Coca-Cola CEO comments on rekindling growth and innovation

Speech to the National Press Club in Washington, D.C.
Muhtar Kent, chairman and chief executive officer, The Coca-Cola Company
December 2, 2010

Thank you and good afternoon, everyone. What a great privilege it is to be in our nation's capital today to address the National Press Club.

I can't help but notice that a lot of folks are enjoying our beverages with your lunch today -- so let me just begin by thanking you for your business!

And President Obama, if you're listening by chance on Public Radio or watching live on C-span, I know from press reports that many of the soft drinks of choice in the White House are produced by Coca-Cola. That's a policy position I certainly endorse and appreciate.

I have been looking forward to this engagement at the Press Club for quite some time.

As someone who has spent the vast majority of his career traveling to markets around the world for Coca-Cola, I have seen, first-hand, the correlation between the strength of a nation and the strength of its press. That's no more so true than right here in America. In fact, you could say I owe my career to a strong American press.

Over 32 years ago, I was reading a newspaper in New York and stumbled upon a classified ad for an entry level position with The Coca-Cola Company. It looked intriguing, so I responded and sent in my resume. I'm glad I did -- I'm living proof that classified ads really do work!

When I first went to work for Coca-Cola in the late 70s, the mood in America was pretty somber and anxious. Fuel prices were spiking. A recession was draining our confidence. 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. There were many striking parallels to the situation we find ourselves in today.

But the system 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 learn from history -- 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 and tax policies that promote growth and investment. All because of the entrepreneurial spirit and vitality of a nation that cultivates diverse cultures... and people... and points of view.

I believe it's the same formula -- the same antidote -- that will ultimately solve our current problems. For the record, I should say I am an unabashed optimist. And I work for a Company that is unabashedly optimistic. We learned this trait from America itself.

For the last 124 years, Coca-Cola has grown up right beside America. We have reinvented and renewed ourselves countless times, just like this great nation.

Now, I realize that being an optimistic Baby Boomer is not exactly in vogue at the moment. In fact, USA Today published a report two weeks ago that cited that two-thirds of Baby Boomers were less optimistic about the future of the U.S. than they were when they turned 21.

I certainly understand the anxiety and frustration that exists out there today. The past two years of economic plight have been tough -- brutally tough. Families have suffered. Communities have suffered. Too many jobs have been lost and too much wealth has vanished.

I also believe, though, that our darkest days have passed. We're beginning to see the first rays of light through that long dark tunnel. If we muscle through, I believe we're not only going to see a return to pre-2008 economic conditions, but we're also going to witness potentially unprecedented levels of growth and prosperity in the years ahead.

Shortly after I started my role as CEO of The Coca-Cola Company in 2008, I asked my good friend Warren Buffett to come talk to our people about the economic crisis, and the mood in America, and what it could mean for our business. As you probably know, Warren is the single largest shareholder of Coca-Cola stock.

At our Town Hall he said something I will never forget. He said, "Since the dawn of this nation, there have been those who have bet against America. There are people today betting against America, and you can be sure there will be people 20 years from now who will be betting against America."

"But here's the reality," he said. "People betting against America are always wrong. We have the culture here... the institutions here... the people here... and the ideas and innovations -- that will always bloom if given the chance."

I don't know about you folks, but I'm not about to argue with Warren Buffett.

At Coca-Cola, the America we see just beyond the horizon is one of incredible opportunity.

We're growing: Over the next 40 years, the U.S. is likely to add 100 million new residents. Our fertility rates are the highest in the developed world and are higher than much of the developing world.

We're young: By 2050, only a quarter of our population will be over 60, compared with 31 percent in China and 41 percent in Japan -- and even higher percentages in much of Europe.

We're multi-cultural: The U.S. remains the world's top destination for immigrants. In fact, today, according to demographic expert Joel Kotkin, half of all skilled immigrants come to the U.S. These newly minted Americans have launched nearly a quarter of all venture-backed public companies since 1990.

We're enterprising: Two out of 3 new jobs in this country are created by businesses less than 5 years old. Women entrepreneurs alone account for $4 trillion dollars in GDP in the U.S. That's nearly the entire GDP of China today.

