[Anil Chakravarthy] Now, in the meantime, there's no better way to bring what we have discussed to life than through a real-world example. In this case with one of the most iconic brands in the world, Coca-Cola. The Coca-Cola Company is rightly recognized as a leader in creativity and marketing. So, I am really excited to welcome Shantanu back to the stage with the Chairman and CEO of the Coca-Cola Company, James Quincey. Over to you, Shantanu. [Music] [Applause] [Shantanu Narayen] I'm delighted to welcome a leader who has redefined innovation, sustainability, and global impact at one of the world's most iconic brands. As chairman and CEO of the Coca-Cola Company, James Quincey has driven transformation, expanding beyond classic beverages to meet the demands of a changing world. And with a career spanning multiple continents and cultures, he brings a global perspective on leadership, innovation and reinvention. Please join me in welcoming James Quincey. [Applause] So, while I pour myself a drink as well, James... [James Quincey] Go on. [Shantanu Narayen] ...rumor has it that at your first employee meeting as CEO of Coke, you neither wore a suit for the first time and you had a beverage from the Coca-Cola Company but that was not Coke, true? [James Quincey] True. [Shantanu Narayen] What message were you trying to send? [James Quincey] I was trying to send two messages. One was, we needed to move with the times. We are in the South. We were very formal, hierarchical, stuck-in-our-ways-type culture at the time, and we needed to break out of it. And so the message, and actually, if you look at it when I was announced and all the fancy shows like this that we did and the investor stuff and blah, blah, blah, if you'd asked people the next week, what's the one thing they could remember? And the answer was he wore jeans, and it wasn't Friday.
I know that's weird for all you tech people, but like, that was a big deal ten years ago at the Coke company. And I got a lot of hate mail, from local tailors whose business way was the top people in suits and all sorts of things. But the message was very clear about the culture had to change. And the second thing was about the product. We had got ourselves trapped strategically in the idea that we wanted to be a total beverage company, but everything we looked at, people said, But it has to be Coke first, and you have to love Coke the most, but you can't have a total, you can't have all these different apps, if one has to be loved more than the others. You need to be able to choose. You need to be able to choose Topo Chico and I need to be able to choose Coke. And if you don't allow that, you trap everyone in a brand strategy that doesn't let the people choose. You're trying to sell what you make rather than make what sells. And so, the two things had to be broken down. And the reason I did it by what I wore and by what I drunk is a very famous old CMO of Coke once said, Everything communicates, and largely, it's not what's on the PowerPoint, it's not what's on the screen with all the fancy technology, it's not what the CEO actually says, it's what he does. And the thing they can remember is I was wearing jeans, and I wasn't drinking a Coke on that day, and that was a very powerful communication for them. [Shantanu Narayen] That's great. we'll go back a little bit. I mean, one thing we both have in common is we were actually aspiring electronics engineers. [Shantanu Narayen] We could spend our time talking... [James Quincey] It's leaving behind.
[Shantanu Narayen] We could spend our time talking about transmission lines and capacitors and inductors, but I don't think people are here for that. But just a little bit about your personal journey. I mean, I know you were in consulting for many years. You joined Coke in '96, and then you actually had a significant amount of global positions that you had and drove growth in Latin America, Mexico, Asia, just maybe a little bit about the leadership lessons, and especially the global ones.
[James Quincey] I think the first thing I would say is there wasn't a grand plan. So, all of you out there who haven't had a 20-year career plan written out for the last 19 years, I didn't either. I'm not saying that's necessarily the best advice for everyone to just go with the flow. But I had joined companies, whether it was in consulting or at Coke, that was very interested in growing the people and their capabilities. And so, the opportunities came along. So, I didn't have to have a weird career plan. I just went and did things that were interesting. So, I always say, as one of my bits of advice, is do something that you're really interested in, because the chances of you getting out of bed in the morning and giving your best are much higher, if you like what you're doing than if you don't like what you're doing. So, like what you're doing. The second thing that I would say is, particularly as it relates to Coke, and Adobe's absolutely the same, growth is what drives the machine forward. And so, in each of those general management jobs, there came a time where something bold needed to be done, some reinvention was needed. And so, having the courage to make the bold decision and go all in on something, I mean, you changed the way Adobe was connected to creativity and marketing. Every one of those jobs had a moment when there was a super big decision that was needed, and being courageous enough to do it is relatively rare in general management. Lots of other people, there's lots of process and blah blah blah, and it goes on forever. But actually, I know this is the moment for the big decision. It always came at some point.
