Taste of Innovations Coca-Cola Hellenic product portfolio strategy till 2020
As part of the case study, participants will have to develop the business strategy for increase of Coca-Cola Hellenic share in the Russian soft drinks market for the next five years with account for current market trends and growth prospects. This strategy may include any innovative ideas for the entire business area (not just a single function) that could be of the positive impact on the Company’s development. It is quite important that any suggestions are of practical nature and are feasible in terms of business application and economic effect.
Moscow 2014
Contents
CONTENTS
Introduction
Coca-Cola Hellenic Beverages Marketing and Promotion in Russia
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Coca-Cola System
Non-Alcoholic Beverages Market in Russia
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Manufacturing Capacities
Supplements
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INTRODUCTION
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Introduction
INTRODUCTION While waiting for his flight in the small airport, Sergey Fedorov1, General Director of Coca-Cola Hellenic in Russia, was enjoying the opportunity to relax a bit in the comfortable business lounge. Sergey had worked for Coca-Cola Hellenic for over ten years and had already become accustomed to extremely tight business schedule, important negotiations, and frequent flights all over the world so he knew well to value small pleasures. Sergey started his professional life as the Management Trainee2 in the marketing team of a large FMCG company. He was then invited into Coca-Cola Hellenic3 where he worked through a long and tumultuous path to the very top position. At various points of his career Sergey was in charge of direct sales, managed national customers department, and later (already as a general manager) he spent three years to gain cross-functional experience in Greece. Finally, Mr. Fedorov was appointed to the position of the General Director in Russia. As the executive officer of international company, a part of Coca-Cola Hellenic Group (one of leaders in the soft drinks market), Sergey often had to participate in meetings with representatives of large regional enterprises, state authorities, and various business entities. The General Director was well known for his innovative approach to business management. Sergey did make risky decisions a number of times, and that always brought in good results.
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Sergey was heading back to Moscow after a morning meeting with the leadership of a major regional enterprise. In Moscow, Sergey would participate in the meeting of regional directors dedicated to elaboration of the Company’s development strategy until 2020. Sergey would both moderate the meeting and make an introduction speech. The main goal of the event was to establish a range of initiatives for business development in the next five years, as well as to suggest innovations that would scoop in palpable gains on or before 2020. Sergey had long learned how to stay focused on his work during business trips. His positive and energetic nature enabled him to make all the important calls and work with his computer regardless of surroundings. From time to time Sergey afforded himself small breaks and looked around. It was his habit to look at the Company’s products wherever he was, be it a hotel, a restaurant, a partner office, or an airport. He paid attention to how well his Company brands were displayed and how much demand did they enjoy on part of visitors. Thus, Sergey set aside his computer and strolled down the lounge looking for Coca-Cola Hellenic products. He noted with satisfaction the presence of stand-alone refrigerator with Coca-Cola soft drinks, as well as juices next to the bar. Sergey took his favorite fizzy drink, got back to his seat and threw a couple of glances at the business lounge visitors. Two senior citizens were skimming through newspapers while sipping drinking water produced by his
Company. A toddler was really enjoying an apple juice and asked his mother for more. A young couple chitchatted and both held Coca-Cola cans in their hands. Sergey focused his mind on the topics of meeting with regional directors. What should the business be like in five years in order to satisfy consumer demand? What kind of message shall be put through the brand, what format shall be used to strike with originality? In Russia, Coca-Cola Hellenic was not entitled
to develop new flavors of Coca-Cola drink or to introduce changes into the existing brand, but the Company did have own manufacturing capacities for production of a large and diverse range of soft drinks. In fact, Coca-Cola Hellenic had almost limitless capability in terms of creating new flashy formats and images for well-known flavors. One of the successful examples was the recent launch of the new “Ruby Orange” Rich flavor – a mix of Brazil and Red Sicilian oranges.
All names and events in the case are fictional, non-public information about the Company can be distorted to protect privacy Trainee position Coca-Cola HBC AG (in text: Coca-Cola Hellenic)
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Introduction
Sergey opened his notebook to check again main points of his upcoming speech. On one hand, there was an approved global development strategy for Coca-Сola Hellenic until 2020. On the other hand, it was true that Russia had everything required for creation and implementation of own innovations that would enhance the brand awareness and increase sales of the entire soft drinks range (including juices, energy drinks, and drinking water). Sergey well understood that the task on his hand was not easy. As result of the meeting with regional directors he had to develop a comprehensive five years strategy for business development in Russia with account for current trends and consumer needs forecast. Sergey and his colleagues (Sales Director, HR Manager, COO, and a head of the trade marketing team) were to come up with decisions on where the Company would be heading; they were to formulate and explain how the selected strategy would help to achieve the global goals set by the corporation (Vision-2020), and what risks and hazards should be carefully considered if the Company was to take over the Russian market.
The following was required for Sergey and his working group to finalize the strategy in the near future: 1. Analyze market trends and prepare a forecast as to the further development of soft drinks market in Russia. 2. Formulate and present the strategy of Coca-Cola Hellenic soft drinks range development in Russia, as well as perform financial assessment (DCF, NPV) of the range in question.
is promoted within Coca-Cola Hellenic as this inspires all employees to achieve the goals set. The strategy will have to be brought for consideration of Coca-Cola Hellenic shareholders in just two weeks. Sergey checked his schedule – the next day he would have the meeting with his colleagues for discussion of draft strategy. Well, he had about half an hour till his plane would depart, so he could ponder more about the innovation ideas which he would talk about with his peers the next day and which would be so important for Coca-Cola Hellenic Russia in the next 3-5 years.
Dear Participants! You are expected to get into Sergey’s shoes and to find solution for ambitious goals that they set — you have to suggest commercially feasible Coca-Cola business development strategy based on thorough analysis of business performance indicators. Good Luck!
3. Develop efficient Coca-Cola Hellenic employer brand promotion strategy for Russia covering breakthrough ideas that would bring feasible results till 2020. The strategy should be in full compliance with business needs when it comes down to human resources, provide for competitive edge in retaining talents and developing them within the Company, strengthen the Company employer brand, create best possible work conditions for team members, and ensure that leadership
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Coca-Cola System
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Coca-Cola System
History of the Coca-Cola Company The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia.
it was done, he carried it a few doors down to Jacobs’ Pharmacy4. Here, the mixture was combined with carbonated water and sampled by customers who all agreed — this new drink was something special. So Jacobs’ Pharmacy put it on sale for five cents a glass.
