♪ a-cola, a dominant industry.he new everage behemoth has a ceo. gates quincy spent a decade rising through the ranks and now he wants to show the world he takes the environment seriously.

ames quincy said that was very serious conversation. we wanted to see how he wanted to change the culture while managing a checkerboard of tax regimes and regulations. works in a lot of different countries. the talking about the united states. the tax cut, how does it affect coca-cola? >> because we are an international company, the absolute rate is not affected up as much as the more domestically focused enterprises. moving thefocused on system. we are still working on the numbers.

in the end, if it generates more economic growth, it will get all the boats. this capital make a difference? >> -- >> if there is incremental cash, when he decided, the together into dividends or -- >> we have been a successful company. canre working to see how we pay tax on the cash first. we are looking at how we make the right applications. >> one of the big issues for the united states the dreamers. , are you certain

about how they can stay are not? >> we have people in our company. we would love for government find a solution for the dreamers and make it not totally disrupted so they can stay. parcel solutions may be necessary but we would love to see fundamental reforms. >> you have seen this issue on both sides, including our southern border. do you see a constructive passport on immigration? >> it is connected. part of what drives immigration is disparity in economic

outlook. leadership from the united states to drive wealth will help with some of these other issues. >> you have seen active from both sides of the border. bad for been good or the united states? >> it has been good for all participants. it has been good for all of the countries. that does not mean it is perfect. better but i do not think we should start deconstructing global trade. it has been a powerful engine. that is not mean it solves all problems. there are questions of income inequality. somethingtions that

soon needs to be improved. but let's go forward, not backwards. david: when president trump came in, he was closely aligned with he had panels that he would talk to. do you get to talk to president trump or the administration about things like nafta? do you make your views known to them? james: when we have a view or it affects our business, we make our views known to the administration or many of the business forums, like the business roundtable. there are enough points of intersection within the administration that they know what we think. david: do you have any sense where we are headed with nafta? there are conflicting reports. the canadians seem to be preparing for u.s. withdraw. a lot of people in washington say we will not withdraw. do you have any sense from your point of view of where we are

headed? james: you have to let the negotiators negotiate. if you are not in the room, you don't know the answer until it comes out. the important thing is to say what they believe to be true, the areas where things can be made better, in the negotiators have to get in the room and thrashing out. trying to work out what color the smoke is coming from the room doesn't leave you anywhere until they come out and tell you what the answer is. david: your native country has voted in a referendum to leave the eu, and i won't ask you what you think about that, about how is that developing? is there a soft landing? how do we get to it? james: it goes back to my point about negotiations. you are never really sure until the cake is cooked. myself, i think the logic of the economics is a softer rather than a harder brexit. i think in the end while it won't be a catastrophe one way or the other, life will be better. there will be more economic growth. if it is a softer brexit, there are a lot of details and points of view to work out, because in the end the referendum was not between this or that. it was like this or not this.

it was not a referendum of the version of the exit, which is where we are trapped at the moment. there are a lot of negotiations going on. it is important to get it right for the u.k., and to some extent for europe as well. david: how do these trade issues affect coca-cola's business? james: one of the great benefits of the coca-cola system is that we are global, but extremely local. we manufacture in virtually every country we sell in. virtually everything that is sold in the u.s. is made in the u.s., everything sold in the u.k. or france is in that individual country. global trade restrictions don't tend to affect us heavily in the moment. to the extent they reduce or increase total economic growth, that is what matters to us. philosophically, we are pro-global free trade because it

drives economic growth, so let's focus on making those deals better because it will provide the wealth to then solve a lot of society's problems. david: you came in and took over coca-cola and trumpeted innovation as critical to your future. i believe you have a chief information officer, but you are the chief innovation officer in some sense. how do you innovate in a 130-year-old company with such an entrenched perception of people's views? james: it is hard. any institution that has been around for a long time, it will be hard. from my point of view, if i'm not the chief innovator, i am certainly the chief agitator for innovation. with that means is driving the culture to try and do a few things, on top of everything else we do. stay curious. if you are not curious about the outside world, the consumer, what is changing, how will we innovate?

curiosity leads you to an insight. it is very passive. you need to drive empowerment of people so they feel they can do something, that they can get up in the morning and go do something. the next thing is you have to be inclusive, connect the pieces. we have tremendous global knowledge and a tremendous global system. sometimes your idea has been tried somewhere else, so connect to the other parts of the system. lastly, we probably fell in the trap of trying to make things perfect before we did anything in the past. we need to learn from software companies. have a version 1.0, 2.0, 3.0. that gets us innovation and speed. if we keep pushing those four things, we will make progress. david: how does james quincey know whether you're getting the innovation job done? you are sitting on top of a very large organization, a lot of people spread around the world. how do you judge if people are changing their behavior?