We're innovative: The U.S. produces more patents and inventions than the rest of the world combined.

And we're generous: Today, Americans give over $300 billion dollars a year to charitable causes. The American ethic of service and philanthropy is alive and well. This is the moral foundation of a growing and healthy society.

Two years ago, we looked long and hard at these trends and others that would be shaping America and the global landscape over the next decade and beyond. We began a serious process of strategic renewal across our entire Coca-Cola system.

When I say "Coca-Cola system" I am referring to our Company and the more than 300 partners that manufacture and distribute our beverages at almost 1,000 bottling plants in over 200 countries around the world today.

You might know that relations between our Company and our independent bottlers have not always been exactly rosy. There have been times when, quite frankly, we lost our way. In many cases, individual interests were put above the greater good of our system and our brands. Both parties shared the blame. Our business suffered.

Now, however, we're sharing the same vision. Two years ago, the leadership teams from our Company and our bottling partners sat down and began crafting a shared vision for the future. We call it our 2020 Vision, and it's based on a set of mutual priorities and actions that will enable us to double our business in the next 10 years.

It's an aggressive vision-- certainly not for the faint of heart. In essence, we're asking ourselves to accomplish in the next 10 years what took 124 years to achieve. It's going to require hard work, but we believe it's doable if we continue to put aside our differences, focus on what we do best together, and execute day-in and day-out.

Our business in the United States is absolutely central to our 2020 Vision. We can't achieve our global targets without a strong and sustainable business in America. And we certainly can't do it without a strong and healthy American economy in the coming decade.

Fortunately, we're very bullish on the future of our business and this country. In fact, we're so bullish that this year we made a $12 billion dollar investment in restructuring our operations in North America by acquiring the American operations of our largest bottler here -- Coca-Cola Enterprises. This new structure is helping us better serve our retail customers and consumers here in the U.S. and accelerate our business. It's foundational to our 2020 Vision.

We have a long way to go to get our American business back to the growth levels we envision, but the journey has begun. In fact, these past two quarters, we've grown volume in North America for this first time in five years. Indeed, there's light at the end of the tunnel -- not just for Coca-Cola but for the United States economy.

Now, I don't even pretend to be an economist nor a politician. But I believe if we as a nation recommit to improving 4 critical areas of national advantage -- there will be no stopping this great country in the years ahead.

These four are:

• Innovation
• Education
• Entrepreneurship
• International trade

These four critical areas have made the U.S. the greatest economic power the world has ever known. In just the few minutes that I have remaining, let me quickly share a thought on each of these four -- beginning with innovation.

In the foyer outside this ballroom, we've set up an example of an innovation that we think is uniquely American. It's a blending of art, science, entertainment and design. It includes RFID technology, a micro-dispensing technology, a Pure Pour technology, a Microsoft operating system and other wonderful American inventions. We call it our Freestyle® fountain, and it is capable of dispensing thousands of different combinations of Coca-Cola beverages from one single dispenser. If you want an Orange Coke or a Raspberry Fanta with a twist of lemon or a Diet Barqs or 103 other branded beverages, you've got it with a simple touch-screen inter-face.

Freestyle® also allows you to experiment. In fact, already some inventive consumers have come up with their own favorite recipes. Our journalists in the room, for instance, might want to try a Red Wolf Blitzer -- a combination of Vault, Red Blitz and Vanilla Diet Coke. And for our medical professionals here today, we have the Doogie Fanta MD -- a combination of Mr. Pibb, Vault Peach and Cherry Fanta.

We were very fortunate to have the great American inventor and entrepreneur Dean Kamen -- the man who gave us the first insulin pump and the Segway cycle -- involved with us on the development of this breakthrough. Dean is a fascinating man and his imprint is all over this innovation.

Here in the Washington, D.C., area, our Freestyle® fountains are being tested in Five Guys hamburger restaurants, and we're presently in 13 markets nationally. We plan to expand all across the U.S. in the coming years. We believe it is going to be a game-changer for us. It gives consumers more choice... It gives us real-time data about consumer preferences... And it gives the environment a break.

