on those five brands that small customers could purchase for no more than USD 9 per day.

The specialty box includes six cans of juice, three bottles of water, three bottles of fruit drink, two teas and two bottles of Powerade™. Despite featuring 16 bottles comprised of five different brands, the customer simply orders the box as one SKU.

Keeping the details straight“We need tremendous logistics coordination with the warehouse to make this work efficiently and cost effectively,” explained Leonel Medina, operations manager. “For example, the warehouse pulls six-packs and four-packs with damaged outer wrappings that can’t be used for other customers and pulls them apart to create a unique four-pack of mixed products for the specialty box.”

Tracking is also tricky because the single SKU for the customer must be entered into ARCA CONTAL’s sales system as multiple SKUs for product tracking and tax purposes.

Growing small into mediumThe extra effort is paying off with growing sales and converting numerous small customers into medium ones. “Once customers see that they are selling out of these new products they typically evolve into buying solid packs,” said Ramon Rodriguez.

“It might start with them first telling us they can now buy an unbroken six-pack of water which then allows us to move the water into a normal order and place a new brand in the specialized box in its place,” explained Carlos Samora, operations senior manager for Coca-Cola Mexico.

ARCA CONTAL launched with just two routes and within two weeks saw strong enough results that they quickly expanded to eight routes. Today, they have 70 routes serving about 3,800 small customers with the “SKU in a box”. They rely on the same distribution system that serves carbonated beverages.

When you carry it, you can sell it“SKU in a box” enabled ARCA CONTAL to increase the number of customers stocking juices by 114%, teas 138%, water 146%, fruit drinks 171% and Powerade™ 250%.

Sales volumes jumped 37% for water, 41% for Fuze™, 50% for juice, 42% for fruit drinks and 122% for Powerade™. Volume among these outlets has tripled under the new program.

And there ’s room to grow. “Nationally there are about 900,000 customers who meet the criteria for the program and I think we can reach 50% of them,” said Andres Bartoluchi, NCBs capabilities senior manager for Coca-Cola Mexico. “As we grow, we will not only reach more customers but continue adding new beverages to the mix. This offers tremendous potential to help us expand the reach of our diverse portfolio.”

The sales force also reports customers reallocating money previously used to purchase from competitors to buy the new brands due to their strong results.

Other bottlers are launching similar pilots based on ARCA CONTAL’s learnings.

Strong logistics coordination with the warehouse is enabling ARCA CONTINENTAL to create its unique “Specialty Box” of still products for small customers.



Mexico creates separate pre‑sale team for stills and boosts customer investments

thank you!The Bottler-Business Unit team

who brought these projects to life...

FROM ARCA CONTINENTAL

Leonel MedinaCommercial Manager, South Pacific Zone

Francisco GourcyEmerging Beverages Manager

Oscar GomezEmerging Beverages Manager

FROM THE BUSINESS UNIT

Felipe NuñezGeneral Manager, Still Beverages

Diego GonzalezStills Operation and Execution Director

Carlos zamoraOperations Senior Manager

Andres BartoluchiStills Capabilites Senior Manager

A Coca-Cola preseller walks into an outlet . . . (no, this is not the start of a bad joke) and the store manager probably already knows how much he plans to spend on our products. He is likely to spread that amount across the total variety of products offered, giving new items less attention or taking funds allocated in his usual order to try a new product.

That scenario got people at Mexican bottler ARCA CONTAL thinking. If they created a specialized sales force just for the new stills portfolio, would they be better able to serve customers and grow sales?

Two visits can lead to two budgets“Creating a specialized preseller force with people strictly dedicated to selling still beverages is giving these new products the added attention they need and helps customers see their interaction with different sales team members as two separate transactions with separate budgets,” explained Guillermo Adam Faisal, emerging beverages director for ARCA CONTAL.

“They make their customary investment in the traditional portfolio but when customers work with a specialized preseller who is very knowledgeable about the stills portfolio, they are motivated to set aside additional funds for these transactions,” added Felipe Nuñez, general manager for still beverages in the Mexico Business Unit.

The new approach is driving increased daily average volume. Since the specialized stills presellers were introduced, stills volume has grown from 287 daily unit cases on the specialized routes in 2011 to 320 cases in 2012 and 334 cases per day in 2013.

Expanding across the country, the specialized stills routes have grown from 169 in 2011 to 230 stills routes in 2013. With an average volume of 335 incremental cases for each stills preseller, the program quickly surpassed its 150-case break-even point.

Dedicated presellers David Garcia and Alejandro Sanches Martinez are helping ARCA CONTINENTAL drive increased daily average stills volume with strong knowledge of the products, a unique value dialogue for each brand and more time in outlet to introduce new products.

The volume mix contribution from these customers has also grown from 21% in 2011 to 30% in 2013. “This program is already a strong success but it also has robust potential,” said Adam Faisal. “At our current number of routes we are still only covering 20% of our total universe.”

Select outlets rigorously to safeguard profitsNot all customers have the potential to warrant a stills preseller so ARCA CONTAL created its own methodology to identify appropriate customers and ensure profitability. Customers are selected based on total product portfolio, location along a desirable existing route, how competitive the customer is and the potential they represent to win business from other suppliers and drive incremental sales in stills.

“On average, appropriate outlets for this level of support will be large and extra-large customers (more than 30 physical cases per week) where we can expect a 100% increase in volume,” said Ricardo Piedras, NCBs capability manager for Coca-Cola Mexico. “We need to know, if that happens, will their sales level justify the expense of the specialized sales force with dedicated resources making daily visits,” said Piedras.

Distribution and delivery are still carried out jointly for sparkling and non-carbonated beverages.

Create unique value dialogue for each brandSeveral key elements make the program successful. The stills preseller has a more in-depth knowledge of the brands from working with them every day and selling only the stills portfolio. ARCA CONTAL has also created a unique value dialogue for each brand and preseller compensation varies by category so focusing on top bottler priorities earns greater commissions.

The stills presellers are also able to devote the time required to follow up with customers who may have bought a product last month but have not purchased it more recently.

“They have an intimate knowledge of the customer’s business related to stills and how they can best utilize our portfolio to increase their business,” said Alejandro Wong, NCBs capabilities manager for Coca-Cola Mexico.