james: it is hard to know. the only way forward is to look for multiple signals. there is no one number or one metric. we have employees surveys where we ask people. we can look at the sales number and measure the success rate for the number and success rate of the things we put into the marketplace. we can look at what our research and development pipeline is generating. are we really getting new patents, are we making progress? one has to have a dashboard to look across. david: how is technology changing the way you do business, and for that matter, your workforce? ♪ ♪

♪ david: technology is disrupting just about every company we know of today. how is it affecting coca-cola and first talk about how it is affecting your relationship with your consumer? how you deliver to your consumer, e-commerce, how you market to your consumer? james: how we engage with consumers, there used to be tv advertising, now there is social media. the ways of engagement are changing rapidly. who the customer is and how the shopping happens is changing rapidly. and internally is changing rapidly. with the consumer, around the world tv is still the biggest

vehicle, maybe less so in the developed economies. around the world, it is still the biggest. a lot is going to social media. we work closely with the new tech companies and social media trying to find ways to continue to have a brand role. in the end, someone has to pay for the content to be developed, whether that is through advertising or sponsorship. there is a lot of change going on. we are adapting. we feel we are towards the front end, but it will be different in five years and 10 years. we have to keep investing in innovation and evolving to stay close to consumers. david: which markets do you see the fastest innovation when it comes to e-commerce, when you get on your app and it gets delivered? is it china, the u.s., europe? james: i think places like shanghai and some parts of western europe are on the cutting edge along with some of

the u.s. the u.s. in many respects, there is a lot of advanced e-commerce, but i can tell you that it is very advanced in places like shanghai and western europe, and the penetration of e-commerce in aggregate is higher in some of those places than the u.s. when you want to learn what is going on, i would be tempted to tell you to go to shanghai as stay in new york. david: how do you market? we are used to going in a fast food restaurant, and coca-cola is there. it is on the menu. you don't have that when you are on your app. james: no, but you have to get it. if you went back two or three years in china when a lot of the apps and the mobile payment systems came in, we were not on the menu. even worse, we were probably trying to sell a returnable glass bottle to the restaurant that had no way of being in the delivery system. we had to reengineer our

business system very quickly to be present on the apps. what is the virtual representation of what you normally see in the store, and how do we change the packaging portfolio so we can be part of the delivery system? you have a lot of places in shanghai where food orders on apps delivered are 30% of restaurant sales. david: that is the relationship with the consumer. talk about coca-cola as coca-cola. how is technology changing your business and your workforce? james: in lots of profound ways. in simple terms, go back 10, 20 years. we were a large company and one of few that could invest in expensive i.t. systems and do our own stuff. today, that is no longer the model. we had to move to the cloud, to standard programs that the whole industry is using, and mobile. the one thing i always said to the i.t. department is just put it on the phone. everything can be done on the phone.

let's move everything to mobile on the phone. in the old day, i.t. had training budgets. why? everyone knows how to use the apps on the phone. it is profoundly changing the way that we work, and i think it will continue to flow through the organization. we have a big program of digitizing the company. david: does that translate into fewer employees because of the efficiencies from digital? james: it changes into a different profile. people are having to adapt to do things in a different way. we have made a lot of changes in our i.t. departments to move to different skill sets, so it is changing the nature of employment and the profiles you want. whether we buy the services ourselves or do it ourselves, it makes a difference to where the employees are, but net-net, more employment is being generated. david: can coca-cola compete with silicon valley and the digital startups when you are trying to recruit the young computer scientists? james: atlanta is a fast-growing economy. the state of georgia has been ranked one of the top places to do business in the u.s. for many years in a row.

the local political system has done a great job, so has the city. it is a very competitive economy and we do very well in it. we are happy to see atlanta and georgia growing, and they have done a lot to invest in tech startups and the media industry in and near atlanta. it has been very successful. david: as you look toward new growth in these beverage categories, are you looking at acquisitions, organic growth? you have been inclined to look for smaller startup brands and bringing them along. is that the path for coca-cola? james: i think it will be both. we have grown organically, and we have made these bold on acquisitions, the small brands. where we see something is a good idea, we invest with them, sometimes we buy them, but we also just invest with them. there is a quid pro quo.

