There was once a saying that if there is a brand more famous than the United Nations worldwide, it would be Coca-Cola. However, in an era of great change in the retail industry, even the world's largest beverage company is trying to become faster and lighter. Coca-Cola, the globally renowned 131-year-old company, is currently undergoing its own century-long transformation. For Coca-Cola, maintaining continuous innovation and capturing consumer trends and changing markets are the things it must do immediately when facing today's strong competitors. Recently, Curt Ferguson, President of Coca-Cola Greater China and Korea, gave an interview to FTChinese.com. The editor has selected and organized the highlights of the interview to present the things that have quietly changed at Coca-Cola in recent years... Let's see what inspiration it can bring you. The "Slimming Plan" of a Centenarian Coca-Cola In recent years, Coca-Cola has been implementing a "franchise restructuring plan" globally, divesting and selling bottling plants that it once prided itself on half a century ago. The company's profits have been declining due to this. Why would it revolutionize itself? In response, Curt Ferguson, President of Coca-Cola Greater China and Korea, said: "This is a strategic plan we are rolling out worldwide. We want to focus more on what we do best—building brands—rather than just bottling and selling. We have really made a firm decision to take out our bottling assets all at once and hand them over to partners. 'Coca-Cola operates a classic franchise model. We firmly hold the brand, including brand building, creating new brands, innovation, marketing, etc. Then we sell the concentrate to local bottling partners. They handle the 'dirty work' of putting our brands into bottles or cans and delivering them to consumers. This is a classic model where we each play to our strengths. We are a bit like investment banks, and they are like commercial banks. We focus on the bigger picture, such as judging market trends and finding M&A opportunities; while they focus on how to sell and make money, so it may be more difficult." Regarding the profit decline, Ferguson said: "It depends on whether it's due to structural adjustment. For example, if you look at our stock price and other indicators, we have performed very well since last year. I think the market understands where our structural adjustment is heading. Let me put it this way: considering the retail revenue from the bottling business, we are essentially shrinking a company with $50 billion in revenue to a $30 billion scale, because that bottling asset is what we are selling now. In the divestiture process, the key is to find good partners. In China, we have two of the world's strongest partners: one is Swire Group, which may become the third-largest bottler in the Coca-Cola system; the other is a local Chinese company, COFCO Coca-Cola, a state-owned enterprise, which should be able to jump overnight from the ninth or tenth largest bottler globally to the fifth. Therefore, there are many opportunities to unlock new value." Focusing only on market share is naive China's per capita beverage consumption is still very low, and there are many opportunities. Ferguson said Coca-Cola does not pay much attention to market share but focuses more on value. Keep traffic within a reasonable range, and while chasing traffic, you must ensure profitability. "Look at Mobike and OFO. You walk on the street and see many, many bikes, but if they are not profitable, is that really doing business? So we focus on truly high-quality profitable revenue and growth, which is good for our entire company and shareholders," Ferguson said. The mindset of Coke people is also adjusting Today's Coke people have shed the psychological burden of arrogance and say things they would not have dared to say ten years ago: "The favorite beverage brand of Coke employees does not have to be Coca-Cola." Of course, the other brand options should not include competitors' products. Fanta, developed in Nazi Germany, and Sprite, which was once the favorite of Chinese people, are both brands that can fight alongside traditional Coca-Cola. It is understood that Sprite may be the most popular Coca-Cola brand among Chinese consumers. "Actually, I looked at the sales figures, and now Sprite's sales are starting to be on par with Coke. At one point, I felt that for every three bottles of Sprite sold, only one bottle of Coke was sold. Why is Sprite so popular? I think it's related to the fact that Sprite tastes great at room temperature; it's already delicious without refrigeration, but Coke is better when chilled. Chinese consumers' tastes are also constantly changing. I remember when I first came to China, someone whispered to me, 'Chinese people never drink coffee.' We call what is happening in China a process of mass market segmentation." When asked whether Coca-Cola has launched successful tea beverages in China, Ferguson replied: "Tea beverages are the toughest battle we have ever faced. My predecessor has aged eight years due to many reasons. To be modest, I might age nine years. However, we will still