In fact, this new innovation takes 30 percent of the water and packaging associated with our fountain business out of our system altogether. When fully deployed, Freestyle® is going to present a very significant green advantage for us. A great American invention. Made in America. For America.

In the coming years, I believe the greatest opportunities for American innovation will lie at a similar intersection of supply chain and sustainability. The opportunities are simply huge.

The second area we need to be focused on nationally is education. While we have a higher education system that is still largely the envy of most of the world, we need to think creatively about new solutions for our primary education system.

Let me just say I applaud -- make that I applaud loudly -- Mayor Bloomberg's recent choice of Hearst Magazines' Cathie Black to head New York City's Public School System. This is the kind of innovative thinking... and innovative leadership... we need across our primary education system in America. A journalist running the nation's largest public school system makes a lot of sense to me.

Cathie, as you might know, served on our Company's Board of Directors for 20 years before leaving two weeks ago. She is brilliant. She has unlimited creativity and energy. She is committed, and she will be a huge asset for New York's children and for our nation's future. Look for great things to come from New York in the years ahead.

The third area that needs our national focus is entrepreneurship. I think one of the great untold stories is just how much mutual dependency exists between large and small businesses today.

Our Coca-Cola system is a massive generator of small business development. Each year, we invest over $10 billion dollars in our supply chain in the U.S. This includes $208 million dollars that was invested this past year on suppliers right here in D.C., Maryland and Virginia.

We feel we have a deep responsibility to promote and protect the interests of entrepreneurs and small businesses -- which are today the most-trusted institutions in America.

If we -- together -- create the right climate for investment, entrepreneurship and competitiveness, there is no limit to how far we can advance over the coming decade. In the coming years, our national focus needs to be more on entrepreneurship and growth and less on taxation and regulation that threatens incentive, investment and growth.

The fourth and final area that I believe desperately needs our national focus is international trade. Today, global American-based companies like Coca-Cola directly employ 22 million workers in the U.S. and support more than 41 million additional American jobs through our supply chains. That's nearly one-in-three American workers.

Here's what our global success allows us to do at Coca-Cola: In just the last 5 years, we have invested nearly $20 billion dollars in capital expenditures and acquisitions right here in the U.S. When the calendar reaches December 31 this year, we will have invested $3.2 billion dollars in one of the most economically difficult years in the U.S. since the Great Depression. This represents well over half of our Company's worldwide investments over the same period.

And far from shipping jobs overseas, we're creating real and tangible benefits for Main Street America. In fact, I saw this happen recently when I went down to our Main Street citrus plant in Auburndale, Florida. Yes, it's really on Main Street! I was down there to help inaugurate a $115 million dollar expansion of our operations and to meet with our local suppliers who provide us with citrus for our growing global juice business. In fact, one third of the entire Florida orange juice crop is now processed at our Auburndale facilities.

Here's something you might find interesting: The capital improvements we've made to our Auburndale facilities are a direct result of the intense demand we're seeing for our juice beverages in Asia and China, in particular. In fact, about 80 percent of the orange pulp processed at our Auburndale plant will be exported to China alone.

That's right -- our business in China is creating jobs and economic stimulus right here in the U.S. If you look at what's going on in Auburndale, you'll see that our new investments will create 135 new Coca-Cola jobs, and will have an additional $60 million dollar impact on the local community. For all the talk we're hearing about China's rise taking jobs from America -- the reality is (as my friend Fareed Zakaria has noted so well) that China's rise and the rest of the world's rise are good for America and ultimately good for American job growth.

So, having said all this, I hope you can see that our bullishness on America is not some form of blind optimism. There are trends and dynamics here that are real and tangible and have long-term positive implications.

At Coca-Cola we believe in this incredible country and her great future. And as George Allen once told the Redskin faithful -- the future is now .

In fact, we're just a few weeks away from entering our 125th year of consistent renovation and reinvention at Coca-Cola. We're also just a few weeks away from entering America's 235 th year of reinvention. We look forward to this journey together and we're immensely proud to be part of the fabric of this wonderful nation, and our world.

Thank you very much and happy holidays, everyone.

Thank you.