Coca Cola 2005 Annual Report Download - page 34

in this area, sharing learning across the system and capitalizing on immediate-consumption opportunities.
Focusing on revenue growth is an enabler for the financial health of the Coca-Cola system as a whole. Markets
where we effectively implemented a segmented brand, package, price and channel strategy as a system have seen
strong results.
At the same time that we are focused on revenue growth, we are also focused on working with our bottling
partners to reduce system costs and improve system efficiencies. Together with our bottling partners, we have
created a supply chain management company in Japan and supported the creation of a bottler-owned supply
chain organization in North America. By pooling the resources of bottling partners, we have reduced the costs to
manufacture our products. This type of supply chain initiative is being replicated in China and Africa and a
number of other markets. We recognize that our ability to respond to customers’ needs as a system provides a
significant opportunity for future growth. Therefore, we are committed to improving our route to market and
our response to customers. For example, in Mexico, we created a joint sales company for noncarbonated
beverages. This sales company is focused on the efficient sale and distribution of noncarbonated beverages to
customers that span multiple bottler territories.
Executing with Excellence Globally
Our business demands excellence in execution. Our business is not overly complicated, but we operate in a
dynamic, fast-paced environment of global markets and competitive economies. Excellent execution requires
discipline, concrete objectives, routines, reporting, follow-up, asking hard questions and the desire to take risks.
We must efficiently transfer the knowledge and insights we have gained from successes and failures from one
market to other markets around the world. The nonalcoholic beverages segment of the commercial beverages
industry provides opportunities for growth, but it will take a relentless focus on execution to capitalize on those
opportunities.
We have identified several specific areas that provide opportunities for growth. We believe significant
growth potential exists in diet and light products, and we intend to make investments to accelerate the growth of
such products. We also believe that the immediate-consumption channel offers significant growth potential, and
we plan to expand our offerings in this channel. We must ensure that our family of brands is selectively and
profitably expanded to address consumers’ changing preferences. In every market, we must focus on the
financial health of the entire Coca-Cola system. We must look for new opportunities with each customer and
allocate resources to maximize the impact of these opportunities. We believe we can capture this growth by
focusing on our core brands to maximize the potential of each brand and through additional innovation.
Reestablishing Our Marketing Leadership
In 2005, we created our new Marketing, Strategy and Innovation group. We created this distinct group to
ensure that these three functional areas are fully aligned and integrated. Carbonated soft drinks remain a
fundamental and profitable part of our family of brands, and we believe we should invest in marketing our family
of brands more aggressively than we have in the past few years. In addition, we need to further expand our new
products pipeline and continue to develop our innovation capabilities. Accordingly, we increased our marketing
and innovation spending in 2005 and intend to maintain the increased spending level for the foreseeable future.
Challenges and Risks
Operating in more than 200 countries provides unique opportunities for our Company. Challenges and risks
accompany those opportunities.
Looking forward, management has identified certain challenges and risks that demand the attention of the
nonalcoholic beverages segment of the commercial beverages industry and our Company. Of these, four key
challenges and risks are discussed below.
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