These relationships translate not only into placing more stills in the outlet but the more comprehensive negotiations also lead to better product positioning within the outlet. Some outlets have even doubled their Coca-Cola presence with a new rack or cooler in first position dedicated to non-carbonated beverages.

Indirectly, the universal presell routes dedicated to sparkling soft drink development also benefit from more time and greater focus in the point of sale, translating to greater volumes.

May 2014



CCR unlocks category value with new retail strategy that closes gap between high/low price fluctuationsCoca-Cola Refreshments (CCR) knew the traditional focus on promotion-priced 12-pack cans was limiting their ability to drive long-term value by training shoppers to focus on price, squeezing profit margins, and making other packs look expensive. There had to be a better way to re-engage shoppers and re-energize the category.

They found it through extensive study of customer analytics and recently launched a new retail strategy that uses a radically different approach to ensure the right pack is always available at the right price at the right time and place, and with the right messaging.

Built on extensive learnings with one of the largest supermarket chains in the United States, the new retail strategy takes a three-pronged approach to build category value:

“Value Plus” Pricing available every day that rewards shoppers for buying more

Brand Stratification in lieu of traditional line pricing

Occasion-based packaging that increases incidence

“Our 2014 non-alcoholic sparkling retail strategy addresses the question, ‘How can we modify our promotional approach to both increase category participation with shoppers and improve margins for our retail partners?,’” said Dan Hayes, senior vice president, CCR revenue growth management.

“value plus” pricing strategyThe “Value Plus” strategy simplifies pricing for the shopper and builds purchase incidence by offering shoppers an everyday value (EDV) “must buy” that rewards them for buying multiple packs. For example, a shopper might pay USD 4.99 for one 12-pack but can buy three packs for just USD 12 with the everyday value “must buy.”

“The everyday value helps protect margins on a daily basis and thus allows us to offer more competitive feature pricing when needed to stimulate purchases during key times, such as the first week of the month,” said Eric Gorli, vice president, planning and pricing at CCR.

“The final part of the strategy enables CCR to maximize sales and increase profitability during high demand periods, such as holidays, without deep discounting,” he added.

In retailers that have implemented “Value Plus,” category visits per household have increased as the shopper gains predictable value on every shopping trip. Category dollars and units per household also increased because there is an incentive to trade up to the deal.

Retailers using “Value Plus” have maintained or seen up to a one-point increase in margin percentage as shoppers buy more during EDV weeks.

brand stratificationRecognizing that different shoppers have different needs and brand preferences, CCR replaced its single pricing strategy with one that matches brand strength with price.

“Even though Coke® and Fanta® are often listed at the same price, in reality Coke® can command a higher price due to exceptionally strong brand equity and a favorite brand score that is twice that of its primary competitor,” said Janine Shearer, vice president, category advisory for CCR.

Flavors, such as Fanta®, are purchased twice as often by multicultural shoppers who tend to be more price sensitive. Lower retail prices on flavors encourages more frequent purchases from value-seeking shoppers and satisfies variety seekers looking for brand choice.

By reducing Fanta® prices 16%, CCR drove an 83% jump in volume. The key is to match the optimal retail strategy to the brand.

occasion-based packagingPackage variety is critical to take advantage of occasion-based opportunities. The team established a three-pronged approach to using occasion-based packages to grow incidence and profit.

• Drive sales of current occasion packages with greater emphasis from a merchandising and messaging perspective.

• Fill occasion packages gaps through packaging innovation to drive incidence with fill-in trips and lighter purchase shoppers.

• Maximize on-the-go occasion through a shift in on-the-go package choices and retails.

Offering more packages drove a larger spend because they met more needs. CCR introduced the “Sixer” to successfully engage smaller households, satisfy fill-in and convenience trips, and meet the needs of variety seekers.

Occasion packages delivered more than half (69%) of category growth for CCR in the past two years.

putting it all togetHerCCR implemented the new retail strategy throughout Kroger stores in 2013. With a Quarter 4 investment of USD 1.5 million in the Houston, Texas region, they reached 85% of Houston consumers and drove Coca-Cola volume up .6% vs. control stores and up 1.1% vs. total U.S. “As our consumers and shoppers continue to face pressure and our customers remain challenged to improve performance, as a category leader, it is our responsibility to bring new thought leadership to the table,” said Hayes. “Our new retail strategy does this by increasing category participation and improving margins.”

RIGHTBRANDS

RIGHTPACKAGES

RIGHTPRICE

RIGHTPLACE

RIGHTMESSAGES

Provide brand choices

(and prices) that satisfy value-seekers

and multiculturals

The new Retail Strategy is a holistic approach to re-engage the shopper and re-energize the category

Increase focus on occasion-based

packages to grow incidence

and profit

Implement “Value Plus”

to drive store loyalty and transactions

Refocus merchandising assets on non-holiday weeks to drive higher value (and profit) packages

Connect with Shoppers through

compelling occasion-based

messaging

u Everyday Value rewards shoppers for buying multiple packs

u Pulsing deeper pricing on key weeks to drive demand

u Margins rise with less discounting when shoppers willing to pay more

u Matching price to brand drives volume + 83%

u Occasion-based packaging contributes 69% of category growth

CCR is increasing sales and profit by...u Providing brand choices

(and prices) that satisfy value-seekers and multiculturals

u Increasing focus on occasion-based packages to grow incidence and profit

u Implementing “Value Plus” pricing to drive store loyalty and transactions

u Refocusing merchandising assets on non-holiday weeks to drive higher value (and profit) packages

u Connecting with shoppers through compelling occasion-based messaging

CCR introduced the “Sixer” to successfully engage smaller households, satisfy fill-in and convenience trips, and meet the needs of variety seekers.



the event. Rather, they saw the potential in harnessing the excitement, vitality and human connection of the Olympics to energize TCCS employees, forge stronger relationships with customers and build brand love with consumers for the long haul.

They decided to create a legacy for the Russian system.

1Unlock the pride, passion and love for Coca‑Cola among our 14,000+ system employees.

Employee engagement scores in the BU rose from 82% to 85% and engagement scores in CCH rose from 49% to 65%.

