ATLANTA — In an era when retailer-supplier partnerships are defined by collaboration, the biggest manufacturers face considerable challenges.
They are expected to bring world-class resources and support while making sure their own expansive organizations are optimized for the needs of each customer.
The case of The Coca-Cola Co. is particularly interesting because it raised its game in partnering with retailers ranging from Kroger Co. to Ahold USA after completing a major merger and restructuring.
The giant manufacturer is now about 1½ years into its new strategy, which began with the acquisition of its large bottler Coca-Cola Enterprises (CCE) North America. This resulted in a massive vertical integration that helped produce deeper customer relationships, positive retailer feedback and more robust financial performance.
“If you’re a Kroger or a Marsh, for example, you now have one person, one general manager with a customer team, coming in and representing The Coca-Cola Co. in the entirety of the portfolio,” said Steve Cahillane (left), president and chief executive officer, Coca-Cola Refreshments (CCR), the North American unit created from the merger that includes bottle and can, fountain, and juice.
The impact on the industry is considerable, taking into account that The Coca-Cola Co. has more than 500 sparkling and still brands, 15 of which are billion-dollar brands, including Coca-Cola, Diet Coke, Fanta, Sprite, Powerade and Minute Maid. The company’s portfolio includes low-and no-calorie beverages, fortified products, and ready-to-drink teas and coffees.
“We know what’s best for the consumer, and we bring the customer a fully baked solution,” Cahillane said.
This approach to partnering embraces shopper marketing and category insights, among other tools, that enable the company to customize approaches.
“We come with a holistic view that says, ‘Here’s what we know about your shopper; here’s what we know about our portfolio and how it fits into this daypart.”
The new direction and coordinated marketing approach improved on an earlier situation in which the company’s units were sometimes pursuing different strategies with the same customers, and at times even competing with one another. The CCE merger opened the door for Coca-Cola to streamline its strategy.
A major industry ranking points to positive results. Last fall’s Kantar Retail PoweRanking survey, an annual measure of how trading partners rank each other, was particularly glowing about the company. Coca-Cola gained points in a range of areas, including clearest company strategy, most important consumer brands to retailers, business fundamentals and best sales force/customer teams.
“Coca-Cola has improved its execution since it took back its bottlers,” read one retailer comment in the study. “This is critical because improved execution helps in a flat category.”
Said another retailer: “I have to give the Coca-Cola organization credit, they are listening now more than they have in the past.”
Coca-Cola aims to develop insights and strategies specific to individual retailers, which plays out differently depending on the retail customer.
“They’ve tied our relationship to our company’s six pillars,” said Denise Mullen, vice president, DSD, at Ahold USA, parent company of Giant of Landover, Giant of Carlisle and Stop & Shop. These pillars range from increasing customer loyalty to fostering responsible retailing.
“They’ve taken this to heart,” she added. “They developed programs underneath these pillars that help us grow our business along with their business.”
Mullen said Ahold also benefits from the considerable resources the manufacturer provides, including dedicated personnel and expertise in shopper insights, marketing and other functions. As an “advocate” — or preferred — partner, Coca-Cola pulls data and helps provide analysis on how Ahold is performing across categories.
In another example of partnering, Coca-Cola’s relationship with Kroger was recently spotlighted during a panel on merchandising success stories at FMI 2012 in Dallas. The collaboration involved the manufacturer’s Vitaminwater brand, which tied into Kroger’s “customer-first” approach,” said Larry Nelson, director of DSD sales planning for the chain. As reported in a recent SN article, Nelson said transparency and honest discussion about costs were essential to making the collaboration successful.
The program helped promote healthy living through in-store displays in the Nature’s Market sections of Kroger stores, rotating featured products, and education efforts about hydration. The campaign made use of an alliance with performer Carrie Underwood, and included online components that work with the in-store program.
All these efforts helped grow penetration of Vitaminwater at Kroger by 26.5% in 2011, said Wade Duke, who was on the panel and is president of the Kroger account team at Coca-Cola Refreshments.
“You can’t do everyone’s ideas, you have to pick and choose,” said Kroger’s Nelson. “We thought we’d have a home run with this one, and it proved to be a home run.”