15 Jul 2010
First introduced in the US in 1886 and already a national icon by the 1930s, the carbonated beverage known as Coca-Cola has become as much a symbol of American culture around the world as the Stars and Stripes. For the past decade (at least) it has topped the Interbrand rankings of global brand value, ahead of the likes of Microsoft, IBM, General Electric, Nokia, Toyota, McDonalds and Disney.
A truly international business, The Coca-Cola Company derives nearly 80 percent of its operating income from outside the US and holds over half of the global market share for non-alcoholic beverages. Such high visibility has been a magnet for both detractors and competitors, yet despite that and decades of radical changes in consumer tastes and lifestyles the company has held its leadership position in the industry for well over half a century.
According to Dominique Reiniche, President of Coca-Cola Europe since 2005, that is because the company never loses its focus on the fundamentals, while at the same time remaining sufficiently flexible to adapt where necessary.
“What has not changed is that people like good quality products and a good, refreshing taste,” she says. “What is changing is that consumers want more and more choice, and they want the information to allow them to make good choices that suit their particular lifestyle needs.”
In response to consumer demand for choice, the company today has a portfolio of more than 3,300 beverages, from diet and regular sparkling beverages to still beverages including 100 percent fruit juices and fruit drinks, waters, sports and energy drinks, teas and coffees, and milk-and soy-based beverages.
Underlining her belief that consumers should be able to make informed choices, Reiniche herself ensured Coca-Cola was a lead company responsible for CIAA (Confederation of the Food and Drink Industries), advocating GDA labelling on all food and drink products sold in Europe. “This is about putting the calorie content on the front of the pack, and on the back label, putting the key nutrients like fat, saturates, salts and sugars, showing not only the actual quantities, but the percentage of daily requirements in the average diet,” she notes.
Is this simply an exercise in self-preservation for a company that has built its fortune pedalling sugary drinks? No, insists Reiniche, it is a good example of what she sees as a win-win style of doing business. “We make our information very visible and easy to understand, and more and more consumers and governments are telling us that this is very beneficial.”
A new style of business
Reiniche earned an MBA degree at ESSEC in Paris and built her career in the FMCG industry, spending eight years with Procter and Gamble and working as Director of Marketing and Strategy with Kraft Jacobs-Suchard before joining Coca-Cola Enterprises. She is passionate about a style of business leadership that was unheard of in boardrooms twenty years ago, peppering her conversation with phrases like sustainability, leading positively and work/life balance. “I could never be where I am with all my responsibilities without the support of my family,” she enthuses. “I have three fantastic daughters and step-daughters who have always given me strong support, and provide me with the motivation to demonstrate how business can be a very positive force for their future.”
It would be easy to make the mistake of thinking this is a soft touch; that real business results can only come from the old style of confrontational, competitive business. Yet in 2006, Fortune credited her with staunching the bleeding in Coke’s $6.8bn European Union market and returning the business to growth in unit sales for the first time since 2004. Two years later Fortune noted that upon her arrival in her new role, Reiniche managed to boost revenue and operating income in Europe by 15 percent in the first half of 2008. In 2009, the Europe Group revenue was over $5bn and in Europe Coca-Cola outperformed the industry gaining volume and value share.
For Reiniche, the future is all about sustainability, and that is both driven and enabled by communication technologies. “I think we are seeing just the beginning of a revolution created by internet connectivity and the new social media that it has enabled,” she says. “Today people expect their brands to deliver good products, but also to be active players in society. And they want to have their say, so the days of one-way communication are past. Today it is about having a dialogue with our consumers, listening to and acting on their views, not just communicating your message.”
The high visibility and global market reach of the Coca-Cola brand mean that whatever approach the company decides to take to the sustainability agenda, it is bound to get noticed. The industry has been subjected to much scrutiny in the past over allegations of environmental impact, product safety and aggressive marketing to young people, which may be why several people expressed surprise to see Dominique Reiniche and Coca-Cola CEO Muhtar Kent joining in the Copenhagen Summit on climate change. “We think we have a role to play because we are a brand that reaches billions of consumers,” Reiniche comments. “As industry leaders, we have a role to play directly through our own behaviours and also indirectly by conveying the right type of messages and inspiration to people all over the planet.”
Saving the planet
The Coca-Cola sustainability agenda is encapsulated in its new ‘Live Positively’ philosophy which aims to leave a positive print on everything we do and to inspire change in behaviours, both internally and externally. Initiatives are being undertaken on all fronts. In addition to Reiniche’s work at CIAA to push for better product labelling, and promoting more responsible product formulation and marketing, she is working through UNESDA (Union of European Beverage Associations) to drive industry changes. “For example,” she says, “we are committed to developing more mid- and low-cal beverages, to making sure schools are advertising-free zones and supplied with a complete range of beverages for a healthy lifestyle, and to making sure we do not communicate with children under 12 in any media including the internet. These are not empty promises – we have asked to be monitored externally on these commitments.”
Water usage is a very sensitive issue for companies whose business is offering a wide range of non-alcoholic beverages. Coca-Cola Europe has developed what it calls the ‘3 Rs’ program to improve water quality and conservation across the region. Together with its bottlers, the company is working to reduce water consumption by 20 percent by 2012. Secondly, they plan to ensure that 100 percent of the water they return to the environment is of a quality that supports aquatic life. The third ‘R’, replenish, is perhaps the most ambitious: the company currently supports 18 projects to replenish and protect watersheds in Europe, including the mighty Danube river project where Coca-Cola is working closely with WWF.
Coke’s sponsorship of the FIFA World Cup competition in South Africa this summer presents the company with another high profile prospect to demonstrate its Live Positively philosophy. In March 2009, the company announced its Replenish Africa Initiative (RAIN)—a six-year, $30m commitment to provide access to safe drinking water and sanitation to at least two million Africans by 2015. Consumers will be given the opportunity to help raise funds which will be matched by Coca-Cola. The funds will be used to buy supplies for the “Water for Schools” initiative which will help to connect schools to safe water supplies and educate young people on water conservation and hygiene.
“Where we can, we also try to build on our brand image for happiness and fun to help educate people and change behaviours,” notes Reiniche. “For example, at a recent music festival in Belgium, we ran a ‘Keep it Going, Recycle’ program which encouraged festival goers to recycle their bottles and cans by exchanging them for fun Coca-Cola items made entirely from recycled materials – like a T-shirt that said ‘I used to be a bottle’ or ‘Don’t hate me because I’m plastic’.”
Another sustainability program that is close to her heart is a scheme to develop a network of Micro Distribution Centres across Africa. By providing local entrepreneurs with training and support to build independent operations, the company is able to distribute Coca-Cola products into areas where poor infrastructure makes it unviable for centralised distribution facilities to operate.
Approximately 3,000 of these MDCs have now been established, creating an estimated 12,000 jobs and generating over $500m in revenue annually. “Many of the most successful managers benefiting from this program are women,” comments Reiniche. “Women know what this represents for the future of their families and they take it seriously. In some parts of Africa over half of the MDCs are run by women, so this program is also contributing to the gender diversity element of our sustainability program.”
Although she is fully committed to all of these initiatives and the philosophy behind them, Reiniche is quite clear that her other main priority is to run a successful business. What may surprise many business critics is that she does not see a conflict between the two. “Very often people say to me, ‘but you do this to make more profit’, and I reply, ‘in all honesty, yes’,” she laughs. “But if the way I make profit allows me to drive sustainable growth for my company and therefore create investment, local jobs, local investment, local community programmes, plus happy investors who will continue to invest and make my company sustainable in the long term, I think that’s good profit for a good planet.”