Like many people who change history, John Pemberton, an Atlanta pharmacist, was inspired by simple curiosity. One afternoon, he stirred up a fragrant, caramel-coloured liquid and, when
Pemberton’s bookkeeper, Frank Robinson, named the mixture Coca-Cola, and wrote it out in his distinctive script. To this day, Coca-Cola is written the same way. In the
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first year, Pemberton sold just nine glasses of Coca-Cola a day. A century later, The Coca-Cola Company has produced more than 10 billion gallons of syrup. Over the course of three years, between 1888-1891, Atlanta businessman Asa Griggs Candler secured rights to the business for a total of about $2300. Candler would become Coca-Cola’s first president, and the first to bring real vision to the business and the brand.
http://youtu.be/vxm-m4MBBLU
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Coca-Cola System
The Coca-Cola Company today Today The Coca-Cola Company is the owner of one the most expensive brands in the world. In Forbes’ the World’s Most Valuable Brands list for 2014, Coca-Cola occupiers the fourth position, inferior only to major IT companies Apple, Microsoft и Google. The most expensive FMCG brand – Coca-Cola – is valued at $56.1 billion, and has demonstrated a 2% increase in value for the last year. The headquarters of the Company is based in Atlanta, USA, which is also the location of the major and the biggest museum of this brand in the world. In “The World of Coca-Cola“5 museum there are no frowning attendants, but you will find there signboards, placards, and advertisements illustrating all stages of brand development, drinks dispensers selling Coca-Cola of all times, an operational mini filling line, a 4D-movie theater, and a host of other things. In the course of the journey around the museum halls you are allowed to drink carbonated beverages produced by the Coca-Cola Company without restraint and free of charge.
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In 2013, 13.5 billion cases of Coca-Cola were sold globally, which accounts for nearly half of all carbonated beverages produced by the Company. In total, Company portfolio includes around 2800 non-alcoholic beverages marketed in over 200 countries of the world. The Coca-Cola Company holds the first place in the world for sales of juices, carbonated and juice drinks, the second place in the global market of sport drinks, and the third place in the segment on bottled water. The Company is able to reach these sales volumes due to its globally recognised brand, unique taste of its beverages, and over 90,000 of highly professional employees working for the Company around the globe. The Coca-Cola Company was one of the first in history to use franchising in their business model as the major instrument of business development. In simple terms, franchising means authorisation to use the brand in business deals. The first contract for bottling The Coca-Cola Company landed back in 1899. Starting from the end of the 19th century
The Coca-Cola Company offers this opportunity to its partners engaged in bottling, i.e. manufacturing the ready-to-drink beverage, filling into bottles, and distribution to outlets. The Coca-Cola Company produces syrup according to the secret formula. Around the world there are independent companies that buy beverage concentrates from the central company together with the rights to use the brand. In the global market The Coca-Cola Company works with 11 major bottling companies and several hundreds of smaller ones. Bottling companies produce final beverages independently: they fill the concentrate into bottles, and also organise sales and marketing campaigns to promote the products. The bottling companies are not engaged in scientific research, developing new recipes of products, and brand promotion. In Russia, such bottling company is Coca-Cola Hellenic.
Coca-Cola Museum: www.worldofcoca-cola.com
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Coca-Cola System
Coca-Cola Hellenic in Russia6 Coca-Cola Hellenic in Russia is part of the Coca-Cola Hellenic Group — one of the largest bottlers of The Coca-Cola Company’s products in the world, and the biggest in Europe. The operations of the Coca-Cola Hellenic Group span 28 countries, serving more than 585 million people. The group’s holding Company, Coca-Cola HBC AG, is headquartered in Switzerland and has a premium listing on the London Stock Exchange as well as secondary listings on the Athens and New York stock exchanges.
Coca-Cola Hellenic aim is to offer consumers a choice of beverages that meet the highest quality standards. Customers and consumers expect beverages to be of consistently high quality. Coca-Cola Hellenic aim to meets and exceeds their expectations. This commitment is underpinned by the international standard ISO 9001 and ISO 22000, as well as by Coca-Cola Hellenic own Quality and Food Safety policy and the global standards of The Coca-Cola Company.
Coca-Cola Hellenic started operations in Russia in 2001. The Company serves approximately 143 million people by producing and distributing a unique portfolio of quality brands, bringing passion to marketplace implementation, and demonstrating leadership in corporate social responsibility.
Coca-Cola Hellenic in Russia monitors production processes closely and has sophisticated control equipment and testing programs for key stages of the process. Electronic bottle inspection equipment on all refillable bottling lines is installed which can identify even the tiniest crack of impurity in the beverage.
Based in Moscow, the Company operates bottling plants in Moscow and Moscow region, Saint Petersburg, Orel, Nizhny Novgorod, Samara, Rostov region, Ekaterinburg, Novosibirsk, Krasnoyarsk and Vladivostok. In addition, Coca-Cola Hellenic channels products through more than 70 distribution centers. Coca-Cola Hellenic in Russia employ over 13000 people and indirectly support the jobs of up to 5-10 times more in value chain. Coca-Cola Hellenic in Russia aim to be its customers’ most preferred supplier, and conduct programs to support more than 207000 customers who sell products to consumers.
Sustainable growth for Coca-Cola Hellenic business goes hand in hand with sustainable development for communities. The Company is deeply committed to creating value for these communities and builds reputation as a trusted partner and a force for positive change. Today, more than ever before, business and society must work together to create sustainable environmental, economic and social change: to make a difference and create a better world for children. Coca-Cola Hellenic aim is to work with communities to continue to build trust: trust in brands and products, trust in actions as citizens and trust in the future. To do this the
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Company strives to be open, transparent and collaborative in all actions and communications. Winning in the marketplace begins with anticipating and meeting the needs of consumers, a task which Coca-Cola Hellenic is uniquely placed to perform. The Company manages a portfolio of the world’s leading beverage brands, which strategically leverage to capture clearly defined market opportunities. Coca-Cola Hellenic also continues to introduce product and packaging innovations to meet consumers’ evolving lifestyles and tastes. In the marketplace, the Company is rolling out a powerful strategy for consumer-driven execution that enhances relevance and revenue growth and will allow to captures untapped opportunities across markets. In the framework of “Excellence Across the Board“ initiative, Coca-Cola Hellenic also aims to reach optimum performance. For this purpose, the Company builds robust routeto-market systems, forms partner relations with clients, who help Coca-Cola Hellenic achieve success in the regions of its presence. Apart from that, the Company optimises the use of current assets, and for this purpose it reconsiders its internal systems and processes. The basis of Coca-Cola Hellenic business management model is formed by the following six priorities: widening the product mix of non-alcoholic drinks, and consequently, diversification of its business; increasing brand advantages, i.e. creating values to
be enjoyed by customers; streamlining the portfolio and brand selection, using new channels for increasing profits; managing capital that guarantees growth and value of the Company; cost efficiency across all economic operations; ensuring superior and stable return on investment. Coca-Cola Hellenic invests resources in creating an effective team of trade representatives, for example in marketing system that will allow customers to have the necessary product whenever and wherever they need it. The Company provides its sales personnel with mobile devices to speed up the process of receiving orders, issuing invoices, and controlling the asset flow.
www.coca-colahellenic.ru
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Coca-Cola System
“Play to Win” Strategic Framework Coca-Cola Hellenic “2020 Play to Win” Strategic Framework is based on core values and four strategic imperatives; community trust, consumer relevance, customer preference and cost leadership. Unparalleled talent and high performance mindset are key enablers of efforts to achieve aspirational targets. Coca-Cola Hellenic is committed to six core values, along with their behaviors which support them and shape the way the Company works every day. Everything starts with values; they are the DNA7 of the Company and are essential to future success: • Authenticity: act with integrity, and do what is right, not just easy • Excellence: strive to amaze, with passion and speed
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• Learning: listen and have a natural curiosity to learn • Caring for people: believe in people in the Company invest in them, and empower them • Performing as one: believe in the power of working together, contributing in every occasion • Winning with customers: Companies’ customers are at the heart of everything Coca-Cola Hellenic do. Coca-Cola Hellenic values are deeply embedded in 2020 Play to Win Strategic Framework that aims to deliver every day superior value in community trust, consumer relevance, customer preference, and cost leadership.
