“How can we reinvent our fountain experience so it really delights and excites the consumer and creates positive growth for our business? If we could give consumers a lot more choice and variety and a fun interactive experience, then we have a chance of doing that.”
Where did the idea of Coca-Cola Freestyle® come from and how many years in development was Freestyle?
It started in 2005. The original idea was a result of a pretty robust innovation process at the company. It was driven by an assessment of looking at our business. Coca-Cola has a very strong share in the food service and fountain business in North America. As we were assessing how we were beginning to grow that business over the long-term, one of the barriers to growth was going to be the traditional equivalent platforms that exist today because they just didn’t offer the choice and variety that consumers were looking for. So it really started with: how do we offer more variety and more flexibility for our customers? That was the genesis and that’s where the initial thinking of moving to microdosing technology and higher dosing concentrates came from. From there, we assembled a start-up project team within the company and that’s when I joined the project. This was in the middle of 2005—it was six engineers and myself. We were really trying to say, where’s the value from a consumer perspective? How can we reinvent our fountain experience so it really delights and excites the consumer and creates positive growth for our business? If we could give consumers a lot more choice and variety and a fun interactive experience, then we have a chance of doing that. That’s what the research told us—we have a very driven insights-based approach.
You mentioned the microdosing technology, which the health community is using. How did you come across the microdosing technology and decide it was the right tool for Freestyle?
It started with looking at how do we better manage the quality of the drink. We were looking at changing the format of the product. Today the product (the bag in the box) is basically an all-concentrated dilution of the product—you mix it with 5:1 with water and you get carbonated water. We were looking at getting far more concentrated, but as a result we realized we had to separate out the sweeteners from the beverage concentrates, and beverage concentrates in their native form are much more concentrated. We decided to go with 150:1 and at that concentration level we then had to figure out what technology would allow us to deliver the kind of drink quality we needed at that concentration level. We would look at other industries that tackled the same challenges and then apply those. In that sense, Freestyle is a combination of a lot of innovation. For example, look at Apple, which takes known technology and configures it in a way that has strong consumer appeal. Freestyle skews in that space as well. There’s some invention—and a lot of innovation around taking technologies that aren’t new to the world by creating them in a way that creates a new to the world experience.
It is interesting you mention Apple. Some blogs and articles make it sound like Coca-Cola partnered with Apple or Microsoft on Freestyle’s interface. Is this true?
No, we had a few partners that we partnered with for a technology development perspective, but we own the design and we really grew the design.
But you were inspired to make the interfaces as intuitive as possible, taking cues from leading interface design?
Absolutely. We did a tremendous amount of research around different interface options and how to engage the consumer, and we got a lot of great feedback that helped us get the interface to where it is today. And now we’re working on the next generation.
On the same topic of collaborating, I do know that you worked with the same designers that are behind the Ferrari racecars on the design. How did that come about?
It is actually a really good story. We had an industrial design firm that we were working with out of North America. The designs they had were very cool but almost cold. When you looked at it, it looked like something a tech company would do. It didn’t really communicate the brand voice of Coca-Cola particularly well. It was actually our current Chairman Muhtar Kent, at that point he was the President of the company. We were doing a project review with him and he commented on the design and said there maybe was an opportunity to do better. He has a real passion for Italian cars—actually Formula 1. He mentioned he knew a couple of companies in Italy that might be able to help. He gave us some names and we followed up and had a bit of a bake off and we ended up selecting Andrea Pininfarina.
Well, we must say, it is a beautiful design – it looks great!
Thank you. You know, a lot of people don’t appreciate it, but one of the challenges in product development is taking the design that the artist comes up with and taking that and making it into a physical object that even remotely resembles what the original design object looked like. And if you saw some of initial pictures of the design of Coca-Cola Freestyle by Andrea Pininfarina, it is almost identical to what is sitting in over a thousand restaurants today.
I was also interested in the data collection aspect of Coca-Cola Freestyle. Can you tell us a little bit more about that?
Certainly – so one of things we looked at with Coca-Cola Freestyle was not just as an equipment innovation, but as a total business system innovation. So, at every step we would look at what capabilities are possible and how we would enable those. Looking at the amount of choice and variety we were offering, it really made sense to have a touch screen and computer controls. And now that I have a computer as a screen, I can do a lot of things with data management. I can capture logs of what consumers will purchase, logs of machine performance, and once I capture that data, if I add a little bit of connectivity, I can then download that data to headquarters every day and at the same time use that connectivity to push out content or software updates, those types of things. We really built the connectivity out of what we saw as a big business opportunity. The machines are essentially networks—today it isn’t an always-on connection, but eventually it may be. Today, they call home and do data burst transmissions of all the consumption logs and performance logs and we then communicate to the machines with software updates and new content.
