FP: You said "Brand America" took a hit -- and it certainly did. Where is it still useful or attractive for Coke to be seen as an American brand today?
MK: In every market that we're operating in, no matter what region in the world, we are seen as a local brand. We are always selected as the No. 1 brand in South Africa, not as an American brand but as a South African brand. In Turkey or Russia it's the same.
A successful global company needs to mean different things to different people. When you have Coca-Cola empowering women in Ghana or helping farmers in Haiti or building schools with youth leagues in China, that's what makes the character of the company closer to what people want it to be. Gone are the days when you simply create a positive impression through good advertising, create good products, make sure you can get to the point of sale, and end your job there. We're in a new era where you need to not just create positive impressions but positive expressions, so people talk about you between themselves. It's not you talking to the consumer -- they don't want that. You want to be the company that is more than the product, that has a caring character, that's transparent, lucid, open, and has a dialogue instead of a monologue. If you can then bring in the ecosystem that we're talking about -- all the stakeholders -- with a long-term purpose, you'll be creating value in a more multifaceted, sustainable way … and in a way that's more resilient to geopolitical shocks.
FP: In his inaugural address, Xi Jinping spent a lot of time talking about the "Chinese dream," in contrast with the "American dream." It's a much more collective vision, even if it is equally exceptionalist. What does the "Chinese dream" mean for Coca-Cola?
MK: How the Chinese engage today as a result of their dream is less important than how that dream evolves. China has clearly broken a world record in lifting people out of poverty in a given period of time. You need to peel the fruit and see inside instead of wasting time with the peel. When you look inside the fruit, it's a tremendously noble thing to lift so many people out of poverty.
But the key question is: How does China evolve towards a model where you're creating happiness and purpose for your people? I think that's the next 10, 20 years for China. How does China keep building into a more sustainable model? It's going to have to be an increasingly participative model. And what happens if you successfully build a prosperous middle class, foster true social mobility, but in the process, the environment is destroyed? That's not a happy outcome. So that's the challenge: There are just so many pieces that all have to fit. And I think the Chinese are educated enough, dedicated enough, and there's enough of a legacy -- we forget that out of 18 of the last 20 centuries, China not only had the largest population, but the largest GDP as well -- that they can make these changes happen.
FP: So if you think ahead over the next decade, does China's trajectory or the United States' trajectory matter more to the global economy?
MK: It's not an either-or. Once you think of it as either-or, you've lost the plot. For the world or for Coca-Cola, both the U.S. and China have to succeed. On the other hand, if Europe doesn't succeed, the world will muddle through and find a way forward. If Europe breaks up, if it doesn't accomplish its dream of a united Europe, the world is in a place to find a solution for that. I do not believe the world can find a solution if one or none of China and the U.S. succeed.
The U.S. is unique in that it has the youngest Western population in the world and the most diverse. If the U.S. can leverage the potential it has, if it can convert how it educates the world's citizens into intellectual property and innovation at home -- rather than sending students back to the countries they came from -- then there's a lot of potential.
Europe is a different story; Japan is a different story. It's too late to fix the demographics in Japan to convert it into an open, dynamic, growing population in short order. The U.S. isn't like that. I see the U.S. as a growth market for Coca-Cola. And I see China as a growth market. The rates will not be the same, but I see both of them as growth markets.
FP: What threat keeps you up at night more: cybersecurity or climate change?
MK: Because of how much I've seen about climate change and because it's an even more difficult fix, I think climate change worries me more. With climate change, for starters, people don't agree on the problem. There's a lot of politics and complexity; there's a lot of confusion and contradicting science. And there's a lot of reality that's worrying me. My fear is that if we see continued insufficient progress, volatility will rise at a pace and to an extent that we are unable to contain it. Governments can't manage it, and business and society just can't handle it. Climate volatility, temperature, rainfall, food prices, you name it.
So if I'm forced to choose, climate worries me more. Cybersecurity is a very real problem, but has, in my opinion, a fix that isn't quite so daunting.
FP: So on the topic of cyber, I can't resist asking … is Coke's secret formula safe from IP theft and hackers?
MK: Let me just say, it's in a very well-protected vault in our museum in Atlanta. But we have 500 brands and 3,000 products, so we've evolved from a one-brand, one-product business. Everything we do, in some respect, comes back to brands. A good brand is a promise kept. So to the extent that you want to keep those promises, you need to continually innovate and create new intellectual property. Something that isn't evolving and adapting to an ever-changing global marketplace is perhaps best suited for a museum -- just like Coke's original formula.
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