SLOVAKIA
Comes of Age













Interview with

Mr. IVAN STEFANEC
MD of Coca-Cola

17/10/01


The decision to produce non-alcoholic beverages directly in Slovakia was made in 1993. Until this year, Coca-Cola invested more than 3.5 billion SKK, 60% out of this amount were investments into production facilities. Can you tell us what motivated such an investment from Coca-Cola in Slovakia?

Coca-Cola saw Slovakia as a potential opportunity for developing a market, therefore came here in 1993. They set up a production facility in Rutka near Piestany, which is about 100 km north from Bratislava and up to date invested almost 3.5 billion SKK so there is a continuous investment into this country and major investment was into production. Slovakia, after the split from former Czechoslovakia in 1993 was a new opportunity and Coca-Cola came with a very clear strategy to found a bussiness on a local basis. When I speak about local basis, I do not mean just raw material, but also the people. Currently, more than 99% of our employees are locals, which I believe is very important for our business in this country, because our business is based on people and people drive it. I would also like to emphasize on the fact that we have very good experience with our employees, they are very flexible, willing to learn and able to work hard.

How significantly do you invest in your Human Resources?

In our system, every employee has an individual development plan that is checked on half a year basis and it is updated for next period, so it is a very sophisticated system for development of our staff. We dedicate almost 1% of our revenue for training expenditure yearly and in the beginning we focus more on technical skills, English language skills, but as time goes by, we focus on managerial skills and communication skills and I would say team production skills. I believe the art of management is in communication, so we try to teach out people to communicate and to work in teams.

How many employees do you have?

Currently there are 650 employees, 40% of them are working in staff department, 30% in production, less than 10% in administration.

How would you qualify your growth performance in the Slovak market, taking in consideration the presence of large competitors?

Pepsi has been here since the seventies. Coca-Cola came in the begining of the nineties and in 1995 we took the market leadership. We saw it as a big challenge to create the Coca-cola culture, to create this specialness and we believe that our results are the evidence that we are doing well. In Slovakia we have more competitors than just Pepsi, there are 100 local companies operating on soft beverages market. International companies make bussiness on national basis, the other companies make bussiness on regional basis. Currently our business is developing in a very good way and we are able to grow, although under current circumstances there is pressure from the depression, the market is changing, there is a pressure over the purchasing power, but I am happy to say that we are still able to launch new products. I would also mention localization, which I consider very important. Our consumers should perceive Coca-Cola and other products as local, something that has spirit, that has a feeling and adds value to their lives.

Your counterpart from Venezuela mentioned the fact that the reason for their success was that they managed to make a global company think local and act local. Would you say that your strategy has been similar?

Absolutely, because at the end our consumer is local, so we have to target our marketing activities toward local consumers. Every consumer is different, well, we can say that we are a global company, but at the end our business is local. Therefore I think it is a very fine strategy to found business on local sources, but also to target our products to local consumers. It is the duty of globalization, but not everybody can recognize that globalization also brings this point of being local.

Coca-Cola was also set up in the Czech republic. Is the market and your marketing strategy significantly different there?

There is a very similar strategy, because Coca-cola tries to position products as local ones also in Czech Republic. However, there is also a slight difference between Czech and Slovak consumer. During the last five years the market, both countries developed in different ways, it was also due to the international chance coming to these countries at different times, due to different macroeconomic indicators, GDP, unemployment and average real income. For example in Slovakia our water Bonaqua is much more successful than in Czech Republic. Also there are slight differences in terms of brands, but generally the strategy is the same. If we compare both countries, I am proud to say that currently the per-capita consumption in Slovakia is better than in Czech Republic, it is 100 per capita, it is the same consumption as in Italy and France.
Coca-Cola is said to be one of the most successful foreign investments in Slovakia. We heard that Coca-Cola earned last year the price of the "best production company" in Slovakia. Do you confirm such statements?

I think it is a good example for foreign investors. I would like to go back, in 1993 Coca-Cola did not wait, came with a very fine strategy that we would set up a production facility in this country and we would make bussiness here. It was not clear at that time in terms of political situation, not everybody trusted Slovakia, but Coca-Cola did and began. Now the results are coming. We have more strict rules and standards than local rules. This is also an evidence that Coca-Cola brings some quality in terms of products, in terms of services and people into daily lives and it can be a showcase in terms of this approach. This should be normal, but the most important is the quality of the people that execute this everyday.

According to Trend magazine, your turnover icreased to 50M $ last year and your exports increased by 23% up to 19.5% of your net revenues. What is actually your development strategy on export markets?

First of all, I have to emphasize that we focus on the local market, because Coca-Cola is in every country and Coca-Cola Beverages Slovakia focuses on the local market. This is our priority. Nevertheles, we have significant production facilities, which were built also for the future, therefore we can use this opportunity to produce for other countries, and because of the quality of the labor force and our competetive advantage in terms of raw material, we can supply neighbouring countries.

How would you evaluate your total capacity of your production and what is the number of actual production versus capacity?

This year we produced 200 million litres and this is the full portfolio of Coca-Cola, Coca-Cola Light, Fanta Orange, Sprite, Kinley tonic as carbonated soft drinks, then the Cappy juices. We are the market leader on the juice market in Slovakia and we also produce Bonaqua in three flavours. Recently we launced Nestea peach and lemon.

What are basically your targets as far as the volumes exported are concerned for this year and next year?

This year it is growing up to 50 million litres, for next year the potential has yet to be calculated. I believe there will be a substantial growth again.

You have mentioned earlier that you rely a lot on local human resources. Coca-Cola has the reputation throughout the world of being very active in the socio-economic development of local communities. How would you describe your Corporate social responsibility towards local communities in Slovakia?

It is also a part of our strategy to be a good corporate citizen. Our strategies are targeted towards this objective. There are many activities in terms of foundations, charities, sponsorships, sports and culture events, we have co-operation with orphan houses, we have a long term partnership with the Red Cross, also we were awarded recently Golden and Platinum Sponsor of the Red Cross, which we are very proud of. But by doing our activities and showing people how to do bussiness, to be a representative company also brings value to our life.

Coca-Cola brought its strategy and know-how to develop the region. But have Coca-Cola and yourself learnt from doing business with Slovak people?

I try to learn every day, because life is full of changes. The beauty of management is in communication, so everybody should be open to new knowledge. What I have learnt is to be very open, to communicate and the issue is that we have to show our employees that we share the same values. Our challenge was to change the way of thinking of our older employees, to dare coming up with new ideas, to let them know that we appreciate it. We are trying to change the atmosphere. That is my working experience, that is what I have learned from our employees, also to give them a chance to encourage them to come up with new ideas.

Would you have a final message for our readers?

To drink Coke. I am happy that you came over, it is an honor for Coca-Cola and also Slovakia. My message would be that bussiness is based on people and people here are very flexible and willing to learn.

Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions.

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World INvestment NEws, 2002.
This is the electronic edition of the special country report on Slovakia published in Forbes Global .
May 27th, 2002 Issue.
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