examine other types of tea drinks. Now we already have the number one unsweetened tea beverage in Taiwan, and also number one in Hong Kong. You could say we have a good track record. We will draw lessons from that and bring new products to Chinese consumers." Speaking of the most significant change for Coca-Cola this year, Ferguson said: "We all love this brand; that's why we have developed to where we are today. It's our name. But as time goes by, things change, consumers change, and tastes change. What we need to do is ensure that Coke changes with them. One method we want to use now is to ensure zero calories without damaging the brand's reputation. So you will see some initiatives to reshape 'zero sugar' to make it look like a younger brother of Coca-Cola rather than a separate brand. I think that's a smart idea." Acquisition plans in China Last year, Coca-Cola completed the acquisition of Xiamen Coarse Grain King Beverage Technology Co., Ltd., hoping to expand its localized product line, reflecting a long-term competitive approach. "When I first joined the company, I made a fairly large acquisition. We are still digesting and figuring out how to expand its business; it's entirely new to us. It's a nut milk beverage. We will do some interesting things and see what happens next. We are also looking for viable acquisitions. Our chairman is known as the 'Lightning Acquirer,' striking quickly when a suitable target appears. I think we may be more open now. Some acquisitions may not fit the company's own ecosystem, but they can meet consumer needs and expand our territory. I think there are many possibilities," Ferguson said. Adjustments and innovations in response to health concerns Some sweeteners have been used for over 30 years, but there are still people who say, or based on some academic studies, that sweeteners cause various diseases. But the fact is, the government is saying, consumers are saying, and there will always be people who cling to this issue that need not be viewed so negatively. "After generations of empirical research, it has been found that sweeteners are just amino acid derivatives," Ferguson said. "We have always looked at this brand positively. It has been growing over the years and has achieved great success over the past 30 years. That doesn't mean we don't need to continue looking for other sweeteners, nor does it mean we don't need to provide consumers with other options. We are not so focused on that because, for example, we can put effort into juice research and development, or see if we can discover new plant-based sweeteners." "The result we have always pursued is to keep beverages sweet without calories, or with fewer calories. But the other side of the story is that consumer tastes are also constantly changing. Now people don't want the overly sweet drinks they used to. Therefore, we offer a wide variety of products. Sometimes we even process them cleanly, retaining only a little juice, to observe how consumer tastes change." In addition, Ferguson revealed: "Coca-Cola Zero will exit the Chinese market and be replaced and upgraded by the new product 'Coca-Cola Zero Sugar.' We have made slight adjustments to the Zero formula, and the new sugar-free product tastes better. The new product will retain more recognizable Coca-Cola characteristics, but it also lets you know that this Coke contains no calories." "This will be an adjustment for us. The new sugar-free Coke will taste better (closer to original Coca-Cola). At the same time, you can also observe our global 'One Brand' strategy from this adjustment. We want to sit down and say to everyone: 'This is still the Coca-Cola you know and love, but this product has zero calories.' We want to see how the brand develops and moves forward through a small adjustment. (On the packaging of the new product) we may use more of our beloved red." Here are two bonus Q&As from the final session: Q Question: How do you view the transformation period that the entire consumer retail industry is undergoing? A Answer: Look at the online market. If you have 20% of your business from online, how many square meters of physical retail space do you need? It seems that overnight, 450 million stores have emerged in China. Such a large-scale transformation is incredible. Every time I go to a shopping mall, I step out of my own industry and see what is selling well. I am a poor morning runner because I often check all the trash bins along my usual running route just to see what people are drinking. People go to stores, take a photo, and instantly get a three-point discount. It's tough being a retailer these days. Q Question: Can you tell the difference between Coca-Cola and Pepsi with your eyes closed? A Answer: I can. But it's based on 35 years of experience. Pepsi might be a bit sweeter. However, I still prefer the real tingling sensation in the back of my throat when drinking Coca-Cola. Source: FTChinese.com "High-end Viewpoint" interview Interviewee: Curt Ferguson, President of Coca-Cola Greater China and Korea Interviewer: Lin Huidong, Editor of the Financial Times Chinese website Compiled and edited by New Distribution -END-