TCCS employees in Russia were invited to nominate colleagues to be Olympic Torchbearers in the longest domestic torch relay in Olympic history. Individuals were chosen based on their positive influence in their communities and demonstration of a healthy, active lifestyle.

As soon as the London-Sochi handover was complete, Russia began building momentum internally. With so many employees who wanted to volunteer for the Coca-Cola team in Sochi, they launched a process to select top performers to serve as ambassadors in Sochi and implement first-class execution. Finally, 250+ employees were ‘qualified’ to work in the Olympic venues during the Games.

2Be recognized as the most trusted company in Russia.

Coca‑Cola Russia increased its reputation and trust in the eyes of consumers, the Russian government and key stakeholders kicking‑off a long‑term Active Healthy Living Program targeting youth, moms and system employees.

Annual reputation surveys show that consumer trust of TCCS grew significantly over last year (+3%), and among key stakeholders trust scores grew +89% (36 points in 2012 vs. 68 points in 2013).

One of TCCS’s four global commitments to inspire a healthier, happier world is to get people moving by supporting physical activity programs everywhere we do business. Russia reinforced its commitment to wellbeing through the Active Healthy Living initiative (AHL).

Grounded in research about the state of health and wellbeing of Russian citizens, the initiative utilized the Sochi 2014 Games as a catalyst, along with digital technologies, real world experiences, and relationships with public health, science and sports

Vlivaisya! Russia motivates System, customers to “join in” for long‑term growthContinued from cover

authorities to implement a long-term approach for advocating wellness behaviors across the population.

As its centerpiece, the initiative in Russia defines “active healthy living” through the prism of ‘Movement is Happiness’ using six integrated projects:

• An Active Healthy Living Advisory Board

• The Active Healthy Living ‘V Dvizhenii’ (on the move)website (www.v-dvizhenii.com)

• Active Healthy Living Showcase “V Dvizhenii!”, a traveling experience to engage communities in tangible experiences of active healthy living

• Active Healthy Employee, to promote wellness behaviors through the workplace

• Active Healthy Living Science Capability & Thought Leadership, advancing the science of active healthy living through partnerships with science and educational programs

• Active Healthy Living Legacy project, an installation of sport grounds for street workouts in Russian cities, supported through The Coca-Cola Foundation

TCCS’s sponsorship of the Sochi 2014 Olympic Torch Relay also celebrated those who are making a difference in their communities and drove unique Coca-Cola community engagement, increasing the reputation and trust of Coca-Cola in Russia in the eyes of consumers, the Russian government and key stakeholders.

3Grow Coca‑Cola, enabling the brand to become integral to the new spirit of Russia across all generations.

Over the last three years, we have continued with double-digit volume growth: in 2013 volume was up 11% over last year growing from 110 million unit cases in 2011 to 149 muc in 2013.

Share is up 3%.

Share among teens is up 2%. The Coca-Cola Olympic marketing plan was created through seven marketing “moments,” each of them highlighting the remarkable activation around the Olympic Games. The moments range from the handover of London to Sochi through to the torchbearer nomination campaign and the Olympic Torch Relay and Olympic Christmas right before the start of the Games in 2014.

The Torch Relay nomination campaign inspired more than 90,000 nominations for torchbearers. More than 14 million people voted online to select the finalists who represented Coca-Cola values of active healthy living in the 40,000-mile plus relay.

During 123 days, the Sochi 2014 Olympic Torch Relay was a unique opportunity to touch all Russian hearts and minds. Coca-Cola ambassadors gave away 2.5 million flags, 1.7 million Coca-Cola mini can samples, and 250,000 unique Olympic glow bottles that helped to cheer the torchbearers along the Olympic Torch Relay.

Engaging key customers as torchbearers also helped forge stronger relationships outside of the daily routine and built their pride in TCCS.

“People living in the big cities have lots of opportunities to experience top brands and major attractions,” said Ljubo Grujic, Russia and Belarus general manager, The Coca-Cola Export Corporation. “The torch relay brought us into the homes, hearts and minds of people living in more remote areas. They became better acquainted with the Coca-Cola brand, but also with The Coca-Cola System and our people.”

4Expand our leadership and highlight our execution excellence led by the southern region, home to the city of Sochi.

Grew share of NARTD to 39% with a 43% share in Sochi, the Russian “birthplace” of Coca‑Cola’s top competitor.

Pepsi entered Russia at the end of the 1970s, well ahead of Coca-Cola. Although we caught up quickly and today register a larger share of the beverage landscape, Sochi and the southern region remained one of the few areas where the competition still held a stronger position with the trade and in the minds of consumers.

To change that, Russia placed their strongest talent in Sochi on the Black Sea coast and the cities around Sochi to spread their enthusiasm for the brand.

Small sales teams laid the groundwork throughout the summer high season, building relationships with storeowners, installing specialized activations, bringing business-building tools to the outlets, and turning Sochi into a model of perfect execution.

“You can paint the marketplace red for a short period of time, but sustainable progress comes from investing in the local retailers and becoming part of the local community,” said Alexey Seliverstov, director region operations CCH Russia. “We have created a new reality here and the KBIs bear that out.”

Coca-Cola ambassadors gave out 2.5 million flags, 1.7 million Coca-Cola mini can samples, and 250,000 unique Olympic glow bottles that helped to cheer the torchbearers along the Olympic Torch Relay.

Russia hosted the longest domestic Torch Relay

in Olympic history.

May 2014



BIG looks at results, commits to purchase nearly all LED‑equipped coolers for brighter light intensityLED proves worthy global standard

The idea made sense from the beginning: brighter LED lighting in the cooler should attract more shopper attention and drive transactions while decreasing energy costs for customers and shrinking our carbon footprint. Now the proof is in.

Multiple pilots around the globe have confirmed it. LED lighting, when done right, delivers an average sales uplift of 9% compared to coolers with traditional lighting. And, it does it while lowering energy and labor costs. LED lighting only needs to be replaced every five years, compared to every one to two years with traditional fluorescent tubes.

tHe numbers make tHe caseBottling Investments Group (BIG) in India conducted tests with LED cooler lighting in 18 stores in 2013 using manual observation and video recording to capture consumer engagement. They followed up with extensive interviews with both customers and shoppers.

