Coca-Cola is under attack on all sides in terms of plastic, DRS and sugar. But its GB bottling boss insists it can be a force for good… and growth
Until its dramatic u-turn last year, Coca-Cola was demonised by campaign groups for its role in undermining solutions to plastic pollution, thanks to its opposition to plans for bottle deposit return schemes (DRS) in the UK. Coke’s decision to swing behind DRS just over 12 months ago was seen as a major turning point in the UK’s war on plastic.
It’s now at the centre of another potentially landmark move, having joined forces with Tesco, the Co-op and Heineken, to lead a new industry coalition tackling the crisis, as The Grocer exclusively revealed last week.
Leendert den Hollander, vice-president and general manager, Great Britain at Coca-Cola European Partners, is used to controvery: at Young’s Seafood, where he was CEO until 2014, he had to deal with Horsegate. But these moves are proof that Coke – so often demonised – can be a powerful force for societal good, just as long as it does not lose track of its core customers along the way. “This clearly goes well beyond just Coke but if we want to increase the recovery of packaging I see it as a positive that a company like us is trying to steer the debate in a very collaborative way,” he says. “The industry needs to come together. It’s not something that comes from a manufacturer or retailer in isolation, it needs to work across the whole supply chain and that’s what we’re trying to do.”
“It’s important to talk about the UK context because it doesn’t make sense to come up with a solution that only works in Scotland or England. We believe that’s the wrong way forward.”
The hope is that in conjunction with the government’s proposed DRS scheme for England and Wales – which has been given the go ahead this week – there will be some element of unity in terms of approach.
The biggest challenge is the on-the-go sector. And opportunity. “Bottles that are bought somewhere, consumed then disposed in a different location. That’s a very UK dynamic. The size of that market is much bigger than it is in other countries and we want to be part of a group that gets to grips with it and helps to define a well-designed recovery system.
“The good thing is that there are many parts of the industry [with] a shared ambition. We are discussing the science with many people. These discussions are about the science. If you are clear on the facts and the figures, in this case what the part of plastics is that is not being recovered, then that’s how you can best design the system.”
Potted CV: Currently vice president and general manager at Coca-Cola European Partners, Great Britain. Also president of IGD and vice-president of BSDA. Previously CEO Young’s Seafood, and UK managing director and chief marketing officer of Findus Group. Spent 15 years at Procter & Gamble in senior marketing positions, including leading its global household cleaners business
Family: Married with three children - two boys and one girl
Career peak: Now, enjoying the moment
Best advice received: “Keep it simple”
Hobbies: Food & drink and skiing
Favourite book: Anything by John Grisham
Favourite film: The Shawshank Redemption
The need for “scientific evidence” has clearly become something of a defence mechanism for den Hollander, to deal with the criticism Coke so regularly receives. As the heat has intensified on its use of plastic (110 billion bottles globally a year, according to estimates), it’s not as if the war on sugar is going away, with the soft drinks levy coming in next month.
In January it said it would cut the size of a 1.75-litre bottle of Coke to 1.5 litres and put up the price by 20p in March, having ruled out changes to the Classic Coke recipe, while some of its rivals reformulated.
“The tax is going to come and given the size of our portfolio it’s going to have a significant impact,” says den Hollander. “With red Coke there has been a decision not to change the formula because consumers enjoy the brand and enjoy the drink.
“Will consumers see a different price point in the market? Ultimately that’s down to the retailers but clearly we have an intention to pass on the tax and I expect to see a differentiation between sugary drinks and non-sugary drinks. We just need to make it clear to our consumers that these price rises are driven by the tax.
He strikes a note of defiance. “We didn’t propose the tax and we believe there are other measures to reduce childhood obesity and it’s through these measures that we and the wider industry have taken that the calorie intake from soft drinks has significantly reduced over time.”
The irony is that Coke enjoyed its best performance in years in 2017 due to its greater focus on Zero (see Britain’s Biggest Brands supplement), with sales of the masterbrand up 3.4% to £1.1bn.
But Den Hollander rejects suggestions that because of the impact it has had on reformulation, the tax is a success even before it comes in.
