I am pleased to welcome Henrique Braun back to the stage, this time as CEO of The Coca-Cola Company. Since you were last with us in Boston, the company's delivered stronger evidence of balanced growth, some tangible proof points around the system's digital capabilities, and a clearer sense of where you may look to dial up the strategy from here with you now in the role. Welcome back.
Thank you.
Looking back at the past few months, how have you been spending your time now in your new capacity as CEO?
Thank you, Lauren. It's great to be back here. Look, it has been a smooth transition, very well planned. I have been spending time where it's really necessary for this first month. I've been in the system for 30 years. I think for people that don't know that, it's important to highlight. A great portion of my time is meeting the stakeholders, right? Being with the key customers, then with our bottlers, our teams, and that has been really important because, on the short term, the number one job, it's really keeping the momentum that we built over the last few years together. I have been part of this with James' leadership, but being part of the leadership team as well. We're protecting and continuing that momentum.
On the long term, connected to what I said at the beginning of the year, it is really about starting to get a few laps into this journey of really reinforcing the three beliefs that I talked in the beginning of the year and the three principles that we believe are going to be important for the next chapter of growth, which is staying close to the consumer, really bringing digital to every point of interaction with consumer, customers, and enterprise, and nurturing that mindset of constructively discontent. So that is how I am spending my time.
Okay, great. At CAGNY, you laid out the three priorities for the next chapter of growth for the company . I want to spend a little bit of time unpacking these and starting first with becoming even more consumer centric.
Yeah.
As you spent more time as CEO, how has your thinking evolved on what consumer centricity needs to mean for the company today?
Yeah. I often say that the consumer centricity, it is actually an ongoing capability. What I mean by that, it is not a destination, so you never really get there. You are always evolving. Being closer to consumer, it is about using everything that you have at your fingertips, and today, with digital tech and AI, to really be open to the insights that are happening in the marketplace, either us as the company or the bottlers, our customers. But that opportunity that we have of being a global business that generates 2.2 billion servings a day, we have a point of contact, physical point of contact with the consumers that cannot be neglected, and that can be transformed into a huge opportunity for us to be closer to them.
We are paying a lot of attention on how these data points now generate the right insights for us to move into the four Is that I have talked, that is so important for this connectivity with the consumer, which is insights first, that generates the right innovation with the right intimacy by market, and finally, the integration with digital along. We have done a very good job with the FIFA World Cup, integrating the four Is. Most recently, one that I love is the Coca-Cola Zero Zero Zero , which is a redesign of a Zero Zero version that we had already with the consumers. But as the consumers started to dial during the day the caffeine intake or the energy pickup that they need and less towards the evening, we thought that would be a great opportunity.
The European team actually got that insight and translated that into a very unique package with black and gold design, and that has been doing really well. It is a great indication of following the consumer and now accelerating an opportunity that can travel the world as well.
Okay, great. Let us stick with the consumer. During earnings, you described the global consumer backdrop as uneven. Pressure in some markets—
Yeah
resilience in others. From where you sit, how would you characterize the state of the consumer today, and what are you doing differently to make sure the company keeps winning with consumers
Yeah
when they spend?
It hasn't changed, actually, from the last time that we were together talking about it a few months ago. Continues to be uneven, very dynamic all over the world, which then reemphasizes what we also have been fully aligned with our bottlers in working to provide the consumer the choices that they value, that they actually see that being worth it choosing in an environment where the low income consumers continue to be pressured. That doesn't happen in the U.S. only. It happens in different parts of the world. You need to provide affordability options to meet the consumer where they are. In that case, with the low-income consumers, looking at the daily disposable income that they have designated to beverages, what is the choice that you have for them? Equally important, it's the premiumization part of this revenue growth management opportunities.
To that extent, market by market, we have, in the algorithm, a portfolio that taps into that opportunity. In the U.S., we have Core Power, for example, on a category-wise that plays in there. Or the premium packages like the multi-pack mini cans in the retail segments. Innovations that can help you with the premiumization. This, market by market, is evolving and helping us to be closer to the consumer without letting go a huge opportunity that's still out there for consumers that are less sensitive to pricing, and that want to continue to connect with the brands that they love in the need states that they need to carry on during the day.