And then you can collect information too about what drinks consumers prefer?
Exactly. What I get is consumption by brand, by day, by machine.
How big of a team does it require to sift through the data?
Well, we are still sorting through the best way to do it—the data management process. Without giving away any trade secrets, we are working diligently now to build tools to help our brand teams and our customer marketing teams extract insights from that data and help us build customer-specific and channel-specific marketing programs as well as potentially future product development. It also helps our customers be more efficient—we built an online order engine where customers can go online to order our product and we provided customers with a predicted order based on consumption data. We are also experimenting with a service where we manage all inventory for our customers. We’ll do automated replenishment, basically.
I had also read that Freestyle has an environmentally sustainable component—that it is much more environmentally sustainable that previous fountains. Can you talk a little about that?
Let me speak a little bit about that. There are a couple of pieces to it. First is the product supply chain in general. Our cartridges are the first LEED Gold certified facility in the Coca-Cola system. We just received that designation in the last 60 days. Additionally, when you look at the product form in general, because of the concentrates (because we aren’t shipping around as much water), about 30 percent of the bulk from the supply chain is eliminated—so, big savings in packaging, reduced shipping, and carbon from the number of truck deliveries. Then the format itself—fountains, in general—have a favorable environmental footprint because you aren’t shipping around a lot of water and packaging. So in that sense, Freestyle and our legacy fountain are very similar, but compared to our packaging business, it is about 1/3 of the carbon footprint. I should mention too that overall sustainability is part of our company philosophy and so is health. Freestyle, in terms of health, is a big part of our “Live Positively” approach. Giving consumers the choices they want for every occasion. We don’t make a product that isn’t healthy, but depending on the occasion, Freestyle can offer low-calorie, no caffeine options. Typically only one no-calorie, low calorie, caffeine free option is offered on average in a restaurant, but Freestyle takes it to over 70—and 90 that are caffeine free.
I’m curious too about the rollout of Freestyle.
Right now we’re still in the process of rolling out in North America. We are in 65 markets out of the 80+ we have planned for this year. We’ve got over a thousand outlets that have machines. We’re in 33 states. We’re primarily in North America. At this time, we have more machines than outlets. We’re in the process of building our business cases in a number of different markets. We actually have a machine testing in Japan right now in the airport and we’re planning on additional testing there. We’re working on testing in a number of other countries—both in Western Europe as well as Canada. But no defined expansion plans yet. We believe that Freestyle has potential in a number of markets around the world.
Can you talk just a little bit about the marketing and communications efforts around Freestyle?
The focus so far has been heavily driven around social media and PR. We’ve done some blogger outreach, media outreach. We’re north of 35,000 fans on Facebook and we’ve done a fair amount of work in the mobile applications space. We’ve got an iPhone app and mobile app for Android. Most of these applications are in a phase where we’re trying to create awareness about Freestyle and trying to educate the consumer on what Freestyle is about. We do this through information and a game that we have on the mobile app. Consumers and fans find Coca-Cola Freestyle with a locator. We leverage either a zip code of GPS to help a consumer find the closest Coca-Cola Freestyle machine. We also have a toolkit to allow people to design their own soda or mix on their phone. From your phone, you can also pull down the top 10 flavors or brands in a particular location or among your circle of friends. So we’re doing a lot of fun work in that space to connect the whole social graph in with the Coca-Cola brand.
That’s interesting—just a note that Freestyle is such a great name in that sense. It is so open and flexible, in that it doesn’t have to be limited to just one product. Just curious about the name—did you develop it in-house and was a lot of thought put into naming the fountain?
Our team thought a lot about the name and we set up some architecture about what Coca-Cola Freestyle stood for and what we were trying to communicate. We started with 12 different options and whittled it down to what we could own and how consumers responded. It has worked out really well! At the time we were a little unsure, but I think it really works.
ABOUT GENE FARRELL
As Vice President & General Manager of Coca-Cola Freestyle for The Coca-Cola Company, Gene Farrell leads a cross functional team responsible for the development and commercialization of Coca-Cola Freestyle, a new innovative technology based business system.
Previously, Mr. Farrell served as Vice President, Area Sales for Coca-Cola FoodService, & On-Premise from 2000 until mid-2005, responsible for the leading the Company’s foodservice operations across most of the Western half of the United States. Prior to this assignment, he was Director, Customer Development responsible for managing the Company’s foodservice operations in the Pacific Northwest.
Mr. Farrell holds a Bachelor of Science degree in Marketing & Finance from the University of Washington in Seattle and a Masters degree in Business from the Goizueta Business School at Emory University in Atlanta.