[Shantanu Narayen] Well, you talked about reinvention and Coke, certainly, I think a lot of people here may not even know that while Coke was known for the first 100 years, you've really transformed it to this total beverage company, as I read it, 200 brands, and 30 of which are more than $1 billion of business. So, for everybody in this audience, how do you think about innovation? I saw a presentation of yours where you called yourself the chief agitator for innovation. So, maybe touch on that, James. [James Quincey] Yes. I mean, innovation firstly comes in many different shapes and sizes for us. It can be a niche thing, we're just putting something out there to get attention and bring people back to the core franchise. So, putting out a Coke in Oreo flavor, it's never going to last forever. But it brings attention back to Coke, the main brand. So, innovation has multiple roles. About whether you're trying to create a new thing permanently or whether you're trying to bring people back to an existing franchise. It can be about the packaging, it can be about the marketing, it can be about the way we do the marketing. But when we're talking about the core product, it's really about trying to serve unmet needs and expand the universe. As the industry has grown, you started with Coca-Cola, you started with a cola, and then you've got, eventually, after decades and decades and decades, that someone said, Well, what about a calorie free one? And then someone said, Well, what about a caffe? So, they're always looking for the feelings around the big ideas. The problem at Coke is we have more ideas than are ever going to work. And so, whilst I have one role which is chief agitator, to do something, whether it's continue to make the core brands relevant for the next ten years, as they have been for the last 140 years, or do something new. I'm also - and the PR people tried to stop me in the old days from saying it - I'm the chief zombie killer because whilst we have 200 brands now, five years ago we had 400. And that's the brands. If you think they come in multiple package sizes, the number of brands times number of packages is in the thousands. And every brand manager turns up, I don't know if it's the same at Adobe, Shantanu, and they see a product that's struggling and it hasn't worked for the last three years, and they go, I can fix it. Just one more campaign. We can do it, or one more reprogramming or whatever. [Shantanu Narayen] We'll produce the content for you. [James Quincey] Yes, exactly. And we've got lots of people who love your stuff, and they keep producing. But now it's like, no, the time has come. It needs to be put to bed. And so actually, the 200 used to be 400. And again, in the middle of COVID, we took the decision to kill half of the brands. So, I agitate but I'm also, if it doesn't work, it doesn't work, and it's got to go. [Shantanu Narayen] We'll get into marketing because the entire audience here is about marketing. But before that, just one other thing that fascinated me about the Coca-Cola Company is your ecosystem of partners. The bottling partners that you have. You have 33 million customer outlets. And I think you've talked about how people across the entire chain should be profitable. So, maybe just the business strategy around having this incredible ecosystem of partners. [James Quincey] So, let me describe it, and then say why. We, the Coke Company, focus on the brands, the marketing, the innovation, the strategy and the orchestration. We then have several hundred, what we call bottling partners. They physically receive a concentrate, the secret concentrate from us. They then get water, fizz, sugar, other ingredients, and they physically put them in bottles, put them on the trucks and take them to the 33 million physical outlets around the world that we deliver to each week. And we're selling approximately 2.2 billion eight-ounce servings of our products every single day. So today, there will be 2.2 billion of our products consumed. So, it's a massive physical system, and that's just us and the bottlers, and then you get the metal and everything else. It works for us because we cannot be good at everything. When I started, we owned 40% of the bottling system. And we were at best mediocre at being bottlers. And at times we were on a trend to be mediocre on other things too. And we had to be true to ourselves. We're really good at one set of things, and we can find another set of people who are really good at bottling, which is very different, it's much more asset heavy. The margins are less, it's much more people. So, the 750,000 people who work in the Coke system, us and the bottlers, of which less than 50,000 are in the Coke Company. And I'm including some of the bottling companies we still own. The vast majority of the people and assets are here, and they're great at running those things, and we're great at running a marketing mission. When the franchise system works, it's unbeatable. Because you have both the global perspective and scale of the company and its brands, and yet each bottler is local to the place they're in. There are 60+ bottlers in the US. There are multiple bottlers in Mexico. They're all different, and they love the bit of the world they're in. They own that dirt and go to market every day for that dirt. And we don't forget about any corner of the world. [Shantanu Narayen] So, let's talk about building brands then. And when you talk about global versus local, 2.2 billion, eight ounces sold every day. How do you decide, how do you build brands globally versus what's local? [James Quincey] Yes, that's an eternal struggle. And the starting point is, we need to make the brands relevant for each group of consumers. So, the relevance of the brand is the key. And what that generally turns into is a set of decisions. We're going to prioritize brands and products that can be global. So, I'm not looking to acquire a portfolio of zillions of things that are just relevant to one city at a time. I would prioritize things that can be relevant around the world. But if you take something like