Okay. One of the clearest investor debates over the last year has been whether Coke can move back toward more balanced growth between volume and price mix-
Yep
without sacrificing the quality of that growth. You've been off to a strong start first half of the year. But how do you think about the durability of that balance over the medium- term? And what guardrails do you use to make sure volume growth doesn't come at the expense of market structure, brand equity, or long-term bottler economics?
Yeah. Look, what we said at the beginning of the year, and it continues to be where we expect to aim for, is a balanced growth, which means volume and price mix coming in tandem. We knew that this year, when we spoke about it last year, that would be a year that would be a little bit more skewed towards volume. But invariably, what we see is that quarter- on- quarter, you're going to have a few quarters that are more skewed to volume, others to pricing. But if you look at this from a longer period where we aim for and we believe is the right way to grow the industry and to capture our fair share, is to aim for a balanced growth algorithm, where you have volume and you got price mix playing in tandem.
With that, aligned to what I was saying before, using the discipline of the revenue growth management capabilities and being closer to consumers, we believe that this is a flywheel that will continue to deliver over time. But it requires that constant discontent of looking for opportunities to be faithful, to be close to the consumer, and add the right value moving forward. And that's what we have been doing to get to the algorithm.
Okay. When you think about the affordability at Coca-Cola, how do you think about that? How does it translate into revenue growth management? Because affordability is a word that we've been-
Yeah
throwing around now for a few years.
Yes.
Unfortunately, it's a topic.
No. Yeah. Look, it's a word we all, as consumers, sometimes we forget that we've been consumers all our lives, and in different instances, you wanted to be with the brand, but you wanted something that would fit your pocket. There are other times you wanted something that would be a need state that you're willing to go a little bit more with convenience. The way we look at affordability overall, it's under the umbrella of really being consumer centric and telling the consumer, independent of where they are and their disposable daily income opportunities, it's about giving them the value, being relevant to the occasion, right? In developed markets today, 75% of every beverage that the consumers drink in the developed markets are paid for. It's a huge opportunity there.
In developing markets where the majority of the population sits in, only 25% of the daily drink intakes are paid for, the commercial beverage. When you put it all together, it's very important that you have the right choices to continue to be with them. The affordability, at the end of the day, it's about being worth it choosing, but it's not about price only. It's about how the brands connect with the consumer on their minds, their hearts, and their pockets, and then the whole equation works accordingly. That's how we see it.
Okay, great. You've often shared the ambition to, quote, Get more from more.
Yeah.
An area where that seems particularly relevant is innovation.
Yep.
What do you think the c ompany has made? Where do you think the company made the most progress recently? Where do you still see the biggest opportunity to improve the speed, quality, or scalability of innovation?
Yeah. Look, innovation continues to be something that not only excites the industry, the consumers. After COVID, we had the period that the industry overall was actually coming out of a period where a lot of companies, including ourselves, pruned our brands, and Coke went from 500 to less than 200 brands globally. Then we became very effective on the way on the supply chain moving forward. But naturally, as the consumer started to get out of that and go out again, innovation became important on their daily lives. New categories, new flavors, and more variability during the day. Equally, we being the leaders of the industry and being close to the consumer, started to also bring innovation accordingly.
What we have been improving, and it's clear focus for us in this next chapter, it's about leveraging the four I's that I talked about, Insights, Innovation, Intimacy, and Integration all together. To be faster at identifying insight and accelerating lift and shift. I gave the example of the Coca-Cola Zero Zero Zero that was in front of everybody, but until we redesigned that for the consumer using the real insights, the unlocking of that growth wasn't there. When we did it happened. Sprite + Tea, which I don't know how many of you listening have tried the product, but it was driven from insight from social media. Consumers all over the world were putting tea bags on the Sprite drink, like they do with dirty sodas and all of that. It became something that we said, well, that makes sense. We tested it. We launched in the U.S..
It worked well as a variant of Sprite. Fast-forward, we lifted and shifted to China, which is a key market for tea, and I reported in the second quarter earnings as one of the highlights on innovation. But again, followed by clear insights that innovated with purpose and then integrated for that particular market. So where I see this going is more of those, which is innovations that make sense to be accretive to the overall portfolio, not bringing complexity, but bringing precision about how to meet that consumer needs at that particular market to be accretive to the overall equation of the bottlers and us as a system. It will be equally important to grow from local than global platforms moving forward. So we're excited with the direction of travel, and still a lot to unlock in that, using here my discontent.
Right.
Yeah.
