The Coca-Cola Company (Coke) is in a league by itself. As the worldʼs largest and number
one nonalcoholic beverage company, Coke makes or licenses more than 3,500 drinks in
more than 200 countries. Coke has built 15 billion-dollar brands and also claims four of the
top five soft-drink brands (Coke, Diet Coke, Fanta, and Sprite). Each year since 2001,
global brand consulting firm Interbrand, in conjunction with Bloomberg BusinessWeek, has
identified Coke as the number one best global brand. Cokeʼs executives and managers are
focusing on ambitious, long-term growth for the company—doubling Cokeʼs business by
2020. A big part of achieving this goal is building up its Simply Orange juice business into a
powerful global juice brand. Decision making is playing a crucial role as managers try to
beat rival PepsiCo, which has a 40 percent market share in the not-from-concentrate juice
category compared to Cokeʼs 28 percent share. And those managers arenʼt leaving
anything to chance in this hot—umm, cold—pursuit!
Orange Juice and the 1 Quintillion Decisions needed to deliver it! Youʼd think that making
orange juice (OJ) would be relatively simple—pick, squeeze, pour. While that would
probably be the case in your own kitchen, in Cokeʼs case, that glass of 100 percent OJ is
possible only through the use of satellite images, complex mathematical algorithms, and a
pipeline solely for the purpose of transporting juice. The purchasing director for Cokeʼs
massive Florida juice packaging facility says that when youʼre dealing with “Mother Nature,”
standardization is a huge problem. Yet, standardization is what it takes for Coke to make
this work profitably. And producing a juice beverage is far more complicated than bottling
soda.
Using what it calls its “Black Book model,” Coke wants to ensure that customers have
consistently fresh, tasty OJ 12 months a year despite a peak growing season thatʼs only
three months long. To help in this, Coke relies on a consultant experienced with revenue
analytics, who has described OJ as “one of the most complex applications of business
analytics.” How complex? To consistently deliver an optimal blend given the challenges of
nature requires some 1 quintillion (thatʼs 1 followed by 18 zeroes) decisions!
Thereʼs no secret formula to Black Book, itʼs simply an algorithm. It includes detailed data
about the more than 600 different flavors that make up an orange and about customer
preferences. This data is correlated to a profile of each batch of raw juice. The algorithm
then determines how to blend batches to match a certain taste and consistency. At the
juice bottling plant, “blend technicians” carefully follow the Black Book instructions before
beginning the bottling process. The weekly OJ recipe they use is “tweaked” constantly.
Black Book also includes data on external factors such as weather patterns, crop yields,
and other cost pressures. This is useful for Cokeʼs decision makers as they ensure theyʼll
have enough supplies for at least 15 months. One Coke executive says the companyʼs
mathematical modeling means that if a weather catastrophe (hurricane or hard freeze) hits,
the business can quickly regroup and replan in a very short time frame: as little as 5 or 10
minutes. (Robbins 116)
Robbins, Stephen P., Mary Coulter, David DeCenzo. Fundamentals of Management, 10th
Edition. Pearson Learning Solutions, 10/2017. VitalBook file.