Corporate DNA is business jargon for organizational culture. It is a metaphor based on the biological term DNA, the molecule that encodes the genetic instructions in living organisms
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MANUFACTURING CAPACITIES
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Manufacturing Capacities
Coca-Cola Hellenic Product Portfolio in Russia Coca-Cola Hellenic produces and markets a wide variety of beverages, most of which are registered under the trademarks of The Coca-Cola Company. The product portfolio of the company features the following carbonated beverages: Coca-Cola, Coca-Cola light, Fanta, Sprite, Schweppes; sports drinks and energy drinks: Powerade, Burn, Gladiator; BonAqua water; local brand Fruktaim; juices: “Dobryi”, “Moya Semya”, Rich, Pulpy; brands licensed by other companies8: Nestea, Valser, and others. In the first quarter of 2014, Coca-Cola Hellenic increased its sales in Russia by 5%. To a large extent, this was due to active promotion in the context of the Olympic Games. Coca-Cola sales increased by 8%, Fanta and Sprite grew by 15% and 3% respectively. The “Ice Tea” category has grown by almost 10%, which is a consequence of launching 1-litre PET package, together with new beverage tastes9. By the end of the year the situation has changed, and for the nine months of 2014 Coca-Cola Hellenic decreased the sales in the Russian market by slightly less than 1%, as compared to the previous year10. The escalation of geopolitical tension continues its negative impact on the economy and consumer sentiments in Russia. As a result, slumping sales of Coca-Cola Hellenic in the third quarter took
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place in all the major categories, except juices. The sales of Coca-Cola brand have decreased by 4%, carbonated drinks in general — by 7%. Fanta brand was an exception that showed a stable growth owing to launch of new flavors. Sales of juices have increased by a twodigit number, and, as a result, the market share of the Company in this category has grown. In 2013, Coca-Cola Hellenic increased its sales in Russia by 5%. In the countries of its presence The Coca-Cola Company manufactures localised brands of beverages. For example, in Brazil they produce Matte Leao tea, in Peru, Chile, and Ecuador — Inca Kola with lemon verbena, in the USA — Zico coconut water and other drinks. In Russia, Coca-Cola Hellenic Company also paid attention to the beverages popular with the public. In 1999 the company started local production of “Fruktaim” beverages employing the recipes of traditionally popular in the Soviet Union carbonated drinks, such as “Duchesse”, “Buratino”, “Krem-Soda”, and “Limonad”. And nine years later, in 2008, Coca-Cola Hellenic started to produce the most popular and traditional Slavonic beverage — kvass under the brand “Kruzhka i Bochka” (“Mug and Barrel”). According to the results of opinion polls, kvass is the fourth popular beverage in Russia, after tea, mineral water, and coffee. In 2012 the recipe of was changed, making it even
tastier. Now “Kruzhka i Bochka” is made using a new technology of high-density fermentation, which has never been used to produce kvass before. Coca-Cola Helleniс places a special priority on the growing segment of juices and develops new flavors. A well-known premium brand Rich has launched a new flavor of juice - Rich “Ruby Orange”. This taste was created through mixing of juices of the Brazilian and the red Sicilian oranges. The Company has launched a promotion related to the launch of the new product, where the prize is ballooning for two people starting at the square near Krymskiy Val in the “Museon” Park in Moscow. Juices and nectars under the brand Rich, which were first presented in Russia in 2002, are positioned in the premium segment. This brand is known to over 91% of consumers in Russia. The unique packaging of this brand was many times awarded with numerous design prizes, including «Brand of the Year» in 2002 and 2010, and “Product of the Year» in 2003 and 2008. Currently, Rich takes the second place in Russia for the volume of sold juices in «premium» segment.
Multon. Its non-standard exterior is good at attracting consumers’ attention and provoking impulse purchases. The new container is easier to hold in hands thanks to canted corners, its cap can be put back in place safely and accurately, and the overall design helps drinking juice without spilling it.
Tetra Pak produces unique Gemina Tetra Aseptic Leaf containers for Dobryi, the popular Coca-Cola juice brand in Russia. This stylish container was develeoped specifically for
Rights for the brand belong to a different company Results of Q1 2014. Coca-Cola HBC AG Source: Interfax www.interfax.ru/business/405673
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Manufacturing Capacities
Coca-Cola Hellenic Factories in Russia Coca-Cola Hellenic has been manufacturing beverages in Russia for over 20 years (since 1994). Soft drinks are bottled at 13 factories, including two ZAO Multon plants purchased by Coca-Cola Hellenic and The Coca-Cola Company in 2005. Coca-Cola Hellenic are the largest Russian purchasers of sugar, packaging, labels, and various marketing materials and services in Russian regions. Beverages manufactured by Coca-Cola Hellenic in Russia are in full compliance with all food quality and safety standards. Largest Coca-Cola plants are located in Schelkovo, Moscow Region (ZAO Multon which comprises 20.6% of total production volume countrywide) and in Moscow (19.2%). Overall Multon plants manufacturing capacity provides for annual production of over 200 different fruit-based healthy food products: natural juices, nectars, and juice drinks. Multon factory in Schelkovo is a huge enterprise more than 11 ha in area and with an output of around 700 million liters per year. The plant employs over 800 people and hosts 17 state-of-theart production lines of Swedish, German, and Italian manufacturers. Furthermore, the factory also comprises a microbiology laboratory and a large logistics hub (35 000 pallet positions) with own local railway. Multon R&D center develops innovative products that further development of both the company and the entire industry in general ensuring that daily
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rations of Russian people are healthy and of top quality. The sales of juices “Dobryi” and Rich that are manufactured at ”Mullton” continued their growth. Once the license agreement with Nidan Soki (Nidan Juices) company was signed in 2014, the plant also started manufacturing Moya Semja (My Family) nectars.