You mentioned the bottlers. I think one thing that's always interesting, checks and balances in the system, right?
Yeah.
Is having an idea that's exciting at a corporate level, but needing the success of any innovation is the bottlers have to get behind it.
Of course.
But it can be something that is very small
Yeah
on their truck.
As you have been talking to bottlers about bringing back more activity, not just activity.
Yeah
more high quality innovation, how would you describe maybe that back and forth?
Yeah.
Yeah.
Nowadays, we enjoy a really, I would say unprecedented level of alignment on the vision of this whole concept of the three beliefs and the three principles moving forward. It's a very honest conversation about, look, if we have the consumer pipeline aligned to launch this year or next year, a lot of times the ideas come from the bottlers or their customers because they're closer to the market. This is something that we evolved over the years. It's not about the company bringing what's the best for the consumer. It's about us as a system being, and our customers included, on what's the next one. But we have a very disciplined process to identify these ideas.
Through our innovation council that all the senior leaders of the company sit at, we measure not only whether that it's meeting all the parameters to be tested, and we also learned over the years that an innovation or a new brand would take at least 10 years to become a $1 billion brand. You might have an outlier here and there, but invariably, that's what happens. The measurement of every data point after launching allows us to identify the ones that are going to have a good path and the ones that are not. When you do that, you actually go from what I was saying in the beginning, which is you go from adding a complexity to adding precision to what the consumer wants.
That added product or variant, yes, there is a increased complexity during the production and the way to go to the customer, but because of the throughput being better, it actually pays back big time. Then it becomes something that's interpreted as a precise innovation rather than bringing complexity. Okay?
Yeah.
Examples of that is what we have done here with Mr. Pibb in the U.S. A lot of discussions around how to redesign the whole proposition, and the North American team did a tremendous job. They not only brought the product with a more bold cherry flavor, with a tad of increase in caffeine levels, and it's a great product that I also talked about in the second half that it's doing well in the U.S.. All of these, at the end of the day, brings to the bottlers the assurance that we're doing the right thing for the consumer and for the customers, which for them is also right.
Okay, great. Would you say in this vein, is the bigger opportunity scaling today's billion-dollar brands-
Yeah
on the more for more, or is it identifying the next Santa Clara or the next fairlife-
No
and scaling it faster?
We all have our bets internally of what's going to be the next one. It's equally important to bring maybe one or two to the family on a yearly basis or in a few years, but also to get the current ones to continue to perform. The game plan is always the ones that are billion- dollar brands now to become multi-billion dollar brands, because the scale matters, and we have a very pervasive distribution system and reach that can allow us to get there. The new brands to the family, they can come naturally being developed locally, which happened the last two ones. One was Innocent Juice that came from the U.K., and also Santa Clara, which is a dairy product from Mexico. They raised to that, and now their game is to stay in there and to continue to deliver even more.
We believe that it's going to be both. We're going to get more coming locally into a more scale and globally trying to get the billion- dollar brands delivering more to that. With that, we are really walking towards what I have been saying, which is this principle to get more from more countries and more from more categories. In a business like ours that performs in 200 + countries and having 32 billion-dollar brands, if I get more from countries and brands, my chances of continue to deliver a very durable long-term growth algorithm, it's increased. That's how we are tackling this strategy moving forward.
Okay, great. You have called digital Coca-Cola's next superpower.
Yeah.
You said a priority is placing digital at the core of all connections. This is a very broad question.
Yeah.
But what does success look like when you think about digital across consumers, customers, and just the broader Coca-Cola system?
Yeah. So digital is such a
Yeah
big topic that I had to summarize this in a very simple way, and I've been very consistent how I'm saying that our journey as a company, as a system is. The whole digital space for us, it's about doing better what we already do best. And why? Because after studying a lot of the digital attempts that we have been doing in the system and roll out and talking to our partners, the ecosystem that goes around it, what is very clear is that the return on investment, it's bigger on capabilities that you already are good at, and especially in a business like ours. Then if I can add data digital and AI on top of it, that then becomes a superpower because it's augmenting our capability to do something that we already do well, better. Okay?