They found brighter LED lighting boosted engagement and sales in both self-serve and counter environments. The LED lighting increased the average time shoppers interacted with the cooler from 7.03 seconds to 8.02 seconds.

u India drives 9+% increase in incidence with switchfromfluorescenttoLED

u Ups interaction time with cooler

They tested two different lighting propositions, half the stores with Philips LED tube lights and half with Optocore LED strips. Coolers with the Philips tubes delivered a 5.27% uplift and the Optocore coolers a 9.23% uplift.

The difference appears to be due to the Philips LED tubes delivering light intensity that both customers and consumers felt was very similar to conventional cooler lighting with fluorescent tubes. The Optocore’s LED strip delivered more light intensity with less variance and fewer dark spots so products stood out.

“Based on these findings, BIG INDIA decided to buy all coolers in the future with the LED strip and the vendors have been approved accordingly with this technology,” said MN Srinath, vice president for cold drink equipment (CDE) and vending.

The data confirm consumer research in the United States, Mexico and England that also found stronger purchase intent among consumers when cooler lighting is brighter.

The global standard for “brighter” is 150 LUX with minimal variance of light intensity (no spot less than 75 LUX or greater than 700 LUX) throughout the cooler so the full range of products can be seen equally well.

big goes “massive” into led“Nearly all of the cold drink equipment we buy across BIG this year will be equipped with LED lighting to our new global standard,” said Romero Moura, strategic CDE director for BIG.

“We are going massively into LED lighting because we have seen the proof that it works. It enables us to move two key levers: better engagement with consumers and increased sustainability.”

“I really don’t see any relevant downsides with switching to LED,” Moura added. “You just need to make sure you are evaluating the whole situation. It may appear more expensive at first because LED lighting costs more to purchase up front. But it is ultimately cheaper because it uses less energy and saves 1.5 visits to the cooler for lighting tube changes.”

He also cautions that when ordering an LED-equipped cooler you should confirm with the vendor that the lighting meets the 150 LUX global standard. “A vendor may use lights that are cheaper and less efficient or simply increase the space between the lights creating less light intensity,” he added.

At least 25% of retailers in the control stores in BIG India’s test switched off the cooler light at least once a day for several hours to reduce energy costs. Armed with the data about the impact of LED lighting and its lower energy consumption, we can better educate retailers that turning off cooler lights means turning off potential sales.

BIG will also begin testing up lighting and scrolling message technology to determine their impact beyond standard LED strip lighting (see related article Australia proves up lighting effective option to cut through visual clutter opposite page).

What the research says about LED lighting when executed to new global standard

• Triggers engagement and thereby purchase

• Increases consumer interaction with the cooler

• Enhances product visibility and makes it easier to tell products apart

• Induces perception of freshness and high quality

• Uplifts overall appearance and impression of the store

• Adds feeling of festivity

• Leads shoppers to reach out to the cooler more proactively

• Should be bright enough to catch the eye of a shopper from a distance

• Makes the product sparkle and increases expectations about the beverage

• Products appear chilled, thereby tempting the shopper

• Makes small shops stand out in crowded shopping areas

• Shows the refrigerator is working

The power of bright

SHOPPERS SAY:

“The cold drinks look sparkling and bright and they are clearly visible. They look absolutely fresh.”

“It makes the shopping experience much better because the lighting overall is very tempting. It is something that forces me to open the fridge myself.”



Australia proves up lighting effective option to cut through visual clutter

Coca-Cola Amatil (CCA) took LED lighting a step further with up lighting (additional lighting under the product on each shelf edge) and drove a 20% lift in outlet and a three-point lift in conversion to Coca-Cola brands.

“Our goal is to transition 90% of our coolers to up lighting because we have seen its power in the marketplace,” said Adam Haddad, equipment innovation specialist for CCA. “The up lighting created an impressive point of differentiation that, even in a very developed marketplace like Australia, enabled us to move from 14% of shoppers purchasing a Coca-Cola product to 17%.”

“The LED up lighting just makes the product shine,” Haddad explained. “It makes a standard cooler look as if it isn’t even turned on.”

test stores prove tHe HypotHesisThey tested the concept with video observation and outlet analytics across three immediate consumption (IC) outlets in Sydney, Australia and analyzed conversion to Coca-Cola brands over five weeks.

Store one featured a cooler with up lighting only, store two used a cooler with up lighting and a scrolling message on the header, and the third location featured a cooler with up lighting as well as a scrolling message on the header and on two shelves.

“Even in mom and pop outlets with a relatively low incidence rate due to high competitive presence, we saw we could strengthen our position by converting one in five shoppers to purchase a Coca-Cola product,” said Ashley Gualter, channel manager for immediate consumption with the Australia Business Unit.

u Drives 20% lift in outlet

u 3% uplift in conversion to Coca-Cola products

“The results validate what we had guessed about better lighting improving sales,” Gualter added. “Just highlighting the product in the cooler far better than the competitor creates incidence uplift.”

bells, wHistles and sales“This is just phase one,” Haddad explained. “There are so many options for the future in terms of controlling individual shelf lighting, having the entire fridge go black and then highlighting one shelf very dramatically, flashing lights and messages, and being able to remotely change content across the country from one location.”

Gualter agrees and points to the strong power of LED up lighting to cut through the clutter of message-rich environments such as food courts. “We can create some pop and movement with this technology that can attract people from far away and draw people to the cooler,” he said.

He points out that many products such as Sprite®, Fanta®, Powerade™ and Glaceau vitaminwater™ illuminate particularly well and appear to glow like colored lights.

matcH ligHting options to locationBased on their experience, Australia suggests a segmented approach for the scrolling message and shelf activation options. They are best suited to gold outlets and locations where the cooler can be viewed from a direct, head-on vantage point. The added bells and whistles can also help cut through clutter in visually busy locations.

The cost per one-door cooler for the LED up lighting is about 300 Australian dollars (AUD) and the scrolling technology for the header and two shelves is about 600AUD. Gualter cautions that the technology is more complex than they first thought in terms of balancing light output vs energy consumption, reliability in a cold and wet environment and avoiding product fading.

How to do lighting right

DO• Invest in LED lighted coolers now to create a

key point of differentiation against competitor coolers still using traditional fluorescent lighting.

• Choose LED strip lighting instead of tubes for greatest differentiation from conventional coolers.