Saint-Petersburg
Moscow
Shchyolkovo Orel
Coca-Cola Hellenic factory in Moscow was the first plant to start manufacturing soft drinks under The Coca-Cola Company brands. This plant can produce up to 3 million liters per year. Recent installation of new production lines resulted in considerable decrease of electric energy consumption, additional employment, optimized logistics. Coca-Cola Hellenic Moscow plant has a laboratory fitted out with cutting edge equipment and multibarrier water purification system (where mains water is processed into potable water), as well as with the Coca-Cola glass bottled products automatic quality control system (the only one of the kind in Russia). In 2007 a new plant was built in Istrinsk District of the Moscow Region. The output of this plant includes the entire range of non-alcoholic beverages from juices and nectars to water products and ice tea. The plant became a part of Coca-Cola Hellenic production chain in 2009. At the moment the factory includes six production lines, which produce a large range of products: Nestea (0.5, 1, and 1.75 liter bottles), 5 liter BonAqua, 0.5 and 1 liter BonAqua
Davydovskoe
Rostov-on-Don
Nizhny Novgorod
Samara
Ekaterinburg
Novosibirsk
Krasnoyarsk
Vladivostok
Viva, 0.5 and 0.9 liter Burn, Coca-Cola, and Pulpy drinks. Nizhniy Novgorod plant of Coca-Cola Hellenic Company has been operating since 1996. It produces a total of 30 different drinks in various packaging: Coca-Cola, Coca-Cola Light, Sprite, Fanta, BonAqua, Nestea ice tea, Powerade, and syrups for Postmix11 units. Today the plant has two production lines: PET line for 0.5, 1, and 2-liter plastic bottles filling, and aseptic line for 0.5 and 1 liter Powerade and Nestea bottles filling.
Moreover, factories for manufacturing of soft beverages under The Coca-Cola Company brands were also built in Vladivostok, Yekaterinburg, Krasnoyarsk, Novosibirsk, Orel, Samara, and Rostov-on-Don. By the end of 2011, Coca-Cola Hellenic plant in Orel became the winner in “the Best Quality Plant” competition among 290 Coca-Cola plants in Africa and Eurasia. For more information about plants visit site: http://plant.coca-colahellenic.ru/show/ factories
Postmix – refrigerator unit for fizzy drinks preparation, icing, and pouring
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Manufacturing Capacities
Manufacturing and Products: Quality and Safety Clients and consumers expect the highest possible quality of products and services. Coca-Cola Hellenic meets these expectations in full by ensuring that its products are manufactured in full compliance with international ISO 9001 and ISO 22000 quality standards, as well as by enforcing own food products quality and safety standards. Coca-Cola Hellenic enterprises in Russia quality, food safety, and HSSE/OHS management systems are certified with internationally recognized standards. Coca-Cola Hellenic in Russia scrupulously controls all processes using state-of-the-art inspection equipment and software at each production stage. Thus every bottling line where drinks are filled in reusable containers is fitted with electronic testing equipment able to locate even the smallest crack or admixture in the bottle. Furthermore, production management systems meet all GFSI12 and HACCP13 requirements. All Coca-Cola Hellenic factories are a part of the comprehensive initiative to minimize
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negative environmental impact. One of the main principles of Coca-Cola Hellenic environment protection policy is rational use of natural resources and constant reduction of industrial waste. That is why the company strives to integrate closed-loop process cycles, energypreserving technologies, materials recovery, waste and pollutants reduction solutions, and decreased water consumption. In order to reduce transport traffic generated air pollution, the company promotes efficient fuel usage and optimizes transportation routes. Implementation of best energy conservation practices help to use energy resources optimally and to reduce energy consumption in manufacturing and refrigeration. In 2011, Coca-Cola Hellenic reverted 87% of total waste back into recycling. The company confirms its compliance with international environmental management standards every year. One of the latest innovations in BonAqua manufacturing processes is the usage of PlantBottle bio-bottles. The Company already uses these bottles in Japan, Brazil, United
Kingdom, Spain, and Russia, and will use them at all Coca-Cola plants by 2020. Up to 25% of each PlantBottle is vegetable materials — a stark contrast to the absolute majority of all other plastic bottles brands manufactured from processed oil. The main advantage of biobottles is that they are completely recyclable and biodegradable. Furthermore, carbon dioxide emission levels are at their minimum during production of these bottles. Coca-Cola Hellenic performs continuous analysis of all incidents and related risks to provide for best occupational safety. Corresponding measures are elaborated and implemented based on analysis results. The company is also extremely interested in relentless improvements of its employees’ professional skills and knowledge. Thus, Coca-Cola Hellenic continuously organizes trainings and certifications in OHS and HSSE. The company plants employs loyal professionals who often have 10+ years of experience and are motivated in manufacturing top quality products.
The Global Food Safety Initiative — www.mygfsi.com Hazard Analysis and Critical Control Points
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Manufacturing Capacities
Beverages Production Process
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Delivery of ingredients and materials
Stringent inspection of incoming ingredients and materials
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Flavor syrup and water mixing, carbonization, bottling, and closing in containers
Check of stability, carbonization, mixing, bottling, and closing indices for consistency with internal quality standards
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of reversed osmosis14, which excludes the presence of any additives and then remineralises. The quality of water is monitored at least every two hours. Some water parameters are controlled continuously and automatically.
The factories take the water to produce all beverages from local water distribution systems or from underground sources (depends on plant). Before becoming an ingredient of a Coca-Cola drink, tap water undergoes four stages of purification until it reaches the condition of distilled water having no impurities. During the first stage of purification, mechanical sand filters clear water from the largest additions. Then, ion exchangers decrease the content of calcium and magnesium salts down to permissible rate of 100 mg per litre of water. When the water has been cleared of salts, it goes through charcoal and polishing filters, and during the final stage it is treated with ultraviolet light to achieve total disinfection. Potable water is additionally purified using the technology
The production process starts with preparing syrups, concentrates, or bases for beverages. The company executes tight acceptance control for all components of beverages, and materials for manufacturing of package. The concentrate to produce Coca-Cola is supplied to the bottling companies by The Coca-Cola Company. And the secret formula of Coca-Cola is known only to several people in the world. The Coca-Cola concentrate is transported to bottling plants with strict adherence to temperature requirements. Juice concentrates are purchased in the countries where corresponding fruits are grown. The Company independently produces ingredients for localised beverages.
