Global Beverage Industry Will Prevail

WHILE no one has a crystal ball, I think it's safe to say we will continue to live in times of great paradox. Our future over the next decade will almost certainly be defined by severe headwinds... and unprecedented tailwinds. Today, those headwinds feel more like a Category 4 hurricane. It's tough out there. I know it. You know it. It's probably true that it will get even tougher before it gets better. It's been tough for a while. Some of the challenges we've been facing have been lingering for more than a decade. Consumer and customer preferences and expectations have shifted dramatically. Regulatory and NGO pressures have intensified. Commodity and energy costs have soared. And now, of course, we find ourselves in the midst of the biggest financial crisis since the Great Depression. As scary as it sounds ?we've been in this place before and we prevailed. And we will prevail again. In fact, the mood in America today is very similar to what it was 30 years ago when I graduated from university in England and moved to Atlanta to work for The Coca-Cola Company. Fuel prices were spiking. A recession was draining our confidence. Across America 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. But the system didn't collapse, did it? And we can and have to learn from history ?that the past is indeed prologue. Think back when you first joined this wonderful industry. Even if it was just a decade ago, there was still no viable bottled water category or ready to drink tea or coffee categories. Enhanced waters and energy drinks were non-existent. Nutraceuticals and functional beverages were still the realm of science fiction. Calorie-free sparkling beverages were still at a very early stage of their development. But all that's changed. And even with the formidable challenges we now face, I know of few industries that possess the same degree of creativity, passion, genius and determination as the American beverage industry. These attributes, I believe, will bode well for us as we weather the current economic storm and other obstacles we can't control. And they are even more important as we tend to those areas we can control, like better execution, innovation and leadership. Now is the time for us ?collectively ?to focus on those things we can control. I recognize that there are no easy solutions. But I also know we've never had a greater incentive to reach down deep and push the envelope further than we've ever pushed before. Doing What We Do Best As a system, [Coca-Cola] have always been ?and always will be ?in the business of non-alcoholic ready to drink beverages. This is where we excel. This is what we do best. 匢 believe this industry has just scratched the surface of our potential. There's so much more out there for us ?globally and right here in the United States. And to illustrate this, consider the sparkling beverage category. Nearly three years ago at the CAGNY conference I got up on stage and said sparkling beverages had a strong future here in North America and around the world. More than a few audience members thought I was from the Flat Earth Society. A lot of folks were saying that sparkling beverages were a dying category. I'm proud to say Coca-Cola proved them wrong. We had a wonderful innovation up our sleeve in Coke Zero ?our biggest product launch in 22 years. Last year, we sold nearly 450 million unit cases internationally and we are well above that number this year. Coke Zero is central to driving our sparkling beverage leadership. It's bringing people back to the sparkling beverage franchise while generating great interest among new consumers. In fact, today, Coke Zero now ranks as one of our dozNike React Element 55