Coke Shuffles Management in Wake of Wendy Clark Exit

Beverage Giant Creates New USA Division

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Coca-Cola is making significant changes to its North American leadership team in the wake of the departure of Wendy Clark, a highly respected marketer who is leaving to become president and CEO of North America for DDB Worldwide.

Ms. Clark -- whose exit was announced last month-- carried the title of president of sparkling brands and strategic marketing in North America.

But instead of filling her role as is, Coke has elected to create a new division called USA Operations that will oversee all U.S. beverages, including brand strategy, marketing and integrated content for all sparkling or carbonated and still brands, as well as retail sales and franchise leadership. The USA division's president will be Hendrik Steckhan, a former president of Coke's German business who recently came to North America to serve as president of still beverages. Mr. Steckhan will report directly to to Sandy Douglas, president of Coca-Cola North America.

Meanwhile, Coke has named longtime employee Stuart Kronauge to lead brand marketing, where her responsibilities will include the Coca-Cola trademark, Sprite, Glaceau, water, tea and coffee. She is currently senior VP-customer marketing, which involves relationships with Coke retailers.

Also taking on an expanded role is Ivan Pollard, who will lead strategic marketing, including content, connections, investments, assets and portfolio strategy and innovations. Mr. Pollard is currently senior VP of connections, investments and assets. Ms. Kronauge and Mr. Pollard will report to Mr. Steckhan.

Mr. Douglas described the changes in an internal memo as "aligning our organization" around the following four lines of business: U.S. bottler-delivered beverages, U.S. foodservice and on-premise, The Minute Maid Co. and Coca-Cola Limited Canada.

"These changes capitalize on [Coca-Cola North America's] leadership talent and better align our structure to our strategy and lines of business, facilitating improved execution going forward," he said in the memo. "These changes also reflect our continued focus on developing our people and accelerating execution and business momentum."

He credited Mr. Steckhan with "leading our business in Germany to renewed growth and success from 2010 to 2014." Mr. Douglas noted that prior to his German stint, Mr. Steckhan "led the revitalization of our core brand business" as president of sparkling brands in North America from 2007 to 2010.

The creation of Mr. Steckhan's new role overseeing both carbonated and non-carbonated brands underscores the rising importance of non-soda offerings as more consumers shun the fizzy drinks partly as a result of health concerns.

While Coke remains the top soda brand in the U.S., it eked out just 0.1% volume growth last year, while Diet Coke volume fell 6.6%, according to Beverage Digest. Pepsi-Cola volume fell 1.8%.

Coke's carbonated soft drinks still account for 58.8% of the company's sales, compared with 39.6% for non-carbonated, according to Sanford C. Bernstein. But in the four weeks ending Nov. 28, carbonated soft drink volumes fell 2.5%, compared with a 6.9% jump in non-carb sales, according to a Bernstein report.

Coke has combated the trends by emphasising dollar sales growth over volume growth, or as executives have put it, selling "Cokes" instead of "Coke." The strategy involves selling smaller package sizes that might contain less liquid but are more profitable on a per-unit basis.

"Packages by the end of the 1990s were all huge and they were boring and the consumer rejected them. The consumer is now changing," Mr. Douglas said recently at an investor conference. "The consumer is moving to smaller packages. A 12-ounce can traded to a 7-ounce can is a 30% reduction in volume, but it's an increase in revenue."

Coke is also in the midst of a $3 billion productivity program that involves seeking cost savings on everything from cost of goods sold to marketing expenses. Some of the savings are being poured into media spending. "Last year, we significantly increased our media investments, and we're doing so again this year," CEO Muhtar Kent said on a recent earnings call.

Coke is the world's fourth-largest advertiser as ranked by measured media spending, at nearly $3.3 billion in 2014, according to the Ad Age Datacenter. That was up by 8.9% compared with 2013.

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