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Water treatment
Sugar syrup production equipment washing and disinfection
Multistage treatment of local water
Check for absence of physical, chemical, and microbiological contamination
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Primary containers code marking and labelling
Products packing in cases/pallets
The equipment used to manufacture the beverages at Coca-Cola Hellenic undergoes stringent control for quality of sanitary processing. At highly automated production lines of the plants (every line employs on average 3-4 people) syrups and water are mixed and, if necessary, carbonated. The composition and proportions of ingredients are monitored for compliance of internal quality standards. Carbon dioxide is supplied to the plant in liquid form employing a specialised large-tonnage
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Sugar syrup production. Consistency check
In accordance with the Company physical, chemical, organoleptic and microbiological standards
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Transportation of packed products to warehouse
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Flavor syrup production. Consistency check
In accordance with the Company physical, chemical, organoleptic and microbiological standards
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Products shelf storage
tank-car, and then it is pumped to the storage at the plant. Carbon dioxide reaches the water through an evaporator, which is used to convert the gas from liquid to gaseous state. The process of mixing carbon dioxide with syrup is conducted in the mixer, and water is previously called down to provide for better dissolving of carbon dioxide. It takes about 30 g of carbon dioxide per one 2-litre bottle. The ready-made beverage is filled into cans, glass and PET (polyethyleneterephthalate) bottles15, and cardboard packages accurately cleaned of any possible physical, chemical, or biological contamination. At the production line where plastic bottles for beverages with 0.5 and 1.5 litres of volume are produced from
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Containers washing, disinfection, and rinsing
Inspection of containers' physical condition and cleanliness
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Products distribution
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Bottling equipment washing and disinfection
Check for absence of physical, chemical, and microbiological contamination
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Products sales in retail outlets
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Inspection of code/label integrity and its compliance with technical specifications, legal requirements of the Russian Federation and internal standards of the Company
Inspection of package compliance with technical specifications and company standards
Monitoring of cargo forwarding means sanitary condition
Monitoring of products lifespan and storage requirements adherence
Monitoring of cargo forwarding means sanitary condition
Monitoring of retail outlets sanitary condition and products lifespan and storage requirements adherence
14 Reversed osmosis is a process, where a solvent (usually water) is forced by pressure to run through a semipermeable membrane from a more concentrated to a less concentrated solution, i.e. in the direction that is reverse for osmosis. At that, the membrane lets the solvent to pass through, but does not conduct the substances dissolved in it 15 PET (polyethyleneterephthalate) is a heat-sensitive plastic, which is the most widespread representative of polyether, and is known under a variety of brand names
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Manufacturing Capacities
small plastic «bulbs» with application of high air pressure of about 40 atm, and temperature of 240°. It takes about three seconds to produce one bottle. Then the containers are called down and transferred to the filling machine. The filling process is conducted automatically using a machine, which is called a filler. The filler production capacity is from 12,000 (2 L) to 30,000 (0.5 L) bottles per hour. The beverage temperature (for Coca-Cola) at the stage of filling into bottles is 15°C. A 2-litre bottle is fully filled for 4 seconds. Every bottle is filled with a strictly defined volume of beverage. After the filling is completed, every bottle is finished with an airtight twist cap.
a specialised equipment, a specific number of bottles, depending on their capacity, are wrapped with shrinkable film thereby forming packages of product – cases.
The filled bottles undergo a “rejector” examination, which automatically checks filling level and presence of cap. If something does not correspond to standard, the “rejector” automatically drives such bottle out of the conveyor. After that, the bottles are directed to the labelling machine.
Quality control for ready-made drinks is done by highly-qualified staff in specially equipped production laboratories. The produce is tested for compliance to all the established parameters of quality and safety with strictly defined recurrence. There are two laboratories in the factory: physical and chemical, where they check the level of carbon dioxide, amount of sugar, taste, colour, density; and microbiological, where they check microbiological indicators of the beverage. Every 30 min an employee of quality control department uses the method of «blind selection» to remove one bottle from the line to conduct the necessary quality tests. For doing microbiological research on the products only disposable and sterile vessels are used: test tubes, Petri dishes, pipettes, funnels, filters.
The package has a dedicated coded label and undergoes internal control compliance checks. Further, the bottles go through the encoder, that imprints on them the date and time of bottling, factory and line code, and expiry date for the beverage. During the next phase the bottle is labelled with all the necessary information for the consumer: manufacturer address, beverage contents, hotline telephone number. Using
Then, the cases are forwarded to the next stage of packing. The palletiser machine puts a strictly defined number of cases on transportation trays – pallets, and wraps them with film. On average, during one hour the palletizer can prepare and pack up to 150 pallets with beverages. The car-lift truck removes the ready-made pallets from the conveyor and deposits them in the warehouse, where they wait to be shipped to consumers.
3595 people work in the logistics unit of Coca-Cola Hellenic. In 2013, 60% of them were employed in the delivery and transportation department (of them 1549 were drivers). The remaining 40% worked in Coca-Cola Hellenic warehouses. The warehouse, as well as production, works round-the-clock, seven days a week. The mass of pallet with finished goods that is transported by fork-lifts is around 800 kg. There are forklifts that transport up to 2 pallets at once. A truck is loaded with up to 24 pallets with finished goods. The warehouse is organised as a city road: there is a lane for forklifts, and paths for pedestrians, there are even traffic rules.
safe operation of motor vehicles. The accident indicator in 2013 accounted for seven traffic accidents per 1,000,000 km on the road, which is 11% lower as compared to 2012. Coca-Cola Hellenic has over 70 distribution centres in Russia that are located in different cities. Coca-Cola Hellenic has its own logistics but at the same time there are territories where they employ indirect distribution models – these are territories with low population density, where direct distribution is not economically efficient, and these issues are taken care of by local distributors. When interacting with several major retailers, the company sometimes transfers the issues of transporting the beverages to the shops to the retailer.
Coca-Cola Hellenic uses a substantial car fleet comprised of 6197 vehicles. For product transportation they make use of 1453 motor transport vehicles, which are predominantly equipped with diesel engines. All the vehicles are kept in good technical condition and is regularly undergo technical inspection. The major methods to decrease vehicle pollution used by the Company are the optimisation of product delivery routes and the changes in driving techniques. As a result of these methods, the consumption of fuel in 2011 decreased by 2.5% as compared to 2010. Emphasis is placed on the issues of security and on-thejob safety of drivers. Since 2002, the Company has followed the plan of training in the field of
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COCA-COLA HELLENIC BEVERAGES MARKETING AND PROMOTION IN RUSSIA
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Coca-Cola Hellenic Beverages Marketing and Promotion in Russia
Various promotions, new brands launches, and market and consumer preferences studies may be thoroughly scrutinized at the local level, but all the promotional events have to be approved directly with The Coca-Cola Company. Multon plant products are the only exclusion — here any decisions in relation to ad campaigns, new flavors and any other local brand promotion activities do not require approval with The Coca-Cola Company. The Coca-Cola Company mainly focuses on ATL marketing. This type of marketing includes direct advertising on TV, radio, printed mass media, and outdoor advertising. Coca-Cola Hellenic also holds BTL marketing campaigns on a regular basis: representatives of the company do their best to promote sales in retail outlets and through intermediate companies, place on-the-spot advertisement, engage into event-based and guerilla marketing. The company spends 65% of the total local ad budget on advertising fizzy drinks at retail outlets, and further 15% on juices and bottled water. Coca-Cola Hellenic has brand promotion and sales channel development strategies in place. Brand positioning is broken down into detailed aspects so that the company products find their buyers.
