Late last year, there was an interview in Bloomberg BusinessWeek with Charlie Rose where his guest was the CEO of Coca-Cola, Muhtar Kent. In the short but fascinating interview, Muhtar discusses what one of the world’s largest consumer goods company is doing to expand its international reach.
We have written earlier posts which discussed why we strongly recommend that people invest and own international companies, but some of Muhtar’s comments help drive the point home. Upon answering the question of how important developing markets (emerging markets) have come to Coca-Cola, he stated the following:
Let me just put it into perspective: 3.5% to 4% of the population of the world lives in the United States, and we’re consumer goods company. So we sell where the people are.
As one of the large stock companies in the United States, a member of the so-called S&P 500 Index, Coca-Cola is one of many large stock companies based in the U.S. which currently have a large share of their revenues and sales from international markets and this percentage, especially to the developing or emerging markets, will continue to grow at a quickening pace.
Muhtar continues in the interview by describing how quickly they have developed a product that then grows exponentially. While he describes that Coca-Cola currently offers 3,000 products and more than 500 brands, he offers an example – due to the modern social media – of how quickly a new brand can explode on the marketplace.
He describes how for the first time in the history of our planet, there are 3 billion people who are communicating with each other everyday. He discusses how they launched a juice called Minute Maid Pulpy and within three years it became a billion-dollar product for the company. The product is now sold in 25 countries around the world.
He also discusses a topic which has been in the news lately – the so-called slowing down of China. But he talks about how natural this slowing is as they have been growing at 9 to 10% for the past 20 years and, just like we have found in the U.S. , as you grow into an enormous sized economy, it is natural for the growth rate to slow down.
The Coca-Cola Company is not alone in expanding their product reach. How many of the S&P 500 companies will continue to expand the markets. Just to name a few: Johnson & Johnson, McDonald’s, Procter & Gamble, Disney, PepsiCo, Kellogg’s, General Motors, Apple, the list continues…
Another item that is discussed in the interview, is how Coca-Cola has-been also improving the lives of the people in the markets they serve – and not just from having their beverage of choice. Muhtar describes how they are now one of the top three employees in Africa and have begun working on an initiative to bring clean water to the various areas that they serve. They’ve also begun a project called Last Mile to allow Cokes’ immense distributional system to get medicine to remote locations while at the same time lowering their costs.
To give you some idea of the scale of their distribution, Coca-Cola actually services – every week – 20 million points of sale from a fleet of delivery vehicles. As these villages lives are improved from clean water and medicine, they become additional markets for the great American products. We all should be excited about our futures.