man with face via FlickrA glass of orange juice seems like one of the simplest things in the world. That might be true if you squeeze it yourself, but when you try to make it for millions of consumers, it turns out to be incredibly complex.
Duane Stanford at Bloomberg Businessweek takes a close look at how Coke manages to make every glass of orange juice the same. The company has to fight the changeable moods of nature, and plan a whole year based on a 3 month growing season.
They use an incredibly complex algorithm known as the "Black Book" to control everything from picking schedule to the way the juice tastes:
Revenue Analytics consultant Bob Cross, architect of Coke’s juice model, also built the model Delta Air Lines uses to maximize its revenue per mile flown. Orange juice, says Cross, “is definitely one of the most complex applications of business analytics. It requires analyzing up to 1 quintillion decision variables to consistently deliver the optimal blend, despite the whims of Mother Nature.”
The Black Book model includes detailed data about the myriad flavors — more than 600 in all— that make up an orange, and consumer preferences. Those data are matched to a profile detailing acidity, sweetness, and other attributes of each batch of raw juice. The algorithm then tells Coke how to blend batches to replicate a certain taste and consistency, right down to pulp content.
It's not just taste. The model also has to be able to account for weather patterns, potential supply and cost pressures, and transportation.
- Consumers pay a high premium for fresh juice
- It's an increasingly important business as people move away from soda
- Pepsi (which owns Tropicana) is a huge competitor, so everything the company can do to increase quality and keep costs down takes on outsize importance
- Coca Cola's major juice brand in Asia (Minute Maid Pulpy) became a billion dollar plus brand within three years of launching
It sounds like an incredible amount of effort and data for something that takes seconds to drink, but billions of dollars are at stake.