brand Coca-Cola, the focus of the marketing is, the core idea is, there're some things that are true about humanity across the world, optimism, happiness, the idea of a better world. There's no way that that's not true. And it's linked to the Coca-Cola brand. But how that's brought to life in each country has to be profoundly local. So, we have both global programs and a framework or a corridor in which Coca-Cola and all the other brands must operate. But then it's brought to life differently in every country. In India it's with biryani. In other places, it's with tacos in Mexico, it's with burgers in the US. And so, it's profoundly brought to life. If Coke and meals is the idea, sharing a Coke at a meal is a universal idea. But the meal and the location of the meal, and whether it's a couple of people or the whole family, is very local, food is much more local than beverages. If you break the industries down, food is profoundly local versus beverages. And so, what that looks like in every country is different. [Shantanu Narayen] You touched on Share a Coke. And one of the things that I was really amazed with is how you've actually engaged by having customers in your marketing for decades. And you know the story around how you started the Share a Coke with the intention of everybody being allowed to have their name on a brand. That was pioneered well before social marketing, or social media. How do you think about integrating customers in your campaigns? And the pros and cons of that? [James Quincey] So, firstly, on Share a Coke, it was really one of the first pieces of digital marketing at scale. The reason it never happened before is not because the idea of personalization never existed. It just was not practical at scale. In your intro, you have creativity, and you have scale. For me, I can find plenty of creative people with lots of ideas, whether it's customers or... My pushback is how will it ever be big? And so, I think digital marketing, you could always print your own label and stick it on a can. But when I make 2.2 billion a day, for those of you interested in the technology of how you make a label on a bottle, the label on the bottle comes in a mega reel. Like, I'm not exaggerating, a huge reel of labels that is tens of thousands on a reel. But to print that reel is like printing a newspaper. In the old days when it was analog, they all had to be the same. And so every bottle had to be the same. But with digital printing, the digital printer can print a different name on every label on the reels. You can have thousands of different names. And so suddenly, it was one of the first times that the digitization of the execution of marketing could produce a much more personalized experience. It was probably like, almost 20 years ago now. And that was the beginning of actually being able to do personalization at physical scale. You could do it in emails, but physical personalization. Now you can go to the Las Vegas Coke store here, and in 30 seconds they'll print whatever you want, beautiful high-tech printing. And so that kind of personalization at scale really matters. When you want to then engage with customers, actually, you call customers, the people, end-consumer, we call them consumers, it gets very confusing. Customers are the retailers for us. But the end-consumer really wants to be the center of their own story and narrative. And that's part of what all this personalized creativity is about. It's engaging them in their own narrative. Now, we could enter into debate as to how social media is putting people at the center of their own universes, and the pros and cons of that and where it's leading us. But that is part of what's going on, is they want to be the center, or a protagonist in their own story. And so, this digitization, not just of the virtual world, but the physical world, can make them the protagonist in their own story, which is profoundly attractive. [Shantanu Narayen] More recently, I think, during the holiday season, you actually pushed the envelope with using AI in some of these campaigns, and a lot of people may not know you actually started that work well before AI sort of became mainstream. Maybe just the role of technology and AI and marketing and as you thought about that campaign, what were you trying to focus on? [James Quincey] Yes, we've always been in AI in the process and the analytical side. And obviously as a massive marketer, as we've been able to personalize communication, whether it be emails, people have personalized voice communication or text or whatever, the opportunity to go to GenAI, the breakthrough in GenAI we had no idea how to use when we jumped on the train because we said, Look, that's the way the world's going, let's at least get on and let's understand, because we're big and that tends to make us slow if we're not in at the beginning, For us to get to scale, we often end up too late, and so we started with the GenAI on the pictures, and actually one of the first scale usages of GenAI on pictures. We print a lot of point-of-sale material, those 33 million outlets we go to, most of them are pop stores in the emerging world, and there's a picture of a Coke, someone drinking it with an ad. In the old days, there was a photographer and a specialist somewhere, putting all that together. Now there's a GenAI program that can have a picture of me and you having a pizza or a curry, sharing the drinks you want to drink, and if they want to change the drink, you've got it, they just press the button on the GenAI and they can print it and send it to the source. So this revolutionary static imagery has occurred thus making a huge change the way marketing happens, physically printed. The next stage was when's video coming? And that has come now. The ad we made for Christmas, for those who haven't seen, you can look it up on the internet. It's a nice Christmas ad with the polar bears on the truck, what's interesting about it are a few things. One, it was cheaper to make than historical regular ads. It was much quicker to make. So it was a huge productivity opportunity. The