Coca-Cola executive reassures industry aluminum can is "alive and well"

Business Wire, May 22, 1997

ATLANTA--(BUSINESS WIRE)--May 22, 1997--A Coca-Cola executive reassured more than 2,300 aluminum industry executives today that the aluminum beverage can is "alive and well" in the eyes of Coke, which was characterized as the largest user of aluminum fabricated products in the world.

"On a global basis, one out of every four beverage cans used, including the beer industry, contains a product of The Coca-Cola Company," said George Gourlay, senior vice president and manager, technical operations division, The Coca-Cola Company. "It represents well over 600,000 metric tons of aluminum can sheet. And we're doing our best to increase those numbers daily."

Gourlay was a featured speaker today at Alumitech '97, The Aluminum Association's second international conference and exhibition. Joining Gourlay in this morning's session was Leslie G. McCraw, chairman and chief executive officer, Fluor Corp.; and Brian W. Sturgell, president, Alcan Aluminum Corp.

Gourlay reminded the audience that during the mid-70s, the aluminum industry and Coca-Cola "did a phenomenal job" of implementing a variety of cost reduction efforts to make the aluminum can more affordable and in the 1980s, introduced innovations such as multi-packs and the easy-open end. "Volume numbers began to increase notably," he said, "but as we went into the 1990s, we began to lose our way, focusing again primarily on cost reduction efforts... you can see the decrease in the rate of volume growth."

Gourlay suggested that companies which remain cost competitive and deliver consumer-focused innovations are those companies that will, over time, add value and increase volume. "...They are the companies we want to partner with for the future," he said.

The Coca-Cola executive said the "biggest lesson for us" from the past was that "we had been driven by the technical and financial aspects of our business to the point that we lost sight of the consumer.

"The lesson we learned is that we must put the consumer first and understand what their needs are."

The return of the contour bottle, in the form of a 20-ounce plastic container, marked a revolution in the thinking at Coca-Cola, and brought about dramatic sales increases, Gourlay added. In markets where the company initially launched its 20-ounce contour bottle, Coca-Cola saw substantial volume growth rates between 40 and 90 percent; the company has sustained a 20 percent compounded volume growth.

Gourlay said the decision to introduce the 20-ounce container was "deliberately made," knowing it would be more expensive, would initially present operating difficulties and reduced efficiencies in bottling plants. "But we recognized this would be the right thing to do and that we had to find ways to solve these operational problems," he said.

"Looked at another way," Gourlay began, "a more expensive, complex package brought value to the Coca-Cola system that our lowest cost packaging had taken away. Just as we found out with the can: bring value to the consumer, and they will reward you with volume."

Gourlay complimented the aluminum industry for working with Coca-Cola on the development of the contour can. While he had no specific information, he said consumer reaction "is good." Next month, the company will introduce an embossed aluminum can for its brand, Sprite.

"Here, as with the contour can, we not only developed new technologies directly with our suppliers, but we further defined how we work together. We closed the communication loop between us, the converters and the suppliers," he said.

In conclusion, Gourlay said Coca-Cola has excellent growth opportunities. "In fact, we at The Coca-Cola Company are very excited about our growth. To realize this growth, we will continue to need packaging material partners. Partners that can deliver... consumer-focused innovations... whether that be in plastics, steel or, of course, aluminum," he said.

Gourlay believes that, working together, the aluminum industry and The Coca-Cola Company can significantly grow volume by meeting the needs of the consumer. "...The aluminum can is a big part of that packaging. And, if you recall what a significant role the can played in the...developed markets...well, the imagination runs wild when you dimensionalize the potential growth of aluminum packaging globally," he said.

"I know a lot of you have been concerned in the last few years about new packaging, especially with innovations in the plastic field. To that I say aluminum as a packaging material continues to be very important to us at The Coca-Cola Company. The can is alive and well. And it's got Coca-Cola in it."

Alumitech '97 continues through Friday in Atlanta. The Aluminum Association, based in Washington, D.C., represents primary and secondary producers of aluminum, as well as producers of semi-fabricated products. Its members operate approximately 300 plants in 40 states.

Editor's Note: The full text of Mr. Gourlay's speech is available by calling 404-220-3511.

CONTACT: Alumitech '97, Atlanta