Here [image-nocss] is the complete text of Kent's speech:
I brought along that television commercial from our new "Open Happiness" campaign, because I wanted you to see the hero-role played by the convenience retailer in helping satisfy that young man's thirst craving.
At Coca-Cola, we appreciate everything you do. I personally appreciate the opportunity to be here today and to share a few thoughts with our great friends and partners from the convenience retailing and supplier industries.
The Coca-Cola Co. and our bottling partners around the world are extremely proud of our relationship with NACS-a partnership that now spans nearly a half a century. In many ways, NACS and Coca-Cola have grown up together.
For those of you old enough, think back with me for a minute to the year 1961, when NACS was just getting started. Convenience retailing, as we know it today, was truly in its infancy.
In 1961, Coca-Cola was also just beginning to spread its wings. We had just launched our third-ever sparkling beverage brand-a refreshing lemon-lime drink called Sprite that we believed had a lot of great potential. Sprite joined the ranks of Coke and Fanta in our sparkling portfolio. Our still beverage portfolio at the time consisted of just one brand-Minute Maid, and only in the U.S.
The world, of course, has changed exponentially since then as have the convenience-retailing and beverage industries. Today, more than 140,000 convenience stores dot the American landscape, and another 1 million are scattered all across the globe. In Japan alone, there are over 45,000.
Coca-Cola's portfolio now consists of nearly 500 sparkling and still beverages, and each year our industry introduces about 5,000 new beverages. In 1961, we sold 84 million servings per day. Today, we connect with our consumers over 1.5 billion times per day.
I bring up this comparison over time to illustrate a broader point. The changes we've witnessed over the past half century will pale compared to what's in store for us in just the next decade.
The world is truly shifting on its axis, and the implications for convenience retailing are profound. Our future over the next decade will be defined by severe headwinds and incredible tailwinds. Today, those headwinds feel more like a Category 4 hurricane.
This morning, I am going to talk about some of these changes and the opportunities and challenges they will pose for all of us. I will share some ideas on ways we can prepare for and leverage the changes coming our way. And I will discuss some of the creative innovations you should expect to see from Coca-Cola and the beverage industry that will help you better connect with your consumers and communities.
Before I get into that discussion, though, I'd like to spend a moment or two to touch on the current economic storm we are currently sailing through. There's no sugar-coating the fact that it's a mess out there.
A chain of extraordinary events have led to where we are today:
First, it all started with the energy crisis when the oil price shot up to over $100 per barrel. This led to a food crisis-when basic commodities like rice, grain and corn tripled in price leading to fighting on the streets of Manila, Mumbai and Bangkok. Then came the subprime mortgage crisis with real estate beginning to topple. This led to a banking crisis. And now we're in a full-scale, deep global recession. And this is very much unlike the crisis of our grandparents, when the world's middle class was a very small minority in a very few countries. The crisis then was really confined to North America and certain parts of Europe.
Today, with the latest data from December showing key Asian economies like Taiwan, Korea and Japan shrinking at double digits, the developing theory has clearly cracked.
The last 12 months have seen $52 trillion dollars of wealth wiped out of the world- $38 trillion of equity values and $14 trillion of real estate! Almost all from middle-class populations across the world.
We have never seen this before...and it's likely to only get worse before we see any improvement.
I dare say no one has felt this more than you. Jittery consumers are cinching their belts and consolidating trips. More and more of your customers are paying at the pump and fewer are walking through your doors.
It's tough. And no industry, no nation and no one person is truly immune. Some may be more resilient, but no one is immune. We're all feeling the impact.
I was in Davos for the World Economic Forum just a few weeks ago and last week participated in the Consumer Analyst Group of New York Conference.
As you can imagine, the financial crisis dominated discussion at both of these events.
I've taken away three themes from those discussions and from private meetings I've had in recent months with U.S. Federal Reserve Chairman Bernanke and other world financial leaders.
First, getting out of this crisis is going to require globally coordinated solutions. Unilateral monetary, fiscal or trade policies won't work in a multi-polar world.
Second, the U.S. will need to take a leadership position in driving this global coordination.
And third, China will need to play a central role as it is a chief actor in this drama as well.
My personal feeling is that the crisis-while extensive, painful and largely unprecedented for our generation-will be shorter-lived than many believe. And that's because we have much better medicine at our disposal today to cure this serious economic illness.
We have better medicine in the form of:
Enhanced communications, transparency and cooperation among nations. Better technology and innovation. A much larger global consumer class than ever. A sharp rise in entrepreneurial energy around the world. And global political mandates for change. These and other factors will play significant roles in correcting the problems.
I also firmly believe that America will emerge from this crisis stronger than ever. As scary as it is out there at the moment, we've been in this place before and we prevailed. And we will prevail again.
In fact, the mood in America today is very similar to what it was some 30 years ago when I responded to a newspaper classified ad and landed a job in Atlanta with the Coca-Cola Co. I am living proof that "help-wanted ads" really do work!