To that extent, we're clearly tapping into how we engage with consumers differently, how we engage with customers, also leveraging that, and enterprise-wise as well. Those three. On the consumer front, we mentioned here that we continue to use more and more AI and GenAI on the creative part of the campaigns. The newest one, it's Fanta Halloween. I don't know if you have seen it. It's amazing, the videos, and you can scan the can through the QR code, and it's going to take you to the content of the campaign. Not only that, takes you to a reward experience and links you even finally to a customer, which then translates the whole digital experience from the first interaction, the first-party data being there, all the way to a transaction.
It's early days, but it's very exciting for us since the FIFA World Cup, how we're integrating this whole experiences of bringing the consumer and the package, which again, I have to reemphasize it, that we generate 2.2 billion servings a day. To fast forward with a vision that a good part of this becomes a portal into a digital space. As you scan it can definitely amplify your connectivity with the consumer there. That's very exciting. The creative part, which is also very important, we are doing the creativity work or the campaigns with a fraction of the cost and a fraction of the time. On the customer front, we continue to digitize also our reach of digital platforms. We serve today 33 million outlets globally. Today, we have digital platforms for a little bit over two-thirds of that outlet reach.
We still have about one-third to go. But we're feeling good about not only getting there, but getting this connectivity with a tool that helps our sales force and the customers to have a good interaction and generate accretive sales down the road. It's difficult for us to quantify now, but the more we test this, the more we believe that we're going to get to that space. Finally, the enterprises with the bottlers and us, we also generated not only with the creation of the Chief Digital Officer reporting to me, but the creation of a CEO system digital council. That connectivity at the top of the house of all of us to talk about this topic that's so important for us in the next chapter moving forward. With all that together, early days.
Yeah.
Again, a bit discontent that we can always go faster, but very happy that the progress is showing up month on month on each one of these pillars.
How would you describe the remit of your Chief Digital Officer? How do you want her to be spending her time?
Yeah.
Because this is a lot.
It's a lot, yeah.
What are the priorities?
Yeah. One of the key things that we did is we thought a lot about that, but had no doubt at the end that we needed someone that was a business leader from the system, that had worked in different departments and different parts of the world. Sedef brings that, and also helps us to galvanize the network that we have of activities around digital in a way that is conducive to the operators and to the functions and to the bottlers to help us to do better what we do best. It's not about being a function that centralizes everything that they do. It's actually orchestrating how digital can be embedded in everything that we do, and naturally, this becomes an enabler of us executing the strategy better internally, externally, with our customers and consumers. It is a big job for her, but she's not alone.
She is actually with all of us together in this journey. She sits in my leadership team. We are all learning together. This is another way that we have learned is, if we want to lead this transformation, we need to learn and be humble.
I learn every day, and every day, I learn how much I do not know about it. I think this is equally important in this journey. It is how you leverage the ecosystem, but you do not lose the essence of what we are. We are a total beverage company with the most loved CPG brands in the world, and that is what we are about. We need to use digital and all the other enablers to just potentialize this even further.
Okay, great. Another great takeaway from CAGNY was the intersection of scale and granularity-
Yep
the FIFA World Cup gave investors a really visible case study in what that could look like in practice. What did the FIFA World Cup teach you about the system's ability to turn a global asset into local execution at scale?
Yeah, a lot. I hope we've all learned with the Spanish team as well, right? They did a tremendous job in there. I really mean it because they played as one team, and they deserved. I think the World Cup was a very positive surprise to everybody. For soccer, football lovers like I am, we knew it could be big, but it was even bigger. The excitement of people, fans and around the world. I don't know if you had the chance to go to one of the games. You went, I think.
In Atlanta.
Yeah. Okay, awesome.
Yep.
You could tell the power of venues like these to actually bring people together, then having your brands connected to that special moment. They bring memories that are going to last long. Our job, it's actually to continue to ignite those memories into something that's going to carry on in different parts of their lives, then continue to recruit more consumers into our brands moving forward. We are ready for that. We have been doing the World Cup longer than any other company. We're the longest standing partners, and we knew this could be a big opportunity for us to do that integrated plan, going from everything that I said about the venue itself, but the brands connection, the execution in digital helping us along.
We have learned that with that, we added significant number of first-party data, which helps us to continue the dialogue with the consumer. After the FIFA World Cup here, if you would have a can or a bottle of the FIFA World Cup and you would scan the QR code, you would get a message that how great FIFA World Cup was and everything, but more importantly, what was coming next as campaigns moving forward. That became also an opportunity for us to talk to the consumer, not only about the venue, but what is coming next. To me, that is the biggest takeaway for us as a system is making the venues, the assets, being real part of the brand coming to life, and how you continue that conversation into other venues.