they get the capital we inject and we introduce them to the world, not just the country, and that helped us double the number of billion-dollar brands we sell. i think it will be an "and" strategy, rather than one or the other. david: it is a beverage company, not a food company. there are competitors who said let's become a food company, at least in part. why did you make that decision, and does it leave you anymore vulnerable, forgive me for saying, even for acquisition? you are a $200 billion market cap. there are some big consolidations in the food industry out there. james: firstly, we are focused on beverages because that is where the greatest synergy and greatest application of know-how and our fabulous global bottling distribution system is. it is the thing that is most synergistic with what we have got. beverage is one of the best growing markets in the whole of

the supermarket, so it is a great market. we have a good position with a lot of synergies. it is a question of choices. i sometimes say never say never, which then causes confusion. people say you haven't ruled anything out. it is a question of what is most logical. beverages are the most logical thing for us to do. in terms of how we think about consolidation, i am convinced that investors, gold stars go to those that grow with expanding margins. growth is the name of the game. if the category has no growth, then optimize margins. that is still silver price largely over the long term. i am pretty clear, if we focus on driving topline growth, which we believe we can with our strategy. we will attract an investor base that will be very happy with us. david: by 2030, you want to get a bottle back for every one that you put out there. how are you going to track all that plastic? ♪

david: world without waste, great goal, a big new packaging announcement. why is it important to coca-cola not just as a corporate citizen but as a business? james: it is important for a very core part of our values. we have always believed to have a healthy business, you need to be operating in a healthy community, and one of today's biggest problems is packaging waste. we have done a lot on making things recyclable and have invested a lot of r&d on making it reusable, but we need to collect it. this announcement is about the big missing piece in generating a world without waste, which is collecting the plastic and creating a market economy for that plastic. that will do great things to help us grow into the future without creating waste. it is good for us, and it is great for communities. david: how will you track all

that plastic? by 2030, you want to get a bottle back for every bottle you put out there. that is a lot of bottles. james: to give you an idea of the dimension, every person in the world if they bring back to bottles a month, we collect every bottle we put out. how will we do it? there will be different systems in different countries. every country needs a solution. it won't be the same everywhere. there are places where it is reasonably advanced in europe to more informal economies where the collection happens. there will be different solutions everywhere. we have to work with ngo's, other industrial companies and governments. it is absolutely doable. that is what is exciting about setting the objective. david: what about other places, like china, for example? james: the emerging countries is where there is more of a problem as opposed to the u.s. or europe.

we need to do more there, but there is some informal collection system going on across a wide range of waste. what we need to create is the circular economy, create value for that. we did this in mexico, for example. you go back a little more than 10 years, it was less than 10% of the plastic was recycled. now it is 60%. how? the informal economy was collecting the waste, but there was no market for it. no one wanted to buy it. we went into the marketplace and bought the plastic, invested in factories to recycle, and we used that in our bottles. i think there is a model there for china and other parts of the world on how to create value. david: you put out a bold strategic vision called total beverage company that includes things beyond coca-cola and diet coke. these five categories, what is driving that? is that basically to get away a bit from sugar drinks? james: actually, we are following the consumer.

when you look at what is happening around the world, as the world is urbanizing and people have more disposable income, they are spending more money on a range of things, including beverages. what is important within that growing market of beverages is they want more choice. different people want different things. if we really want to be able to serve the consumer, we have to follow them. we have to get into more categories. coke is likely to remain the heart and soul of the company, the world's biggest fast-moving consumer good brand, but we need more. we need to offer consumers what they want all day long. we have to offer choice. that is what will drive us forward. in a way, it goes back to where we started. if we pay a lot of attention to what the consumer wants, they will take us to where the business needs to grow, and it ultimately ends up in growth for the business. david: on average around the world, people consume about eight ounces of a beverage per day, and coca-cola is half an ounce.

what is your goal? how much of the total market share of total beverage can you take globally? james: i don't think there is an end of history moment when we reach nirvana. what we are looking to do is gain share every year. it is a competitive marketplace. we have a lot of well-funded competitors doing a lot of exciting things. but we are focused on is can we serve the consumers and get a little share each year and generate a growing business system? our objective is to create value for everyone who touches that business system, whether it be the economics and people in the value chain, or society with initiatives like the packaging one. it builds on our heritage of creating shared value in the world. 10 years ago, we set ourselves the objective of being water neutral by 2020. we achieved it a few years early. we returned to the environment all of the water that we use. it is one of the things that gives us confidence we get business growth and do it in the right way for society.

david: ok, thank you so much. terrific. thank you so much. james: thank you. ♪

♪ nejra: the mifid squeeze, moody says europe's new regulations are damaging to asset managers. how credit negative is mifid ii? how credit negative is mifid ii? brexit and banks, will the uk and eu come to a deal favorable for the city of london. plus, trump one year on, the differences the president has made towards differences in the american financial sector and what is next. welcome to "bloomberg markets: rules and retu