• Locate LED lighting in coolers in outlets with competitor coolers where they can increase differentiation and drive conversion.

• Start with LED up lighting and consider scrolling messaging as potential upgrade for gold outlets with good cooler visibility.

• Locate LED coolers in areas where shoppers can see the full range on offer and make their purchase choice.

• Talk to BIG India and Coca-Cola Amatil and learn from the investments they have already made.

DON’T• Weigh the upfront cost of LED lighting as an

increase – the total cost will be lower than traditional lighting based on energy savings and less frequent tube changes. It also significantly reduces the customers’ electricity costs, often a barrier to CDE placement.

Coca-Cola Amatil (CCA) has found up lighting (additional lighting under the product on each shelf edge) can drive a 20% lift in outlet and a three-point lift in conversion to Coca-Cola brands in the right locations.

May 2014



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Coca‑Cola and Family Dollar move beyond collaboration Together they author shared media campaign

Europe gets hands‑on with eCommerce, social media and virtual reality

Continued from page 4

Sustainability, channels and supply chain new areas of focusThe dedicated sustainability room focuses on the Me, We, World theme emphasizing how customers and TCCS can collaborate around active healthy living, ingredients, recycling, and energy efficiency.

Three new channels zones (grocery, foodservice and C-stores) allow presentation of ideas, strategies, dedicated solutions and experiences in the customer’s own environment.

A new area demonstrates various supply chain opportunities for end-to-end value creation by winning from the pallet. Dedicated supply chain solutions, like ready-to-sell displays, engage the customer to improve product availability for shoppers and supply chain efficiency.

“The KO lab offers the opportunity to scan the horizon for future trends, further understand each other’s barriers and triggers for growth, and create a set of topics to work on. All in just one day.”Bas BakkersSenior Manager National Key Accounts Coca‑Cola Enterprises Netherlands

It is rarely easy to get departments within one organization to work together seamlessly. Getting two separate companies to pull it off is nothing short of impressive – and powerful.

Openly shar ing exist ing data and insights from each company and then jointly commissioning proprietary research to fill the gaps, The Coca-Cola Company (TCCC) and retailer Family Dollar have taken their relationship beyond collaboration to co-create a highly integrated shopper program that tilts heavily toward digital and social media.

Know thy shopperBoth organizations studied Family Dollar shopper motivations and decision making along the path to purchase in depth. Then, they pulled Family Dollar’s objectives and TCCC’s objectives into one cohesive strategy. Executives from both companies even jointly presented the approach at the annual Shopper Marketing Expo in 2013.

Their research showed the Family Dollar shopper is looking for ways to give her family a treat without spending a lot. She values these moments of family togetherness and wants help to enhance them and make more of them possible.

They also learned the Family Dollar shopper is strongly influenced by social media.

Putting insights into action The insights have translated into a program of shared media outreach and launched in store with permanent display racks that “help her say yes to more moments of family happiness.”

It partners Mondelez snacks with Coca-Cola products and informs Family Dollar shoppers how they can get the deal and receive an occasion-based reward to enjoy with their family along with the snack, such as a music or movie download.

After purchasing the snack and Coca-Cola beverages, the shopper scans her rece ipt to download her reward right to her phone. The music and movie rewards reinforce the family togetherness occasion and never include price discounts.

The brand experience is extended through the digitally delivered reward, the opportunity to vote for next week’s ‘crowd-choiced’ reward, encouraging her to share news about her rewards via social media, and giving her a reason to return to the store.

“This project has provided the framework and approach to how we at Family Dollar want to partner with The Coca-Cola Company and Mondelez...it has shown what is possible,” said Jocelyn Wong, chief marketing officer for Family Dollar.

“Coke was the ideal partner for several reasons,” she continued. “One, they have tremendous brand equity that clearly resonates with our customer. Two, Family Dollar and Coca-Cola have a long-standing relationship. And three, we both were aligned on the end goal.”

We’re all in this togetherThe data were shared between both organizations to keep everyone on the same page as they jointly formed consumer insights. The visual identity for both companies within the campaign was also co-authored.

“Typically, we tend to create a whole program and then show it to the customer and tell them this is what we want to implement in their store,” said Kelly Boatright, senior shopper marketing manager for TCCC.

“This time, everything was developed together step by step right from the beginning. The result has been a much closer working relationship and greater insights from much more open, two-way communication,” Boatright added.

TOP: A convenience store setting within the Lab enables customers to experiment with new opportunities in the channel before putting them into effect in the outlet.

BOTTOM: Contemporary meeting space fosters communication between Coca-Cola and customers with the latest interactive technologies and extensive information about critical topics, such as supply chain.

KEY LEARNINGS:• Make sure you understand

the real path to purchase before developing outreach

• Create a triple win for the shopper, customer and TCCC

• Ensure the approach is scalable and flexible to vary with changing budget levels

Family Dollar objectives• Connect emotionally with

shoppers

• Become trusted neighborhood store

• Leverage established brands

• Provide value

• Help her say “Yes” more often

TCCC objectives• Focus on occasions of

Moments of Happiness

• Inspire optimism

• Provide value & enhance brand

• Drive sales

INDIVIDUAL COMPANY OBJECTIVES SHAPE SHARED OBJECTIVES

Mapping the path to purchase

The two companies used the insights to build a holistic program to target shopper needs pre, during and post-shop with extensive use of social media.

PRE‑SHOP (generate awareness with radio, bus shelter ads, store circular)

• Establish Family Dollar as a reliable destination for Coca-Cola products and national brand snacks at low prices.

SHOP (motivate purchase at store entrance and with destination racks that feature occasion based messaging and bundles)

• Make it easy for the Family Dollar core shopper to grab a bottle or can of Coca-Cola® and snack solution.

• Convert shoppers to buyers (help her relate to the occasion and see the solution with national brand drinks and snacks).

POST‑SHOP (nurture advocacy by rewarding her for digital word of mouth)

• Give core shoppers compelling reasons to help us spread the word and amplify our message.



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Jürgen, Zeynep, Gudrun, Moises and Zhang can all Share a Coke® on Germany’s eCommerce platform

It started in Australia with 300 first names and terms of endearment (think honey and sweetie) printed onto Coke® bottles and available in retail outlets. People loved it. Then Germany took the idea up a few notches and launched a website with 25,000 names you can order online, have printed onto a bottle and send to a friend for a very special gift.

