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 in Colombia was in the best interest of the company and its associates. We still have a hub in San José, Costa Rica, and have 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. Within the totality, it ranks among the top 25 countries in the world, and 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 last year. We are 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 Sin Azucar, our sugar-free variant. We have launched close to 40 products, and also reformulated about 70% of our products. Some worked really well, others less so. This is part of the learning curve, where we listen to the consumer, make quick tests and reformulations, and repackage accordingly. The great World Cup activation in 2018 was fantastic. As a company with over 30 years in the market, we need to better learn from the market without holding back. We 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 also using technology to increase the percentage of recycled plastic in our bottles. In Colombia, 42% of the plastic in every bottle on the market is recycled PET, one of the highest percentages in the world. We continue to test technologies to drive that. In 2018, we made a global commitment called World Without Waste 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. We are specifically more ahead in the recyclability of our packages. There is considerable work being done to leverage 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 in fact hired a vice president of digital with a background in the telecoms industry. He 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 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 across Latin America and learning a lot through consumer engagement. It is not only important to connect, but also to bring a consumer closer 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.
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 and want to have variety depending on their preference at any given point. And that is what we are doing. We have reformulated 67% of our portfolio to lower-sugar or sugar-free variants. Many Coca-Cola trademark consumers actually like the red and want an original tasting Coca-Cola. They do not want to be disappointed with the flavor. Even our nectars have low sugar content. From the get go, new products reflect consumers' wishes. We want our nectars to mostly have sugars from the juice base, and not sugar-added, as well as tasting good. The importance of the entire 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 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 Colombia?
There will be a focus on the importance of being there and on availability and affordability. Sometimes we focus on the more glamorous side of business. However, we have a returnable plastic bottle that we relaunched last year with significant investment in Colombia. We want to continue doing that. While it may not wow that much, it will extend our access to families with an affordable, family-sized product in a returnable, environmentally-friendly package, which is a big deal. We will not stop until that package is seen everywhere. Not only is it good for the environment, but also for Colombian families that could otherwise ill afford a Coca-Cola.