In the late '70s, of course, fuel prices were spiking. A recession was draining our confidence. Across America there was widespread fear that we were losing our global political and economic leadership.
Many people feared that a surging Japan would cripple American industry, jobs and the U.S. economy. Even greater numbers of people were worried about their jobs being replaced by technology.
But our world didn't collapse, did it? In fact, America got stronger, much stronger, and that's because this great nation did what it has always done best: America innovated and reinvented itself. And we can and have to learn from history, that the past is indeed prologue.
In the process of innovating and creating a technology and service-driven economy, America replaced 40 million antiquated jobs with 80 million new high-paying and high-skilled jobs between 1980 and 2000.
In those two decades, we witnessed a unique creation of new wealth and ideas, all because of innovation, all because of the entrepreneurial spirit and vitality of a nation that cultivates diverse cultures and people and points of view.
The convenience-retailing industry and your suppliers have been right in the heart of this innovation. Think back when you first joined this industry. Even if it was just a decade ago, think about all the innovations you've experienced in store formats, merchandising, products, equipment, the dramatic growth of foodservice and other retail services.
Think about the beverages you sell. Even a decade ago, there was still no viable bottled-water category or ready-to-drink tea or coffee categories. Enhanced waters and energy drinks were nonexistent. Nutraceuticals and functional beverages were still the realm of science-fiction. Calorie-free sparkling beverages were still at a very early stage of their development.
But all that's changed. The people and companies represented in this room today-all of you-have created what is, in essence, a new industry. You've created a convenience-retailing industry that supports nearly 2 million jobs and generates over half-a-trillion dollars in revenue just here in America alone.
Convenience retailing has a material impact not only on our national economy but also on our national psyche. Here in the land of open spaces and the birth of the automobile culture, convenience retailing is as American as hot dogs and apple pie.
The entrepreneurial spirit, resolve and innovation that are at the heart of the convenience-retailing industry are also going to be the antidotes to battling through this economic crisis and winning again in the market.
For our businesses-and for each of us-this is exactly the time to confront our current reality head-on with courage, flexibility and determination. Now is the time for us to focus on what matters most to our business, shed what is wasteful and unproductive, keep communicating with customers and stake holders, and continue investing in our brands.
We can come out of this much better positioned than when we entered. Indeed, if we make the right decisions today, we can be in an ideal position to grow along with some very favorable macro-conditions that will emerge in the coming years.
So, let's look at the bigger picture, the longer-term forces out there that will be reshaping society and our businesses. At least four key developments will have great bearing on the world in the years ahead. These are:
The rising demand for energy, food and commodities. Rapid urbanization. A growing global middle class. A massive shift toward convenience. Collectively, I refer to these as the "new equilibrium" because they are shifting the balance of the world. No industry-believe me-no industry, sits more at the center of the new equilibrium than convenience retailing.
Let me quickly review these four key developments.
First-you know this better than anyone-oil. Despite the recent price fluctuations, there's no question that, long-term, energy demand is only go skyrocket across the world. Oil booms and busts are not exactly uncommon. What is different today, however, is the energy demand we're seeing from fast-growing economies around the world, adding to the already huge demand from the developed world.
Closely related to energy demand is the growing stress we're seeing on the world's food output. The surge in production of biofuels like ethanol, along with erratic weather, is partly responsible for food shortages and rising prices.
Last year, we met with UN Secretary General Ban Ki-moon, who said over the next decade it will take $200 billion dollars in new investments to offset the food shortage crisis.
So, here we are with surging demand for energy and food. As populations continue to expand and living standards rise across the world, we will have to manage our business in an economy of constant scarcity and cost pressure. This is the new normal.
Even in the midst of today's global economic crisis, people are moving in record numbers from rural to urban areas for jobs and opportunities. Urbanization is the second massive trend. Last year, for the first time in history, the majority of the people in the world lived in urban areas. We're adding a city the size of Miami to the world's urban landscape every month--and this will continue for the next 12 years.
This is creating the third trend, which is an unprecedented growth in the global middle class. By 2020, nearly a billion additional people will ascend to the middle class, and our estimates, by the way, are very conservative.
The fourth trend is the growing conversion to convenience. As more people, with more money, attain urban, time-strapped, on-the-go lifestyles, they yearn for convenience. We certainly see this already playing out in the beverage industry, where today 70% of all beverages consumed are ready-to-drink. Whereas only 30% in the emerging world.
There's a lot of opportunity to grow across all markets. Between now and 2020, non-alcoholic ready-to-drink beverages are expected to grow by $500 billion dollars in revenue. This will have big implications for convenience retailing, where packaged beverages are the No. 2 source of profit and the No. 1 reason among shoppers to visit a store after purchasing gas.
