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Your Orange Juice Coke-Engineers with an algorithm

comp_coke06__01__630x420Do not let the name fool you. (KO) Coca-Cola’s Simply Orange Juice else to pick, squeeze and pour. That cold glass of 100 percent liquid sunshine in the breakfast table is the product of a sophisticated plant juice. Satellite images, data complicated algorithms, a pipeline even juice, are part of the recipe. “You take Mother Nature and normalize it,” says Jim Horrisberger, purchasing large Coke Auburndale (Florida) juice packaging plant. “Mother Nature does not like to be standardized.”

Coca-Cola, maker of Minute Maid and Simply Orange, is using its balance and distribution reach to methodically build a juice machine overall. That includes the U.S., the largest market for Coca-Cola, which represents a third of its sales volume. PepsiCo (PEP), led by its Tropicana brand, has a 40 percent market volume of U.S. $ 4.6 billion for unconcentrated juices-de-, compared with 28 percent of Coca-Cola, according to Euromonitor. Globally, the market researcher said, Coca-Cola gets about $ 13 billion in annual revenue from pure juice and juice. “You see them focused on still beverages as soft drinks has been beating for several years,” says Thomas Mullarkey, an analyst at Morningstar (MORN) in Chicago.

At the core of the plan of Coca-Cola in the U.S. is 100 percent non-de-DO focus on what consumers are willing to pay a premium of as much as 25 percent. However, the production of the drink is much more complicated than soda bottle. Production of juice is full of variables, from the time the regional consumer preference, and Coca-Cola is trying to manage each grove to glass.

In bucolic Auburndale, an hour south of Disney World, Coca-Cola has invested $ 114 million in recent years, the expansion of its juice first U.S. bottling plant, which it claims is the world’s largest. It is here that Coca-Cola has developed a methodology called Top Secret Black Book to ensure that consumers have orange juice consisting of 12 months of the year, although the growing season lasts about three months. “Basically, he built a flight simulator for our juice business,” says Doug Bippert, president of Coca-Cola vice of business acceleration.

Black Book is not really a secret formula. It is an algorithm. Revenue Analytics consultant Bob Cruz, architect model Coke juice, also built the model Delta Air Lines (DAL) used to maximize revenue per mile flown. Orange juice, says Cruz, “is undoubtedly one of the most complex business analysis. Analysis is required to 1 trillion decision variables to consistently deliver the optimal mix, despite the vagaries of Mother Nature.”

Black Book The model includes detailed information about the countless flavors, more than 600 in all-that make up an orange, and consumer preferences. These data are consistent with a detailed profile acidity, sweetness, and other attributes of each batch of raw juice. The algorithm then tells Coke as mixing batches to replicate some flavor and consistency to the pulp content. Another part of the Black Book incorporates external factors such as weather patterns, expected crop yields, and cost pressures. This helps to plan Coke supplies available as early as 15 months. “If we have a hurricane or ice,” says Bippert “that can quickly re-engineering the business in 5 or 10 minutes just because we have modeled mathematically.”

Coca-Cola bought Minute Maid in 1960. The company was founded juice during WWII by pharmaceutical engineer Jack Fox, an expert in blood serum to concentrate, to OJ concentrate for a military contract. Today orange juice from concentrate is less than 4 percent of the orange juice market across the U.S., according to Coca-Cola, and is a small piece of the sales of Minute Maid. Instead, the beverage giant has put its efforts in fresh juice, doubling global sales volume from 2004 to 2011. Of the 15 brands of Coca-Cola each generating at least $ 1 billion in annual revenue, four are the juice-based beverages: world Minute Maid, Simply Orange in the U.S., Minute Maid Pulpy in Asia , and Del Valle in Latin America.

Coca-Cola represented 17 percent of the volume of juice sold in relating the world’s best 22 markets, compared with 9 percent for PepsiCo, according to Nielsen (NLSN) data for the year ended last September. Market share of Coca-Cola rose 0.9 percentage points in the period, while PepsiCo was reduced by the same amount.

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