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Coca-Cola Hellenic Beverages Marketing and Promotion in Russia
Future consumption Future consumption covers beverage sales through traditional convenience stores and advanced sales channels such as supermarkets and hypermarkets. Traditional channels provide for 52% of sales. Advanced sales channels become increasingly popular among general population and supermarkets share in future consumption on average grows by 3% per year. Coca-Cola Hellenic has a large team of sales representatives (merchandisers) who work in major retail outlets with big turnover. Feasibility of merchandiser presence in a retail outlet is analyzed in terms of economic effect – the company assesses the average impact of merchandiser work on sales growth in each particular outlet. If, for instance, average sales in a store amount to 100 bottles per day and merchandiser’s input increases these sales by 20%, then the commercial effect from additional twenty bottles sold should cover all Coca-Cola Hellenic expenses for a merchandiser working with this store. Otherwise, professional layout of products is deemed infeasible. The main tool of a sales representative is detailed clientele data such as knowledge of beverage orders frequency, number of refrigerators in a store, etc. The more precise is customer profiling, the higher are the sales. A sales representative visits from 17 to 22 retail outlets every day, and spends about 20 minutes in each outlet. More often than not outlets to be visited by a sales representative are located close to each other and a merchandiser spends about five minutes to get from one store to
another. It is very important to clearly define which outlets should be visited first in order for a sales representative workday to be efficient. Proper shelf layout is vital for successful sales of products in a store. Once he or she is in a store sales representative will replenish store refrigerator and shelves with beverages, but this is only a small part of what merchandiser does in each outlet. Sales representative monitors particular places of product layout, notes down additional sale point locations in different zones and departments, analyzes showcase quality and condition, keeps track of products placed in close vicinity of Coca-Cola Hellenic beverages. Merchandiser also has to check price tags consistency, ensure that advertising and beverages are laid out in proper order, and confirm that store product stock is at the standard level. Thanks to compact Fenix terminal any request for replenishment of beverages stock is processed to a warehouse immediately, and if any of products requested are unavailable at the moment the corresponding notification is promptly passed back. The client learns the total price for an entire batch requested momentarily. During request execution a merchandiser may advise a client on fast turnaround products and what beverages should better be ordered in larger volume. While working in a store a sales representaive has a chance to find out with a client how the business is going and briefly discuss burning
issues of the day. After all, this is not the first or last time they meet and maintaining good fellowship is more than a job – it is a good practice. The number of stores is ever increasing and merchandiser is constantly on the lookout for new partnership opportunities. Sales representative often has to persuade a storeowner to put only Coca-Cola products in branded Coca-Cola refrigerators.
organized one day long sports event specifically for X5, large retailer in the Russian market. Mixed teams representing both companies took part in this event. It is clearly evident that such promotions and events improve relations between the Company and retailers.
Good humor and communication skills are vital for a successful merchandiser. Sales representative should know how to get acquainted with new people, maintain conversation with long-term clients, act in the best interests of the Company, and, of course, he or she should be expert on Coca-Cola Hellenic products. That is why Coca-Cola Hellenic pays close attention to advanced training and professional development – various courses, trainings, plant visits, motivational programs, etc. are embedded into the company’s business on a constant basis. Coca-Cola Hellenic organizes different brand and sales promotion events together with retailers. In absolute majority of cases (95%) these are mutually approved and financed events. In order to strengthen partner relations with Russian retailers Coca-Cola Hellenic holds joint events involving leadership of key partners such as X5, Dixi, O’key, Lenta, Magnit and Auchan. The company representatives participated in Olympic torch relay in 2014. Coca-Cola Hellenic
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Coca-Cola Hellenic Beverages Marketing and Promotion in Russia
Immediate Consumption Visitors of various HoReCa16 segments (hotels, bars, cafes) and other immediate consumption outlets such as fast food chains, canteens, movie theatres, or gas station stores have widely different preferences when it comes to beverages. According to several forecasts global immediate consumption segment gains 2% per year on average, whereas consumption in HoReCa segment grows by about 1%. However, out-of-home food consumption may sharply decline due to upcoming recession and associated drop in consumer spending. Therefore, any forecasts in regards to this market in Russia should be treated with reserve. Nonetheless, at the moment restaurants constitute 51% of out-of-home food consumption in Russia in monetary terms. HoReCa HoReCa consumption brings in about 7% of total Coca-Cola Hellenic sales in Russia — somewhat falling behind other countries where Coca-Cola Hellenic is present. Hot served drinks such as tea and coffee generate up to 50% of sales in this segment. HoReCa consumers rarely buy potable water products. Low alcohol beverages and local traditional products (stewed fruit compote, lemonade, etc.) are fierce competitors to sparkling beverages in the segment. HoReCa market evolves quicker in large cities. Coca-Cola Hellenic markets its products as vital for healthy lifestyle in order to improve sales.
Thus, daily consumption of juice for breakfast is important to be healthy in city. Another important factor for HoReCa sales promotion is offering your products in premium quality containers. Therefore, Coca-Cola Hellenic prefers to supply cafes and restaurants with beverages in stylish glass bottles. This format has been enjoying success in HoReCa segment for a long time, as consumers find it much more pleasant to drink beverages from neat looking bottles, ensuring quality rather than from paper cups. Other Immediate Consumption Channels In Russia Coca-Cola Hellenic cooperates with global partners like McDonald’s and local partners such as Kroshka-Kartoshka, Star Dogs, etc. Decisions on entering into cooperation are made on different corporate levels depending on potential partner market status and global proliferation. Coca-Cola Hellenic and McDonald’s organized the “Support Your Olympic Torch Carrier Together With Coca-Cola and McDonalds” advertising campaign. In order to take part in the event, a customer had to buy a glass of Coca-Cola, Fanta, or Sprite and a burger in McDonald’s restaurant. Ex-works syrups are filled into dedicated returnable 300-liter containers specifically for McDonald’s. Syrup-water mixing machines
are used to generate beverage in restaurants. Coca-Cola Hellenic fills special 10 and 20-liter containers to be put into Postmix stations for other fast food chains. Postmix stations are standardized machines where syrup is mixed with gas-cut water. Coca-Cola Hellenic constantly monitors water/sugar ratio to ensure that the final product is in compliance with approved standards. Vending Business First vending machines (selling postcards) appeared in London in the end of XIX century. The Coca-Cola Company became one of the first commercial companies to sell its products through vending machines in the USA. The company started to put vending machines at gas stations, movie theatres and next to supermarkets in 1929. Vending business share in Russia is still quite small compared to other European, Asian, and American countries. This is mainly attributable to local consumer mentality and notable general population preference to use other consumption channels. However, vending machines segment demonstrates a stable growth trend. Coca-Cola Hellenic plans to strengthen its presence in the market through employing non-standard approach in the coming years. Many unusual marketing solutions for vending machines worldwide have already allowed Coca-Cola to win over consumers’ hearts.
Thus, on the verge of World Championship Cup 2014 (the main soccer event) Coca-Cola installed a machine that gave a free ticket for a ride in a tube in exchange for 25 squats. The promotion tagline was “Happy in Motion”. Coca-Cola vending machine gave out gifts to everyone in a student campus of New York City. Once a person approached the machine to buy a beverage he or she was practically ambushed with pleasant surprises. The machine could give out nine more Coca-Cola cans in addition to the one bought, as well as pizza, flowers, balloons, or even gigantic sandwiches. There was literally a “live heart” inside as a real person was actually hiding in the machine. In the world fashion capital — Paris — there appeared “slim” Coca-Cola Diet Coke vending machines. This was a vivid way the company chose to demonstrate that its dietary products help to remain in shape, but at the same time can offer the same refreshing taste of classic Coca-Cola.