Now, imagine with me what the world will look like in the year 2020. Think about the opportunities that are out there as consumer lifestyles and life-stages continue to shift, as technologies and economic models evolve, as expectations expand and innovations flourish.
Imagine a U.S. market where time-strapped, on-the-go workers spend two hours longer working every day. Imagine their need for additional convenience. Imagine a market where 90 is the new 60, where people are living longer, healthier and more affluent lives, where 20 million more Americans are over the age of 65 than today. Imagine a world where the youth market is also still growing, where 7 million more Americans are under 18 -almost a quarter of our population.
Imagine a world where consumers are making purchasing decisions that are based as much on the content of our character as the content and taste of our beverages, where in-store technology recognizes consumers and what they want to buy and at what price even before the consumer decides, where innovations in packaging, equipment and transportation use less energy and leave a minimal imprint on the environment.
At Coca-Cola, we believe this is the world that awaits us and everyone in the convenience-retailing industry. It's a world of incredible opportunity and steep, steep challenges. We know it's going to take a lot of hard work and innovation to harness this future. And we know we can't get there alone.
We're only as strong as our industry, our supplier partners and our key advocates.
In that spirit-in the closing moments here-I'd like to briefly share some thoughts on three ways we can innovate together to revitalize the convenience-retailing industry and capture new opportunities that await just beyond the horizon.
To get there, I believe we'll need to innovate across two platforms: 1.) service innovations and 2.) sustainability innovations.
Let me start with service innovations. From the Coca-Cola system, you can expect to see continued investments in our marketing and innovation pipeline so that we can better serve you and the shoppers who frequent your stores.
At the outset, I showed you a television commercial from our new "Open Happiness" campaign, which builds on the success of our Coke Side of Life campaign for Coca-Cola.
It has struck a chord with consumers yearning for optimism and better times. I brought along one other spot that I'd like to show you now. It is an animated spot that represents the lengths we will go to find happiness and refreshments.
This and other ads from our new campaign have received a lot of positive comments, both from the media and more importantly from our customers and consumers. We hope this campaign ultimately plays a role in getting more shoppers to come through your doors.
I mentioned earlier the megatrend toward convenience that will only grow as the world becomes more affluent, mobile and demanding. I think you'll agree with me that it's time to look beyond the industry's stereotypical customer profile and offerings, and start positioning yourself to capture more of the convenience business. This means offering more than a quick in-and-out shopping experience.
A lot of the issues raised and suggestions offered in the NACS/Coca-Cola Retailing Research Council report that you've discussed at this meeting will provide a great framework to activate new customer service strategies to capture growth.
Today and in the future, one of the most important services we can provide our shoppers and consumers with is the peace of mind in knowing that we share their values, aspirations and beliefs.
And this leads me to the second area of innovation I think our industry really needs to focus on in the coming years: sustainability innovations.
I mentioned earlier that more and more consumers are judging us as much on the content of our character as the content and quality of our products and services. It's absolutely true. Today, half of all American consumers say they consider at least one sustainability factor in selecting what they buy and where they shop. The percentages are even higher in Western Europe and parts of Asia.
There's no question that the sustainability movement is spreading-and spreading fast-to all corners of the planet. That's an incredibly positive trend for society and business.
We have seen through our own experiences time and again that our business in any market is only as healthy and sustainable as the communities in which we operate. We've long recognized the responsibility to lead in this area, but we're also wise enough to know that we can't do it alone.
Solving society's largest challenges takes real leadership and partnership among business, government and civil organizations. That's why we collaborate with Greenpeace to develop eco-friendly coolers and with the World Wildlife Fund to restore some of the world's most endangered watersheds.
It's why last year we agreed to a multiyear program with the United Nations to develop a plan to reduce our global water usage. It's why we're partnering with local communities in nearly 50 countries to support healthy watersheds and community water and sanitation programs. It's why we're working with a host of communities and agencies to create innovative recycling solutions for our beverage packaging.
Just a few weeks ago, we put the finishing touches on a new $80-million PET bottle-to-bottle recycling plant in Spartanburg, S.C. This joint-venture facility is the largest of its kind in the world. It will play a big role in our efforts to ultimately recover and reuse 100% of the PET plastic-bottle material that we use by 2020.
We're excited about these and other marketplace, community, workplace and environmental developments that fall under an umbrella we call "Live Positively." In the future, we will all do well by doing good.
I hope you've gained from my comments today that I am bullish about the future. I believe in the convenience-retailing industry. I believe there are enormous opportunities out there, most of which we've yet to even imagine.
A lot of hard work remains ahead of us. This is not the time to feel down. This is not the time to get distracted or pessimistic or cynical. This is the time when leadership-our collective leadership-needs to shine. This is the time when true leaders step up and make those game-changing plays, those catalysts that spark momentum and winning.
American industry-and the world-needs our leadership now more than ever. I wish you all the best of luck and thank you foremost for your partnership but also for your time and attention today.
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