“There is nothing more personal than your own first name, or that of a loved one,” said Philipp Fellmann, senior manager, shopper marketing for the Germany Business Unit (GBU). “Seeing your name in print on the iconic Coca-Cola bottle has a strong emotional impact on people.”

Just a couple weeks after launching the “meineCoke.de” eCommerce portal, German bottler CCEAG sold 60,000 bottles and today has shipped one million. They started with the 200ml Coke® returnable glass bottle (RGB) and now also offer Diet Coke® and Coke Zero®.

A unique connection to consumersGermany took special pains to ensure the program was all-inclusive so everyone would feel connected to their favorite beverage. Their list of 25,000 names represents many traditional German names of course but also carefully reflects the many ethnic communities who comprise the country. More than 15,000 names have been ordered.

Share a Coke® especially resonates with young people. More than half of those who purchased online are under 30 and men and women purchased at nearly equal rates. With 75% of in-store purchases made by women, eCommerce offers a strong option for reaching men.

Most people buy five or six different names in one order, suggesting they purchase the bottles for friends and to use as gifts. When they do, they dramatically improve brand reach.

“This program generates incredible word of mouth,” said Diego Granizo, commercial and operations director for the BU. “People tend to put the bottle in a special place where others will also see it. Then those people want to have one or send one to someone special and it grows exponentially. Isn’t that what Coca-Cola is all about — uplifting spirits and putting a smile on someone’s face?”

Share a Coke® connects with shoppers in two worlds: both online and off. If they encounter the program in outlet, they can find the name they want on the shelf or scan a Quick Response (QR) code

and be directed online to find almost any name they can imagine. Nearly 50% of shoppers purchased from their mobile phone.

Although Germany’s program is self-financing, the focus is on building brand love and connection rather than driving revenue.

The technical stuff“The digital world evolves quickly and we wanted to find another way to engage and learn more about how users behave online, how to convert visitors to shoppers, and how to convert people who love a brand into consumers,” said Fellmann. They have learned that keeping the eCommerce platform simple is key. “The website has to be intuitive and very easy to use,” said Brian Kirwan, digital shopper marketing manager for the BU. “The easier it is to use on the first introduction, the more visitors you convert to buyers.”

He cautions against over-communicating and advises that users need to see key information at a glance. That includes price, product, and how to get free shipping by buying six or more bottles.

Each screen on meineCoke.de has specific calls to action so the user is not overwhelmed or distracted.

Managing the logistics“You have to have a really flexible set of logistics behind this program,” Kirwan said. “We worked very closely with CCEAG and engaged external companies to help handle the complexity of individual labeling and to build the website.”

A real key to success is using an external firm for product fulfillment. Germany built a strong partnership with a company that personalizes chocolate and knows how to deal with very small quantities and single items and how to deliver under tremendous time pressures.

They were also careful to offer the program only with a pack that is not available in the modern trade so immediate cost comparisons are not obvious. The 200ml pack is sold in bars and restaurants at a price range that puts the online product at the low end of the range (but not so low that restaurants might want to purchase stock from Share a Coke®).

GET UP TO SPEED If you think you are ready to launch an eCommerce effort, it is critical to think through the consumer value proposition. Just putting your entire portfolio on line (often with pricing that is not as competitive as in outlet) will not drive traffic or the same level of results as the Share A Coke® program in Germany.

Check out the “Direct to Consumer Assessment and Activation guides” in the Emerging Shopper Technologies section under Customer and Commercial Leadership on The Customer Portal to master The Coca-Cola System (TCCS) learnings and success factors for a D2C business first.

Getting the logistics right is key to Share a Coke® meeting consumer needs. An external vendor experienced with the complexity and time pressures of product individualization is a critical partner to help the German team meet fulfillment obligations and process orders quickly.

HOW TO JUMP IN TO ECOMMERCE u Keep it simple! Start with just one

SKU and one simple shipping option.

u Get the logistics in place first. Germany struggled up to just a few weeks before launch with creating custom-made labels that matched brand standards, could be printed in just hours and would actually stick to the bottle.

u Devise promotions that will drive traffic to the site to get the momentum going.

u Be realistic about what is feasible for the bottler to do and for the fulfillment vendor to provide.

May 2014



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Brazil among first in world to launch multi‑bottler business‑to‑business web portal and improve serviceu Gives on premise customers order access 24/7

u Running in 1,200 outlets across Brazil

u Processed 1.8 million unit cases in transactions in 2013

u Helped boost fill rates from 88% to a 94% average by end 2013

Gisele Lemos, owner of two SUBWAY® stores in Rio de Janeiro, sometimes sits at her kitchen table on a Saturday morning and places her regular order with Andina Bottling. Brazil’s new CokeNet business-to-business portal lets Lemos place and manage orders and submit and track “trouble tickets” when and where she wants.

Just as consumers head online more often to shop, research shows we prefer options to conduct business online too. The CokeNet business-to-business portal enables customers to create, place and track orders 24/7 and provides just one face of The Coca-Cola System (TCCS) even for customers served by multiple bottlers.

“CokeNet is very user friendly and easy to follow,” Lemos said. “I especially like that I can see my order history for the year and place the order when it is convenient for me. And, if I have a problem, I can open a ticket from the same website and it isn’t closed out until I decide the issue is resolved,” she said.

Capturing better service, more accurate orders with CokeNetThe Brazil Business Unit (BU) and the country’s bottlers launched CokeNet to improve response time and order accuracy in the growing on premise channel, especially with the more than 16 national key account customers selling more than one million unit cases per year.

From concept to launch in only nine months, CokeNet increases partnership between customers and bottlers while reducing ordering costs.

“After CokeNet went live, we improved our fill rate and our sales volume due to the optimization of the operational procedures,” said Vonpar Bebidas Chief Executive

Officer André Salles. “This was only possible because CokeNet unifies all information about orders, centralizes all tickets from the customer, and shows managerial information in an easy way for decision making.”

At the store level, instant access to one year of historical data, exact information about merchandise delivery dates or the status of an opened ticket, and the convenience of placing orders anytime, anywhere strengthens Coca-Cola’s position as a logistics service leader.