That is how we are building, actually, the plans for the rest of the year and for 2027 and beyond as well. Great learning.
It has also been interesting because you are taking a global asset, treating it local, but we have seen the return of more local and regional competition, too. Switching
Yep
themes a little bit here. How does a global brand company best compete in a more local world?
Yeah. It's funny, but we actually do that every day, everywhere. In the U.S., we compete with the U.S. great players. In Spain, you compete with not only global brands that are there, but the local brands. In India, the same. This is something particularly very interesting of The Coca-Cola system is that we are global enterprise, global system, but we operate very locally. We are manufactured by local citizens. Our customers and consumers are also local. To that extent, what we have been doing is you have a playbook, which we've learned over the years, on how to segment these markets into their development stage and their consumer demographics. Then combining them together, you have a proposed great portfolio. As a consequence of that, your final portfolio to deal with an opportunity in one market is different than another.
India, out of the top 10 brands, seven brands are ours. Four of them are global brands, and three are local brands that we acquired in the past, but they continue to be very relevant, so it's important there. Then you go to a market like in the U.S., that a lot of the brands actually were established in here or acquired over time. So that's how we play. At the end of the day, it's a global enterprise, but we never lose that touch. One of the key elements of not losing that, it's our bottler footprint. They are very local, and they know the customers by name, and they know everybody, and that brings that chances of us having a better innovation and better portfolio to win in those places.
Okay, great. Let me just follow up quickly on India. I know it's sort of non-linear trajectory-
Yep
in general, but-
Yeah
What does success in this market look like to you over the next several years and the right balance between the right level of support and not overreacting to competitive pressures?
Yeah. Which is always a thing, right? It is how you don't overreact to noise, but really act on the signals. India, it's definitely a long-term game for us. We see the opportunity there of continuing to go the industry and do that the right way, and I'm going to elaborate on what I mean by that. It's about mastering the fundamentals. One of the things that we've learned is that the markets that are most resilient today to any headwind that you have were the markets that mastered those fundamentals, which is building the right packaging architecture and the right brands under the revenue growth management foundations. You need to stick to that plan. The noise will come. You might lose share in one quarter here, or you got something else and another player will have an irrational play on pricing.
This is all things that happen in a market that's still being developed. But staying true to that disciplined process and the playbook that has paid back over time, it's how we're going to continue to play that game, because it's definitely a market for the long- term. To your point at the beginning, that's never a straight line, it's never a straight line. But we always aim for a line that goes like that, right?
Yeah.
The direction of travel, the inclination of that curve it's actually upward.
Okay, great. Let me just squeeze in one last question. If we were to look ahead three to five years and the company executes successfully against the priorities that you've outlined around consumer centricity,
Yep
constructive discontent,
Yep
and digital, what do you think investors will say is most different about the company then versus now?
Well, I really think that you're going to see that we're not going to be a different company. We're going to continue to be The Coca-Cola Company that a lot of consumers, customers, and we know investors also like, because we are a company that really believe that we're here for the next 100 years and so on. Keep really the long- term in place. What will be an evolution to where we are on this next chapter, I think will be on the three principles that I talked about. On the consumer centricity capability, I truly expect that we're going to be more granular on getting more for more countries and more for more categories. Because if we really follow the four I's, we're going to be better at having a hit rate on that. So that's number one.
On the digital front, I totally expect that you see naturally digital being embedded in every interaction that we have with the consumer, with the customer, and with the enterprise. How much we're going to get out of that, Lauren, it's something that it's yet to be seen. Do I believe that this is going to be an enabler for us to do better? Yes. We have the signals that it is. The third one, it's the mindset that I truly believe that we have a great mindset today as a system. The leaders of the bottlers in the company believe this is the best industry to be in, but it has to be part of the culture.
A high performance culture and system that will continue to prevail and win will really be the ones that have no problem to celebrate the victories, but to be even more excited with what we didn't accomplish yet. I really see that in the eyes of our bottling partners and the c ompany leaders that are with us in this journey. That's what we expect in the next five years.
Okay, great. We're going to stop there. We are going to do a breakout, but please join me in thanking Henrique.
Thank you.
and the team, and for all of the drinks all week, too.
Yeah. Exactly. Thank you.