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Helping you offer a choice of great-tasting foods consumers want, the way they want them
 Making the Best Soft Drink Even Better
“Excellence On Every Call” is the slogan
for the Coca-Cola Quality Maintenance Team, which implemented a new comprehensive certification and training program in 2005 to insure the consistency and quality of technical support throughout the national network of third-party technicians who are inspecting what we expect in quality... which is already the best!
An improved protocol for the annual Quality Maintenance Checks in every McDonald’s restaurant included the addition
of the “Carbo-Tester”– equipment that helps technicians do a better, faster job of isolating any carbonation problems.
The focus on innovation and best practices deliveredverypositiveresultsfor2005overthe previous year: 17% improvement in the finished drink carbonation and 8% improvement in the drink ratio – measures that insure that each of your customers is served a cold, bubbly, refreshing Coca-Cola.
Today’s consumers have an unprecedented range of food and beverage options... and they want it all – variety, quality, convenience, and value. This opens up new opportunities to expand the beverage lineup at McDonald’s and focus on innovation in areas Coca-Cola has identified as the three key Growth Corridors: maximizing the sale of dispensed beverages, exploring new packaged product solutions, and offering beverages that make McDonald’s a destination.
The guiding principle for this growth strategy is to stay relevant with consumers. That’s why Coca-Cola conducts ongoing research to identify and tap into trends like the focus on health and wellness, demographic shifts with the graying of America and growth of the Hispanic market, and the increased complexity of the beverage choices with a growing demand for bottled water, sports drinks, and energy drinks.
Taking Advantage of Consumer Preference
In 2005, local and national merchandising were well-integrated and effective in raising awareness of new beverage choices at McDonald’s. Sales of DASANI® bottled water rose 8%, and sales of POWERade® were up 7% per outlet, with overall growth of 21%. POWERade was also the leader in the fast-growth sports drink retail
category, which increased by 23% in 2005. POWERade outpaced the category with 39.5% growth, indicating strong potential for continued expansion of the brand at McDonald’s.
Giving Consumers a Taste of New Choices
As awareness of new choices increases, so do sales. Here’s a story to prove it. In Northern California and Northern Nevada, Business Development Leader Pat Belinski seized an opportunity to enhance a February sampling of Chicken Selects® by McDonald’s by also promoting three non-
 carbonated beverage products new to the
POWERade sales in McDonald’s shot up 21% in 2005!
in his
 POWERade Mountain Blast, Minute Maid® Light Lemonade, and Fruitopia® Strawberry Passion Awareness.
Pat reports, “In four days, in all 543 stores, we had over 1.4 million consumers sampling the products. Since the event, sales of the featured products have sustained at almost four points higher. The collaborative effort increased the impact of the sampling event, helping to drive sales of Chicken Selects and the new beverages even higher.”
Package Innovations “Juice Up” Sales
“Can we sell smoothies to cowboys? It turns out we can!” says Billings, Montana Owner/Operator Patrick Newbury. He and his son John are selling about 50 per day per store.
When Minute Maid Apple Juice was repackaged in a drink box and then co-branded with Ronald McDonald as a Happy Meal® choice in 2004, sales took off. The good news is that the trend has continued with McDonald’s 2005 apple juice sales ending the year 40% higher than the year before!
Minute Maid Orange Juice also has a packaging success story. Ann Hurley, North America Supply Chain Manager for The McDonald’s Group, explains, “In about 13% of McDonald’s restaurants, the environment isn’t optimal for dispensed juice sales. Sometimes it’s a matter of space constraints or shorter breakfast periods inside retail establishments like Wal-Mart. The portion cup was the typical alternative to dispensed juice until we introduced a 12-oz. bottle of chilled orange juice in approximately 1,800 restaurants in 2005. The new package is consumer-friendly because it’s re-sealable; plus it’s operationally easier for restaurants. The stores selling this new package are seeing positive trends in orange juice sales.”
New Flavors, New
Packages, New Choices Destination Smoothie
From chilly Montana to sunny Hawaii, the Minute Maid Smoothie is drawing customers
to McDonald’s. The high-margin test product is
a natural, fresh fruit puree delivered frozen. It’s easy to store, prepare, and serve. The McDonald’s Group is currently evaluating both the equipment platform and product offering to identify the best program for your restaurants.
Custom Beverages
In the LA 3-D Lab, the Coca-Cola incubator
for innovation, Flavor Rage equipment is being developed to allow customers to mix current flavors and develop custom drinks with your existing dispensing system.
Convenient Bottles
In the Lawrenceville,
Georgia “Lab Store,”
2005 sales of 20-oz. PET
Grab n’ Go Bottles showed
promise: Drive-thru times
were faster and UPTs
were up 1.3%, indicating
incremental purchase.
