Muhtar Kent, Coca-Cola Co.'s incoming chief executive officer, took the podium earlier this year at a Florida conference and declared that Coke is back on track.

After sputtering at times in the past decade, Coke posted double-digit increases in profits and revenue in 2007.

AJC file photo (ENLARGE)

Muhtar Kent will become chief executive officer of Coca-Cola Co. on July 1.

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"The winning culture of the Coca-Cola Co. and the Coca-Cola system is back," Kent said between swigs of a Coca-Cola Zero.

But as Kent takes over July 1 for outgoing CEO Neville Isdell, he faces the prospects of a weakening world economy and U.S. consumers moving away from carbonated soft drinks.

"I would say Muhtar has two big challenges," said John Sicher, editor and publisher of Beverage Digest, which follows the industry. "The first is managing through what looks to be a potentially difficult global economic slowdown. The second is fixing the North American business."

The transition from Isdell to Kent has been more than a year in the making. Kent was promoted in December 2006 to president and chief operating officer, the No. 2 spot. A formal succession plan naming him the next CEO was announced in December 2007. It's still unclear who will take the No. 2 post under Kent.

If successful, the transition would make the first smooth hand-off for Coke since the 1997 death of legendary CEO Roberto Goizueta. Douglas Ivester, who replaced Goizueta, announced his retirement in 1999 before a replacement had been named. Doug Daft, Ivester's successor, did the same in 2004, leaving Coke scrambling for a CEO before landing Isdell.

Isdell, a tall, thin Irishman known for diplomacy, is credited with improving employee morale and drafting a new vision for growth. He shepherded Coke Zero, a no-calorie soft drink that's provided a boost for the core Coke brand. He oversaw the $4.1 billion purchase of Glaceau, the largest acquisition in Coke history. Glaceau, maker of Vitaminwater and Smartwater, gives Coke a strong player outside the carbonated soft-drink business.

Kent has the skills and background to continue the momentum, said Jimmy Williams, a longtime Coke board member and retired chairman and CEO of Atlanta-based SunTrust Banks.

The son of a Turkish ambassador, Kent has spent much of his life and career abroad. He also has experience with bottlers, the companies that make and distribute Coke products. From 1999 to 2005 he headed Efes Beverage Group, the majority shareholder of Coca-Cola's Turkish bottler.

"Experience, talent, energy, determination ... he's got it all," Williams said.

Kent was a key management recruit for Isdell when he took over as CEO. The two go back to the 1980s when they worked in Coke's European operations.

Kent is a true "global citizen" able to work both with high-level officials and street-level operations, Isdell told an Atlanta business group earlier this year.

"We have this imagery around the brand ... that is as pristine as we can possibly make it," Isdell said. "The truth is we deliver our product around the backdoors of every store, and some of those stores are pretty scruffy little stores, around the world. ... You need to be able to think and work both those levels, and he's able to do that."

His experience gives him credibility with Coke's bottling partners, which are dealing with higher commodity prices and a slowing economy. Several major bottlers have seen profits dip this year. Atlanta-based Coca-Cola Enterprises and Greece-based Coca-Cola Hellenic, two of Coke's major bottlers, have warned of a slowdown in sales and profits for the second quarter.

Frank Harrison, chairman and CEO of Charlotte-based Coca-Cola Consolidated, said he's been impressed with Kent's knowledge of the business. Coca-Cola Consolidated is Coke's second-largest U.S. bottler, behind Coca-Cola Enterprises.

"Muhtar is a dynamic and forward-thinking leader, and we believe he is the right leader at the right time for the Coca-Cola system," Harrison said. "He is uniquely suited to tackle the tough issues in North America and the courage with which he addresses these issues will be his legacy at Coca-Cola."

In the near-term, much of Kent's attention likely will be focused on North America, said Sicher of Beverage Digest.

Coke's sales are booming in China, India, Brazil, Turkey and Russia. International markets account for more than 80 percent of operating income.

But North America is still the largest market, and sales volume here was down 1 percent last year.

The overall carbonated soft drink market has declined for the past three years in the United States, and Coke's sales have slipped even further. It lost market share in U.S. soft drinks in four of the past five years, according to Beverage Digest figures.

"Coke should not be in a position of losing share," Sicher said. "It should do at least as well as the industry. If the total industry is going to decline, Muhtar's challenge is to make sure Coke declines less."

Kent's Key Challenges

• Rejuvenate Coke's North American sales. Case volume was down 1 percent in 2007. Carbonated soft drinks sales were a sore spot for Coke.
• Manage what could be a softening world economy. High commodity costs and an economic slowdown already are hurting some bottlers.
• Develop or acquire new beverages to keep up with consumer demands for more variety. Still beverages, such as teas, ready-to-drink coffees and enhanced waters are claiming a bigger piece of the overall beverage market.
• Continue expansion in emerging markets, such as China, Russia, India and Brazil.
• Groom a successor. Kent has a strong set of high-ranking executives, but he has not established a clear No. 2 in the current organizational structure.