One of the first Coca-Cola vending machines
HoReCa — is the sector of the food industry that consists of establishments which prepare and serve food and beverages (food service). The term is a syllabic abbreviation of the words Hotel/Restaurant/Cafe. Courtesy of Coca-Cola Hellenic, Russia
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Coca-Cola Hellenic Beverages Marketing and Promotion in Russia
In the difficult political situation between India and Pakistan, Coca-Cola always argues against any disagreement. In 2013, the company installed a vending machine with interactive displays and cameras in each of the conflicting countries. The picture from India was broadcasted to Pakistan, and vice versa. Ordinary people, for whom international hostility does not mean anything, smiled to each other, shared sympathetic words and dances. For displaying such kindness, the “small machines of peace” rewarded those supporting simple human values with cans of Coca-Cola. In one of the corridors of National University of Singapore the company installed a machine that differed from its commonplace counterparts by two details. Firstly, it was not equipped with a coin unit, and secondly it had the words «Hug Me» replacing the famous logo. The machine dispensed a drink to anyone, who would hug it. In South Korea a Coca-Cola vending machine was installed, which did not need any money.
Instead of it machine wanted to see bright dance movements. The more beautiful and difficult they were, the more precious bottles the dancer received. In Argentina there was a vending machine that sold two cans of Coca-Cola for the price of one. The difficulty lied in the fact that the coin unit was installed at the height of 2 meters. In order to take a gulp of happiness, people had to use the help of their friends, without which many things in life are impossible. At the exhibition of vending equipment OneShow-2014, Coca-Cola presented an ecomachine, which worked without connection to the mains, owing to solar panels on the roof of the device. In fair weather they do not only support operation of the vending machine, but also accumulate enough energy for 12 hours of non-stop operation during night time.
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Non-Alcoholic Beverages Market in Russia
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Non-Alcoholic Beverages Market in Russia
According to market reports18 Russian nonalcoholic beverages market has been steadily growing. In 2013, this segment gained 4,5% in volume and 12% in monetary terms totaling 12.3 billion liters and 498.6 billion rubles. It should be noted that the market has yet to become saturated as Russia still lags behind the USA and the Western Europe in nonalcoholic beverages consumption per capita. Even though western markets grow at the considerably slower pace Russian consumer intakes two and a half times fewer beverages than an average Western European and almost four times fewer drinks than a North American.
The largest part of the market (95%) goes to sparkling beverages, juices, nectars and bottled water.
Structure of the soft drinks market by type in 2013 in real terms, %
Consumption of soft drinks per capita and market growth by region in 2013
The changing structure of retail trade in Russia also benefits positive dynamics of non-alcoholic beverages market. According to forecasts, modern retail trade formats such as hypermarkets, supermarkets, and neighborhood stores will continue to demonstrate the double-digit growth in nearly every aspect. Thus, Magnit, one of the fastest growing Russian retail chains, has announced its plans to increase the number of hypermarkets by five times (up to 500) by 2019.
This company opens its retail outlets not in major cities, but in small towns with population exceeding 5 000 inhabitants. Proliferation of advanced sales channels to faraway and less developed Russian regions makes it possible to cover the demand of ever-growing consumers’ number as well as to offer the entire range of non-alcoholic beverages including new health products. The average consumer visits a retail outlet once a week, and for this the preference goes to larger beverage package units. Currently analysts forecast that beverage consumption will further increase by about 3% next year. Sales of preservative-free products Forecast of development of Russian soft drinks market in 2014 - 2018 years in real terms, %
positioned as health food are also expected to boom. Sparkling Beverages As of the end of 2013 the total volume of sparkling beverages market increased by 5%. The growth rate fell down compared to 2012, but this was mainly attributable to cooler than usual summer. Another factor of influence is the ongoing change in consumer preferences as Russians are becoming more inclined towards healthy lifestyle and are less willing to purchase beverages with high sugar content. Coca-Cola Hellenic and PepsiCo are the absolute market leaders holding 58% share in the segment. Coca-Cola Hellenic sales grew 14% in values compared to 2012 and totaled 31% volume share of the sparkling beverages market. St. Petersburg is the biggest regionmanufacturer of fizzy drinks. Coca-Cola Hellenic and PepsiCo plants are the major sparkling beverages factories in the region. Moscow Region on the other hand is but a fifth top beverages producer.
18
Euromonitor International ÂŤThe Soft Drinks in Russia market research reportÂť
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Non-Alcoholic Beverages Market in Russia
Euromonitor forecasts further growth (average annual figures: 3% in production volume and 4% in monetary terms). By 2018 the market will total 5.4 billion liters and 243.9 billion rubles19.
Structure of carbonated beverages production by regions,%
TOP 20 brands of soft drinks, the most popular in Russia, % of population 16+ (Russia) surveyed in large cities (100 000 +) Coca-Cola Fanta Sprite Pepsi 7UP Schweppes Mirinda Coca-Cola Light Pepsi Light �������� ���������� ������� �� ������������ Pepsi Max ����� ���� ���������� Laimon Fresh Mountain Dew Crazy Cola/Lemon/Orange Dr. Pepper ��������
%0
5
10
15
20
25
30
��������� TNS ������� Marketing Index� 2-� ���������Index, 2011 Source: TNS, Russia, Marketing
2nd-half 2011
19 20
Juices In the recent years there has been an evident trend towards expansion of non-alcoholic beverages product range (including drinks
made from imported concentrates) offered in the market. This is especially true for juices segment. Russia mainly imports concentrated or frozen juices, which are then used by many Russian manufacturers for production of own brand juices. Few companies actually use local raw materials for drinks production.
Russian market is packed with players. Today there are three major trendsetters: ZAO Multon, OAO VBD Napitki, and OAO Lebedyanski. These companies are owned by multinational corporations able to invest heavily into marketing, distribution, and promotion as opposed to local manufacturers.
Juices market segment is characteristic of high degree of saturation and very diverse prices. Around 80% all products available at retail outlets represent Mass segment that is also promoted most actively. Mass segment includes Low, Middle, and Premium segments. The particular market feature is that a price depends a lot on container size: in conversion to one notional liter, small containers might well be over 50% more expensive than larger containers (one liter and more). Apple, orange, and tomato juices are the most popular among consumers20: there is a nearly equal share of apple and orange flavor amateurs (66.3% and 60% correspondingly from the total number of juice buyers), around 47.3% juice consumers prefer tomato juice. Overall, juiceboxes are more popular than juices in plastic or glass containers.
Juices and nectars consumption growth will be supported through the increasing interest of Russian people in healthy lifestyle. 1-2% average annual growth (volumes) is forecasted for next several years. Cold break juices, refrigerated juices and functional juice drinks will remain major drivers.