Coke®, Diet Coke®,
Sprite®, and Fanta® Orange
represented 59% of sales
while other Coca-Cola
brands not currently
 available as core brands represented 41%.
Giving consumers compelling reasons to buy more beverages and food
Are Hot Property for Brand Awareness and Sales
The NCAA Final Four tournament, one of the top-watched sporting events, proved to be an excellent opportunity for promotional partnership in 2005. Coca-Cola provided pass-through
rights for Final Four marketing, and McDonald’s provided media support and graphics for in-store “March Madness” promotions with collectible cups and chances to win Final Four tickets.
In St. Louis, the host city for the 2005 championship, tickets to the Hoop City festival and POWERade 3-on-3 tournaments were promoted in McDonald’s restaurants to drive traffic and sales.
Another partnership tie-in surrounding the event: Coca-Cola sponsored DASANI Fest, a free concert, where donations were collected for Ronald McDonald House Charities (RMHC).
Promotion is one of the most collaborative processes of the McDonald’s/Coca-Cola partnership. It brings power- ful brands together to attract new customers and build sales from repeat customers. It supports the i’m lovin’ it! culture and drives more consumers to a destination where they can enjoy food and beverages that fuel today’s lifestyles.
In 2005, Coca-Cola introduced a “Best Bets” process for developing promotional programs. Director of Marketing Ken Schroeder explains, “We collected successful local marketing programs from every region, determined which ones have the most potential in multiple markets, and integrated them into McDonald’s 2006 marketing calendar.” The examples below represent the many ways promotions help you reach your goals. Supporting New Product Launches
• PremiumChickenSandwichesgotaliftfromthe“PeelOfftoDriveOff”cargiveawaypromotionintheNew York Region. During the promotion, the region was one of the top three markets in the country for sales of the new sandwich, and 32-oz. soft drink units rose 3%.
• Fruit ‘n Walnut salad paired with DASANI was integrated into merchandising and featured on FP43 menu board toppers and cooler door clings.
Promoting McDonald’s Programs
Late night hours were the focus of two Boston Region programs: an EVM frequency card (buy 5 and get the 6th free) featuring Chicken Selects and Minute Maid Light Lemonade and a crew program that delivered cash on the spot for suggesting an EVM during the late night shift.
• The new Arch Card® was promoted in a bilingual, holiday season translite featuring a Premium Chicken Sandwich EVM on drive-thru menu boards in the Greater Southwest Region.
 High-profile properties like collegiate sports, the NBA, NASCAR®, McDonald’s All-American High School Basketball, and the Coca-Cola Polar Bear add value, repeat purchase, and consumer excitement to drive your food and beverage sales throughout the calendar year.
Sharing Valuable Assets
Beverage choices at breakfast and Coke Float collectible tumblers build your daypart sales with increased purchase of dessert beverage snacks and combo meals.
• As an NCAA Corporate Champion, Coca-Cola provided national access to a valuable property that is well- aligned with McDonald’s target audiences.
• For McDonald’s All-American High School Basketball Games, POWERade and Coca-Cola are sponsors of this dream-building event for young athletes. The POWERade Jam Fest benefited the Ronald McDonald House Charities.
• Using the Coca-Cola relationship with Regal Theatre, the Baltimore-Washington Region launched an innovative summer weekend movie program targeted to young adults that distributed BOGO coupons and included a 30-second McDonald’s spot on the movie screen and on a plasma screen in the lobby.
Reaching McDonald’s Target Audiences
• Young adult males and females, especially in the Southeast, are reached by the Collegiate Cup (32-oz. polypropylene) Program. In 2005, its third year, the program expanded to 12 co-ops with a Jefferson Pilot media network sponsorship that included McDonald’s participation. The program drove sales of larger soft drinks with trade-up to large EVMs. In Atlanta, over the past two promotional periods, 32-oz. cup UPTs rose 21%.
• Young adult males were the primary target of Tony Hawk’s Boom Boom HuckJam (see the Focus on Innovation story).
  POWERadE Meets YAMs at Tony Hawk’s Boom Boom HuckJam
To build a brand among the young, meet them where they are. That’s just what McDonald’s and POWERade did as sponsors of the 2005 Boom Boom HuckJam Tour featuring legendary skateboarder Tony Hawk.
Our brands collaborated to reach beyond the restaurant and interact with young adult males (YAMs) at the most exhilarating action sports and music show around.
Local markets where the tour stopped were able to leverage the national POWERade campaign which included outdoor boards, TV and radio support along with in-store POP.
For example, in Las Vegas, Coca-Cola and McDonald’s worked together to engage local media for van stops and radio remotes giving away coupons and driving
consumer traffic
to McDonald’s as
the distribution
point for
discount family
pack coupons.
              Inventing The Future Together

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