Building stronger partnershipsCokeNet provides a single, front-end contact for customers and an integrated system for the 10 bottlers it supports. “CokeNet addresses the main mission of customer service, making it easier to do business with us,” said Antonio Viveiros, commercial execution lead for the Brazil BU.

The increased relationship CokeNet fosters between bottlers and customers, along with streamlined processes and routines, has driven fill rates up six points in the first year to an average of 94%. Some bottlers have hit fill rates above 99%.

“We have been working with different bottlers in Brazil to improve operations performance, implement CokeNet and raise franchisee

satisfaction with Coca-Cola. I declare, without hesitation, the service today is better than six months ago,” said Phillippe de Grivel, chief operating officer, (LACPICP) Subway Brazil.

CokeNet also empowers key account customers with much of the same historical data that bottlers see providing increased transparency and positive pressure to improve.

Getting everyone onboard and onlineJust 15 months since go-live, CokeNet is in place with 1,200 stores across Brazil in three of the top five food service chains, SUBWAY®, Bob’s and Giraffas. Brazil expects to expand to 2,500 outlets by the end of 2014 and begin working with other key accounts.

In 2013, volume running through CokeNet hit 1.8 million unit cases and that number is forecast to rise 233% in 2014 to six million unit cases, nearly 10% of total on premise annual volume.

“CokeNet represents a breakthrough step to leverage our relationship with our key account on premise customers, focusing on a consultant-oriented approach,” said Daniel Cappadona, commercial director, Andina Brazil. “As more outlets adopt CokeNet, the lower the unit cost per order will be as well.”

“Not only is CokeNet he lp ing us improve our service levels, but it also brings another lens to contract renewal discussions,” said Moisés Fernandes, modern trade RTM manager and a CokeNet project leader with Felipe Magalhães and Adriana Pereira, key account and information technology managers for the BU.

What CokeNet does• Creates one Coca-Cola “face” for the customer

while preserving individual outlet delivery schedules and the bottlers’ commercial procedures.

• Enables commercial representatives to intervene with non-conforming orders before they are processed.

• Provides a preferred sales transaction channel to customers.

• Standardizes fill rate and service level response time KPIs across the Brazil system (with fill rates calculated online and root cause data available).

• Brings transparency around order and delivery to customers, franchisees and the Brazil system, improving business conversations.

• Registers and tracks trouble tickets and provides an email log between outlets and bottlers.

• Establishes Coca-Cola as a logistics solution provider, strengthening our negotiating position.

• Provides centralized oversight to ensure product images and pricing are consistent within each bottler’s site.

To learn more about CokeNet contact Moises Fernandes at moisesfernandes@coca‑cola.com or Antonio Viveiros at antonioviveiros@coca‑cola.com.

Grabbing an opportunity, managing riskCustomer expectations around digital capabilities are rising quickly and those who meet the needs first can protect their businesses from competition. The Coca-Cola System’s (TCCS) new B2b Assessment and Activation Guides can help you understand eCommerce opportunities in the business-to-business world, as well as the risks of letting others reach your customers first.

Log onto The Customer Portal to download the guide and up your learnings. The guides are housed in the Emerging Shopper Technologies section under Customer and Commercial Leadership.

B2b (business to business) online ordering represents a USD 2+ billion global retail sales opportunity.

Renata Sá (left), Andina customer service analyst, trains

a Subway associate on the CokeNet system in the outlet.

Vonpar Bebidas Customer Service Analyst Deivid Mendes

makes it easier for customers to do business with Coca-Cola.



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Augmented Reality app takes 250ml can launch from a blip on teen radar to all out Blippar immersionNew relationship with Spotify amps up the volume

With a promise to “turn your phone into a magic lens,” the Blippar smartphone app has ‘teen’ written all over it. So it was a natural for the Great Britain Franchise Operations team to connect Blippar with the launch of its new 250ml slim can targeted at recruiting young adults.

The app lets users scan the special can and “magically” transform it into an mp3 player that plays free songs.

Bringing them backThe goal was to recruit young adults back into MyCoke®. As the largest consumer group by volume for sparkling, the need to reconnect with them was huge. But the answer was small.

The 250ml slim can provides a great entry pack for teens and young adults because it is priced affordably and offers a sleek new on-the-go design.

“Augmented Reality (AR) through Blippar offered a great way to differentiate the 250ml slim can,” said Chris Drumey, Great Britain digital shopper marketing manager. “It combines two passions that live at the heart of young adults: their mobile phone and their music. And it gives them something new to show their friends.”

Blipp [verb and noun.] blipp-ed, blipp-ing: the action of instantaneously converting anything in the real world into an interactive wow experience.

Blipp it and live itIt works like this. You buy the 250ml slim can. You download the free Blippar app. You scan the special icon bottle silhouette on the can, and then the magic happens. On screen, you see what appears to be your can coming to life, wearing headphones and playing music right in front of the background that you are looking at in real life.

It also has unique “peel away” technology that lets you move away from your “magic can” and still listen to the music free until you turn off the app. If you do turn Blippar off you can scan the can again to re-animate it.

More than a blip on the radarSales of the 250ml slim can are three times ahead of forecasts thanks to an all-encompassing launch program, but the Augmented Reality has definitely been a popular part of this. “The cans received just under 95,000 ‘blips’ which is 300% higher than what we saw for an on-pack Quick Response (QR) code earlier in the year,” Drumey said. “Quite impressive given there was no Blippar mention on the pack or at the point of sale.”

Let’s give them something to talk aboutThe main way to learn about the Blippar connection to the 250ml can was through social media. Facebook posts and mobile banners with teaser instructional videos saw the greatest responses in the number of ‘blips.’ Local outdoor copy supported awareness for independent stores.

There was no communication about Blippar at the point of sale or on pack to add to the discovery and social currency of sharing what consumers found on their own.

“The pack does two critical things for young adults,” Drumey said. “It provides an accessible pack at a price they can afford and it gives them added value in terms of free music. They can pick up the can and unlock a unique experience.”

Five new songs have been added to the promotion to refresh the experience and this will be expanded to 50 songs in 2014 as part of a new relationship with Spotify, a digital music service.