Exclusive research for The Grocer recently revealed Coca-Cola had reformulated more products than any other manufacturer to duck out of the lower tier of the tax, despite higher-profile reformulations by the likes of Lucozade and Irn-Bru.
Of 29 unique lines that had between 5g and 8g of sugar per 100ml in April 2016, 12 were reformulated to contain less than 5g, including Dr Pepper and Fanta Orange.
“We have been on a long-term strategy around sugar reduction. It takes time to do something like that,” he says. “It’s not just as if they announced there’s going to be a sugar tax so we said ‘OK we’ll change the recipe’. Diet Coke launched in 1983 so you can argue we were way ahead of our time but just recently we have seen the launch of Monster zero calorie and the reformulation of Fanta last year. We now look at our portfolio and see that most likely, apart from classic Coke and Monster green, none of our products will be taxed.”
“But what’s crucially important is that we take consumers by the hand. Taste is crucially important and ultimately we follow the needs and wants of consumers.”
Last year’s crash in sales at rival energy drink Lucozade, which lost £25m in the 12 months since its reformulation, provides a salutary lesson. “If you change a product or packaging or anything to do with that product, you need to make sure it’s well received by consumers. Consumers will vote by liking or not liking the new taste.”
“But that doesn’t mean reformulation is bad,” he stresses. “Look at the flipside. Fanta had double-digit growth after its reformulation because we carried our consumers with us.”
Den Hollander is no stranger to failed formulas, though. In particular the stevia-sweetened Coke Life, which was pulled last summer. But he insists it was not so much a failure of Coke Life as a success story for Diet Coke and Coca-Cola Zero Sugar that saw its demise and also tipped the balance of Coke’s sales last year so that for the first time more than 50% were for products with no sugar.
However, if Coke did, as some suggest, get its fingers burnt with Coke Life, that may partially explain what some regard as the damp squib relaunch of Diet Coke in February this year, which saw the unveiling of new Exotic Mango and Feisty Cherry variants but stopped well short of the “full restage” of Diet Coke in the US. So why was that?
“Diet Coke is a significant brand, by far the biggest light cola brand,” says den Hollander. “We’re looking at what we can do in both the US and the UK to grow that brand.
“We’re trying to bring new news to consumers to try to make sure Diet Coke is up to date, but we feel very strongly about the visual identify of Diet Coke and the silver can and the way it looks today.”
Having been on the defensive in so many areas and for so long, Coca-Cola has also gone on the front foot recently, with the launch of three new products: Fuze Tea, a low-calorie ice tea; Honest Coffee, an extension of the Honest Tea range; and Adez, a range of vegan-friendly smoothies. Half of its growth will come from NPD by 2020.
Looking to become a “total beverage” company, the new products will allow Coke to reach into areas were den Hollander admits it is still relatively weak.
Den Hollander has dubbed the strategy “grow the core and add more”. Rather than world domination it’s low key but, especially amid concern over sugar, it could be a masterstroke.
“We certainly hope some of these products will grow into a big bang, but for us the big bang is the combination of everything we do. It’s more the portfolio play as opposed to one individual,” he says. “We are evolving our strategy. We’ve identified a number of areas we want to grow in and that means adding more brands and products but at the same time never forgetting about the core business.”
Den Hollander’s skill at juggling the forces of change with core priorities for businesses has helped him land two top industry positions outside the CCEP fold too.
Appointed president of the IGD in October 2016, he is also a founding member of the Food and Drink Council, which met for the first time in January.
“I see the council as a clear sign the government wants to look at the industry differently,” he says. “More and more the issues we are dealing with are so big, it’s not just about one company, it’s all about co-operation, with other manufacturers, retailers and with government.
“I believe the days when the industry has a position and the government has a position are over. The new way to do things is to agree on the issue and work together on the solution.”
So will Coke ever get away from being cast as society’s villain? Even with an amiable boss like den Hollander at the helm, probably not.“I hope what we can do is show we are very serious on a number of societal issues and that we can play a positive role on helping to make some of those issues better,” says den Hollander. “We are in a great place to help shape what the future could look like.” Positively, of course.