RAISE A GLASS

Dominican Republic 2019 | ECONOMY | INTERVIEW

After reformulating 70% of its products and launching 40 new ones, Coca-Cola's global brand is doing exciting work at its most promising regional hubs.

Roberto Mercadé
BIOGRAPHY
Roberto Mercadé has 22 years of international general management and operational system experience at Coca-Cola. In addition to being General Manager of South Africa Franchise and Commercial operations, he led the company’s national manufacturing facilities there, Coca-Cola Canners, and Valpre Water. Prior to that, he was General Manager for the Venezuela & Caribbean Franchise Unit. He has a degree in industrial engineering from the Georgia Institute of Technology.

How has your relocation of regional headquarters to Colombia changed Coca-Cola's regional operations?

We had several objectives, the first being to be based in our biggest market with the greatest opportunities. Colombia's time has come, and locating the sector hub here was in the best interest of our company and its associates. We still have a hub in San José, Costa Rica, and spread the Board of Directors across those two hubs. There is a great talent pool available in Colombia. Meanwhile, Latin America accounts for a third of the company's global business and ranks among the top 25 countries in the world, though we intend to make it bigger still. These factors all played a role in our decision to relocate. We saw a steady increase in the volume of sales in 2018. We are still on a learning curve as we progress toward becoming a total beverage company. In 2018, the trademark brand grew at a healthy rate, in particular our Sin Azucar, or sugar-free variant. We have launched close to 40 products and reformulated about 70% of them. Some worked really well, others less so. This is the learning aspect, where we listen to the consumer, make quick tests and reformulations, and repackage accordingly. The World Cup activation in 2018 was fantastic. As a company with over 30 years in the market, we need to be a little less anxious and better learn from the market without holding back. We also need to learn and experiment just as start-ups do. With that in mind, my number-one goal for 2019 is to see more empowered associates that feel free to experiment and adapt. With empowered associates comes greater innovation and more differentiation in processes for each aspect of the business.

How is Coca-Cola using new technology to revolutionize its processes?

We have a co-generation project in Colombia with Air Liquide for power and CO2 to make a plant virtually self-sustaining. We are using technology to also increase the percentage of recycled plastic in our bottles. In Colombia, 42% of the plastic in every bottle on the market is recycled PET. This is one of the highest percentages in the world, and we continue to test technologies to drive that. In 2018, we made a global commitment called World Without Waste. We aim to collect and recycle plastic containers equivalent to the amount we produce, and we are well on our way to achieving that. We continue to experiment with technologies in the recuperation of plastic and are specifically more ahead in the recyclability of our packages. Another way in which we use technology to change the way we do things is by working with start-ups and food aggregators, such as Rappi. Our team associated with that is engaged and coming up with new ways to deliver and sell Coca-Cola products, including AdeS, our soy-based beverage, and Frutal, a nectar we launched last year. There is considerable work being done leveraging technology. We also work to engage customers in a digital world, encouraging them to become digital natives, and progress there has been brisk. We have even hired a vice president of digital with a background in the telecoms industry that is helping us draft a plan to address and capture that opportunity. Coca-Cola is the most ubiquitous product in the world, and we want to ensure its presence remains on all platforms. At the close of 2018, 300,000 consumers had downloaded an application that allows them to experience Coca-Cola activities and products. We are testing the app now and learning a lot through consumer engagement. We are testing across Latin America, not just in Colombia, and have created a digital council for the region. With regard to digital marketing, there are many opportunities there to monetize. It is not only important to connect, but also to take a consumer to the product, ensuring the technology provides the consumer with a sample. This hopefully closes the loop so a prospective consumer becomes a part of your consumer base. Technology can help by removing barriers and by rendering processes seamless, especially in creating a consumer base.

How is Coca-Cola responding to the changing market demand for new, healthier, products?

What we do best is listen to consumers. They want beverages that taste good, but also want a variety depending on their preference at any given point. And that is what we are doing. We have reformulated our portfolio, 35% of which now corresponds to lower sugar or sugar-free variants. Many Coca-Cola trademark consumers actually like the red and may want an original taste Coca-Cola; they do not want to be disappointed with the flavor. Even our juices have a low sugar content. From the get go, new products reflect consumers' wishes. We want our juices to mostly have sugars from the juice base, and not added sugars, as well as taste good. The importance of the whole innovation process is that consumers change and look for new variety while maintaining their desire to have something that tastes good. We underwent a new process that prioritized effectiveness and have found that when we focus on fewer, bigger, and bolder bets we do better than when we are spread across different efforts that may dilute our energy and investments. A perfect example is the Red Coke No Sugar instead of Coke Zero. Instead of spending money branding many different brands, we have built one brand, called Coca-Cola with Variants. It is part of being more effective, while at the same time being more efficient, because we are marketing one brand instead of three. Over 60% of consumers thought that Coke Zero had sugar. Our CEO has also spoken of 'killing zombies;' the zombies in Coca-Cola are all the little brands and products that exist due to inertia. In this region, we have identified over 100 zombies. We are in the process of killing about 40 of those and no longer want to waste resources on brands that do not generate growth.

What will be the next big, bold bet for Coca-Cola in the Dominican Republic?

We are focusing on making our products available, both original and no sugar, to empower the customer in their decision and remind them that both are always available. We are betting strongly on returnability, so will soon launch a campaign that promotes the reuse of our glass bottles in synergy with our World Without Waste initiative. 23% of our portfolio is already returnable, a figure we intend to increase.