Cooperation at the top
Representatives of more than 20 consumer package firms, Including the beverage industry’s two largest players, recently met at the Coca-Cola Co.’s global headquarters in Atlanta to share ideas and direct international business software firm SAP on what kind of software to create next.
What rivals like Coca-Cola and PepsiCo get by pooling their knowledge, participants said, is mutual benefit. By recognizing mutual needs they can direct SAP to craft software that smoothes their operations. SAP sells its software, and Coke and Pepsi get to streamline their systems. Everybody wins, and, instead of competing over who has the better technology, they get to compete over who implements it better.
Tom Miller, Coke’s vice president of bottling investments, said the Coca-Cola Co. has used SAP software on the distributor level for years. In overseas markets, he said, Coke is currently rolling out a new version of the software that allows distributors to “promise” product.
The software eliminates disconnects between what a retailer expects to get and what actually arrives in his store, Miller said. Salesmen can remotely check what product will be available. If the supply doesn’t meet the stores intended order, the salesman can work out a substitution.
While applications like that are the group’s primary reason for meeting, Bill Wohl, SAP’s vice president of field communications, said their meetings have grown beyond that. In the past few years, participants have identified mutual partners, then drawn those partners in. They’ve also identified occasions where their combined clout with particular suppliers could help them save money. The group’s discussions have become increasingly open, Wohl said, covering just about everything but price – a subject banned because it would cross the legal line into monopolistic collusion.
Follow up: vitaminwater... now batting zero
The Coca-Cola Co. Inc. will soon update its $4.1 billion dollar vitaminwater acquisition.
At the top of Coke’s agenda: scrapping vitaminwater10. Coke will replace the 10-calorie per serving (25-calorie per-bottle) diet line and replace it with vitaminwater zero. The new diet variety will boast zero calories and branding that falls in line with Coke’s other “zero” products. This follows what had been a robust rollout of “10,” which quickly achieved more than $78 million in annual sales despite the slowing growth of vitaminwater.
As reported in October, Coke had taken great effort to position vitaminwater10 as an independent brand in the fashion of Diet Coke. The line’s advertisements avoided all mention of the parent product, and Coke and its distributors put extra muscle behind the line by diverting vitaminwater point-of-sale space. One retailer reported that his local distributor ceased giving him vitaminwater window clings in favor of clings featuring vitaminwater10 flavors.
Full-calorie vitaminwater will also see a redesign. Coke announced that it will switch the brand’s old labels for shiny metalics. The entire brand will also receive new nutritional labeling intended to make each variety’s functional ingredients easier to understand.