Sales 3x ahead of forecast

Augmented Reality (AR) through the Blippar smartphone app lets consumers unlock the magic in the new 250ml slim can and turn it into an mp3 player that comes to “life” wearing headphones and playing music right in front of the background the user sees in real life.

May 2014



The Commercial Leadership Times newspaper includes confidential information that is being shared with colleagues across TCCC to help all of us deliver outstanding execution. It should be treated like any other TCCC document, shared only with TCCS people and disposed of properly.

THE INSIDE STORY

What’s for dinner?TCCS and Walmart have the answer Discounter Aldi rolls out

Coca‑Cola® products for first time in GermanyShoppers respond with more trips, bigger baskets and higher sales

Every day all over the world at about 6 p.m. or so the same old question rolls around again. What’s for dinner? Walmart and The Coca-Cola System (TCCS) have teamed up to bring the advantages and influence of both powerhouse brands to bear to give mom an easy answer.

The new effortless meals program gives Walmart shoppers a quick meal solution in the deli that pairs fresh rotisserie chicken, pizza or other hot foods with a 2-liter Coke®.

The effortless meals messaging reaches busy moms in the few hours leading up to dinner when many decide what to make. Drive time radio ads, billboard and gas pump ads within one mile of Walmart locations, and digital, social and mobile media connect with mom just when she needs help to get dinner on the table.

Think like the customer“This initiative has worked so well because our team thought in terms of benefits for the retailer and clearly quantified for Walmart how much they could expect to grow their sparkling business through the effortless meals platform,” said Paul Lukanowski, senior vice president and general manager of Swire Coca-Cola.

Opening the door to a win‑win Walmart is most successful with its 140 million weekly shoppers in categories where they carry strong national brands, such as dry groceries (think General Mills, Proctor and Gamble, and Nestle). They faced a multi-billion dollar opportunity to attract more shoppers into their fresh department.

Who better to help them realize that opportunity than the #1 soft drink brand in the world? Strong household penetration, high daily frequency (only tap water is consumed more often with meals than Coke®) and neuroscience research showing that pairing Coke® with food boosts the appeal of both warmed our seat at the negotiating table.

Reframing the conversation from one focused just on putting beverage displays on the floor

Although discounter Aldi typically relies on store and off brands, when they put six Coca-Cola brands on the shelf in their home country of Germany in late 2012 shoppers got excited.

More than 5.5 million shoppers purchased Coca-Cola products in Aldi’s 4,000+ stores across the country and boosted carbonated soft drinks (CSD) shoppers at the retailer up nearly 15% and Aldi shopping trips for sparkling beverages up 14%.

Shopper insights unlock opportunityBy studying data from consumer panels with 30,000 households across Germany, CCEAG showed Aldi that their shoppers were spending millions with competitors simply because the Coca-Cola products they wanted were not available and so Aldi could not offer them one-stop shopping.

“The data enabled us to show Aldi how to generate potentially ¤100+ million in revenue with KO products and that they could increase their total grocery sales because baskets get larger when Coca-Cola is inside,” said Andreas Kraemer, CCEAG category manager for discount customers.

“We were actually able to show them insights about their own shoppers that were new to them. This information built an important basis for our negotiations,” Kraemer added.

to one that helps the customer leverage Coke® to sell more in their underperforming deli changed everything.

Meeting needs and driving resultsMarket research related to effortless meals TV ads shows the program is driving purchase intent and good feelings among consumers. It is also driving incidence in the outlet. Early results show a 20-point swing in the two-liter portfolio with the effortless meals deli racks averaging 487 two-liter units per store per week, accounting for 35% of total Walmart two-liter sales.

Sales of 16 oz bottles are averaging 130 units per store per week contributing to a 2.4% bump in immediate consumption (IC) for Walmart.

One plus one equals threeEffortless meals has transformed the Walmart deli into a meal solution center with a level of Coke® branding in the outlet never seen before. “The equity of Walmart and Coca-Cola paired together to offer a meal solution is powerful. That’s the big win,” said John Sherman, senior vice president and chief commercial officer for Coca-Cola United.

“If you believe in Coke® with food being a primary platform to grow sparkling, getting it into Walmart with a 40 to 50 share of grocery in our region is critical,” Sherman added. “And other retailers will definitely notice.”

Sherman also says strong investment by Walmart reflects their commitment to the program. “Walmart has participated in the development of in-outlet messaging and enabled far more pervasive communication with many valuable points of shopper interruption than we have ever seen before,” he said.

“This effort has had a real galvanizing effect on our relationship with Walmart,” Lukanowski added. “The scope of the partnership is bigger than anything we’ve undertaken with them in the past.”

Coca‑Cola portfolio drives category growthAldi does not run promotions, never shows listed brands in their retail leaflets and only carries non-refillable packs. So CCEAG launched their six core brands in 1.25 liter PET including Coke®, Diet Coke®, Coke Zero®, Fanta®, Sprite® and MezzoMix™ and let the products do the talking.

Shoppers got the message loud and clear. One million Aldi shoppers purchased Coca-Cola products for the first time, along with 4.5 million Aldi shoppers who had purchased Coca-Cola products elsewhere before and bought KO products at Aldi for the first time. These shoppers enabled Aldi to realize more than ¤100 million in new revenue.

KO products also showed up in 21 million Aldi baskets. There was very little substitution with Aldi’s store brands (only 13% leakage) because most Coca-Cola shoppers do not drink store brands.

“Both customers Aldi North and Aldi South confirmed for their German business that offering six Coca-Cola brands helped to ensure category growth and leveraged additional shopper potential,” said Hendrik de Jong, national key account manager for Aldi.

Protecting other retailersWith Aldi on the move, CCEAG had to make sure classic retailers continued to get their fair share. Special promotions, including Share a Coke® (see related story page 17) helped ensure traditional retailers could increase their KO CSD share in 2013.

IC next on the horizonCCEAG will next offer an immediate consumption (IC) pack to Aldi shoppers. Although the discounter does not currently offer in-outlet coolers, they can stock a small PET pack directly from the retail floor for shoppers to enjoy on the go.

u KO CSD share in retail grocery up nearly 2%

u Aldi CSD beverage sales up 26%

u Aldi KO CSD revenue over ¤100 million

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