By the end of 2013 Russian juice market volume grew only insignificantly (1%) to the total of 3 billion liters. On average, there is 21 liters of juice per one consumer. Several research reports show that Russian consumers take interest in new flavors and containers.
Euromonitor International «Carbonates in Russia market research report» TNS Russia. Marketing Index
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Non-Alcoholic Beverages Market in Russia
Water Around 70% of Russian population consumes bottled mineral water on a regular basis. The most popular water brands are BonAqua, Aqua Minerale, Arkhyz, Narzan, and Borjomi. The demand for bottled water grows steadily. Bottled water market segment gained 5% and reached 4.7 billion liters in 2013. Consumers increasingly pay more attention to water quality and tend to replace tap water with bottled water. Contrary to situation in juices segment, bottled water market is much more diversified. Coca-Cola Hellenic and PepsiCo together hold 17% share (Bonaqua and Aqua Minerale brands). Due to extremely competitive market and regularly introduced new brands, leaders’ share tends to fall. Nearly every Russian region manufactures bottled water.
Structure of the mineral water production in regions,%
Euromonitor indicates that every Russian on average purchases 33 liters of bottled water per year21. The same figure is 50 liters for Eastern Europe and 116 liters in Western Europe. Russian market boasts a huge growth potential and, in spite of upcoming recession, the average annual market growth will be 4% with the forecast of total sales volume becoming over 5.6 billion liters by 2018.
21
Euromonitor International ÂŤBottled water in Russia market research reportÂť
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SUPPLEMENTS
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Supplements
SUPPLEMENT 1 Distribution of Coca-Cola Hellenic sales by products 2013, volumes (%) 100% Water 12% 90% 80%
Juice 23,8%
70% 60%
Energy drinks, Kvass, RTD Tea 8,6%
50% 40% 30%
Sparkling beverages 55,6%
20% 10% 0
Source: Report Coca-Cola Hellenic CSR, 2013 Taste of Innovations
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Supplements
SUPPLEMENT 2 Distribution of Coca-Cola Hellenic soft drinks sub-categories in places of future consumption
Premium 72 %
Sparkling beverages
Local 28 %
Super premium 2 % Fruit-drink 2 %
Juice
Premium 31 % Middle 10 % Mass 39 % and Low 16 % Immediate consumption 8 % (Among all categories, small packs)
�erapeutic 32 %
Water
Premium 13 % Local 55 %
Source: Nielsen, MAT 2014 Taste of Innovations
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Supplements
SUPPLEMENT 3 Coca-Cola Hellenic organizational structure CEO e Department of work with national key accounts e Department of development of bussiness competencies Ensuring product quality and minimize environmental impacts throughout the production chain
Marketing Department Finance Department Legal Department IT Department Customer service Department Logistics Department
Staff development
Distribution Department HR Department Purchase Department Communication Department Devisions, responsible for different areas of suistainable growth
-
Select suppliers that meet the principles of sustainable development of the Company Implementation of principles of corporate social responsibility
Source: Coca-Cola Hellenic Taste of Innovations
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Supplements
SUPPLEMENT 4 The value chain from production to consumption
BOTTLING AND DISTRIBUTION BOTTLING AND DISTRIBUTION VALUE CREATED VALUE CREATED
PRODUCT PRODUCTPORTFOLIO PORTFOLIO
CAPITAL CAPITAL
Packaging Packaging Materials Materials
BOTTLING OPERATIONS BOTTLING OPERATIONS
DISTRIBUTION DISTRIBUTION
SALES & CUSTOMER RELATIONSHIPS VALUE ADDED SALES SALES
CUSTOMERS CUSTOMERS
CONSUMERS & COMMUNITY VALUE SHARED CONSUMERS CONSUMERS
COMMUNITY COMMUNITY
Cash Cash distribution distributiontoto shareholders shareholders
Financial Financialcapital capital Human Humancapital capital Manufacturing Manufacturingcapital capital Plants, warehouses, Plants, warehouses, distribution centres distribution centres
Sharedand andrelationship relationship Shared capital capital Suppliers, customers, Suppliers, customers, government agencies, government agencies, communities communities
Direct Direct and and indirect indirect employment employment
Customers Customers Bottles, cans, Bottles, cans, cartons cartons
Recycling and Recycling andrecovery recovery Packaging compliance compliance schemes Packaging schemes
Colddrink drink equipment Cold equipment
Product Product manufacture manufacture
Sparkling Sparkling beverages, juice, beverages, juice, water other waterand and other still stillbeverages beverages
Owned leased Ownedand and leased trucks trucks
Payments Payments toto suppliers suppliers Skills Skills and and knowledge knowledge transfer transfer
Warehouses Warehouses andand distribution distribution centres centres
Resources Resources
Taxes Taxes and andfees fees Consumer marketing Consumer marketing with The Company with ˆeCoca-Cola Coca-Cola Company
Sales cars andand vansvans Sales cars
Water, COCO Water, 2, 2 , sweetener, juice, sweetener, juice, concentrate concentrate
Water, energy, fuel fuel Water, energy,
Consumers Consumers
Sales Sales people people
Ingredients Ingredients
Naturalcapital capital Natural Water, biodiversity, Water, biodiversity, eco-system health eco-system health Intellectualcapital capital Intellectual Brands, standards, Brands, standards, processes, processes, manufacturing, manufacturing, reputation reputation
Coca-Cola Coca-ColaHBC HBC countries countries
PET, PET, glass, glass, aluminium, carton aluminium, carton
Outlets Outlets
Trade marketing and Trade marketing and activation tools activation tools
Community Community investment investment programmes programmes
Community programmes Community programmes Sport andactive active lifestyles, youth Sport and lifestyles, youth development,water water stewardship, development, stewardship, disaster relief disaster relief
Source: Coca-Cola Hellenic Taste of Innovations
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Supplements
SUPPLEMENT 5 Distribution of advertising in retail chain catalogues in 2011 and 2012, %
Research by HyperCom company Taste of Innovations
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Supplements
SUPPLEMENT 6 Trends in the global market immediate consumption
100%
88(+2 %) 90(+2%) 92(+2%) 85(+3%) 86(+1%) 83(+3%) 79(+5%) 80(+1%)
80% 60% 40%
32
32
36
33
36
36
55
54
52
51
50
49
48
47
36
36
Eating outdoors Russian market in 2014: visits and expenses, % 100% 80%
20%
20%
0%
0% 2009
2010
2011
2012
Fast Food
2013 2014(est) 2015(f) 2016(f)
HoReCa
19% 1%
60% 40%
9% 8%
17%
51%
31%
32%
Visits, %
1%
Other Canteens Cinema
31%
Full Service Restaurant (FSR) Quick Service Restaurant (QSR)
Spends, %
Total IC
Source: CREST research, 2014 Taste of Innovations
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This case study was written and published by Changellenge >> — the leading provider of case studies in Russia
This case study was commissioned by Coca-Cola Hellenic www.coca-colahellenic.ru
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