limitations? What couldn't it do? It cannot produce resolution on people's faces that humans will buy into. So the boundary is still inanimate or kind of animal scale resolution of the picture. We generally want to make ads with people in. So it's super interesting because you can make a video with music and voice and you can customize it endlessly, and we can talk about where customization could take us. And so it's super exciting, but it is not yet at the stage when it can make all our ads. Because we want people in them. And humans are incredibly effective at noticing AI that's not actually a human. It will get there, I don't know how long it's going to take us, but when it breaks through and marry that idea with what is the ultimate unit cost of making that, and I think it's going to be a huge wave of marketing revolution and creativity. [Shantanu Narayen] So maybe just looking around the corner and if you had a wish list of how you would like creativity and AI to help you transform how you market to consumers, what do you see around the corner? [James Quincey] As someone once said to me you can't see over the horizon. I think there's a kind of a struggle between two ends of the spectrum. One is as the technology develops and especially as humans can be resolved into the GenAI programs, the question will become in part, what is the cost of every time I make it? Because let me give you the kind of the futuristic one end of the spectrum, which is the cheaper it gets to make GenAI, the easier it is for me to put you in the ad on your phone and put someone else in the ad on their phone, because I just pick up your picture and drop it in the ad. So I make you the protagonist of the ad. If that's cheap to do, great, I put you in. The next stage is to say, Well, you looked at your phone, but you didn't buy the product, and I know you didn't buy it. So today what happens is it goes back to a bunch of humans, and they notch their teeth and they go, Well, what can we do to make sure Shantanu clicks, yes? In the future, the AI can do that. It can go, Well, okay, he didn't click yes but let me... If it's cheap to redo the ad, I'll just make a few changes in the ad like a A/B test and redo the ad and then reshow it to Shantanu and see if he clicks. And I'll keep changing it until he clicks, yes. And so the lower the cost of the ad, the more I can set up GenAI plus some sort of intelligent engine to chase you until you click yes.
At the other end of the spectrum will be a whole load of annoyed consumers.
And they will start going, Man, this has gone from Minority report to something really weird, now I am in it? I want to buy those apps that block everything.
And so I block everything. And where does Coke then spend its money? Maybe I have to spend it on live experiences, because the only thing you can't avoid is a live experience. Look at how live experiences are growing. Look how the music industry is trending. All the money is in the live experiences. So this interplay between creativity, the cost of the creativity, people's level of annoyance, between being flooded and live experiences, in the center will be the quality of the creativity. I'm willing to let in the best stuff. I don't want to be spammed with rubbish. And that interplay between these three different polls, I think we would put a premium on core creativity. [Shantanu Narayen] Maybe last question. As you sit at the center of one of these largest companies with an iconic brand, we all think about purpose, and we all think about responsibility. So maybe just a little bit about as CEO of Coke, how do you think about advancing purpose for companies? [James Quincey] Well, firstly you've got to understand what it is. And I think we have reflected on purpose over the years and come back to the very essence of where we started, which was to refresh the world and make a difference. It's all about the business we're in, refresh the world. We're a beverage business, but not in any other businesses. People say, should you do the X, Y and go. If we're good at beverages, what's the chances of us being good at the next thing? Much lower. So let's just keep investing in beverages, especially as the opportunity is still massive and make a difference is in the end the inside, and you mentioned one of the ideas, which was everyone who touches the Coke business needs to make money. It's not set up so that we try and capture everything. We want everyone to be excited about working with Coke and they need to make money to do so. Because in the end, there cannot be a sustainable, successful business if the ecosystem and the society it exists in is not also sustainable and successful. And that then feeds into how we approach the economics, everyone needs to make some money, how we approach things like water or waste packaging, we have an objective to return all the water we use. Because if there's a problem with the water aquifer in the world, not necessarily the first, but pretty close to the first persons to be blamed will be us, irrespective of how much water we use. And so we're very focused on making sure that every element of the business, from the economics to the side effects, are all taken into consideration. And we can say we have for a set of policies that allow the business to be sustainable and grow in the very long term. [Shantanu Narayen] Let's end with a quick word association. I'll just give you a word, and whatever word comes to mind as a result of that. Birmingham.
[James Quincey] Getting better, not Alabama, he means England.
[Shantanu Narayen] Aston Villa. [James Quincey] Our time has come.
Champion League final coming.
[Shantanu Narayen] Consumer. [James Quincey] Center. [Shantanu Narayen] Olympics.
[James Quincey] Gold.
[Shantanu Narayen] Ice hotel. [James Quincey] Ice hotel. Awesome experience, got to be done. [Shantanu Narayen] The Coca-Cola Company.
[James Quincey] Iconic. [Shantanu Narayen] James Quincey. [James Quincey] Forgettable. [Applause] [Shantanu Narayen] Please join me in thanking James Quincey for being here. [Applause] [James Quincey] Thank you. [Applause]
