Artificial intelligence (AI) has captivated investors' attention since the launch of ChatGPT last November. While the implications of the new generative AI technology are far-reaching, most of the focus has been on tech companies like OpenAI-backers Microsoft, Alphabet, and Nvidia.
However, outside of the tech sector, other companies aren't wasting time leveraging the new technologies to their advantage. One of those unexpected AI users is Coca-Cola (KO 0.31%), the world's largest beverage company.
Image source: Getty Images.
Coke partners with OpenAI
Coca-Cola became the first company to take advantage of an innovative partnership. OpenAI, the company behind ChatGPT, and the consulting firm Bain & Co., are inviting businesses to use ChatGPT and DALL-E. The soft drink giant is the first company to step up to that plate, aiming to beef up its marketing capabilities and improve its business operations.
The companies announced this partnership back in February, and in March, Coke unveiled the first product of the tie-up, a platform called "Create Real Magic."
Running from March 20 to March 31, Create Real Magic was a contest that allowed anyone to create original artwork using Coca-Cola's intellectual property, including not only the brand's logo and trademarked contour bottle but also images like the Coca-Cola Santa Claus and the Polar Bear.
The artwork is generated using GPT-4 and DALL-E, a generative AI technology that can create images from text prompts.
From the campaign, the company plans to select 30 creators to visit Coke's headquarters in Atlanta for a three-day workshop with Coke's Global Design and Creative teams. The winners could have their artwork displayed on a billboard in Times Square and London's Piccadilly Circus.
Management also sees an opportunity to use AI in content creation, increasing velocity and adding personalizing content and messaging.
In addition to marketing, Coca-Cola expects to use AI in a range of applications, including customer service, ordering, and internal workflows.
What it means for Coca-Cola
As one of the most valuable and recognized brands in the world, leveraging the power of tools like DALL-E could boost customer engagement, but there are other potential applications for it as well.
AI could help the company with new formulations and beverages. Coca-Cola's Freestyle machine allows users to mix and match flavors, and artificial intelligence could work with Freestyle data to invent limited-time drinks or even permanent ones if those are successful. One brewery, Night Shift Brewing, has already used ChatGPT to create a new beer and had an AI design the label as well.
Demand forecasting and inventory management is another valuable AI tool that can help Coke and its retail partners make sure they have adequate inventory in stock and better understand customer demand trends. In 2019, Nike paid $110 million for the AI-based demand forecasting company Celect, showing the value of AI in analyzing market trends. While Coca-Cola isn't a fashion company, it does face similar supply chain and inventory management challenges.
What it means for AI
While the AI partnership may take time to yield results for Coca-Cola, the impact for companies like OpenAI and Microsoft, as well as their peers, should be more immediate.
Coca-Cola isn't the only major consumer-facing company leveraging generative AI, after all. French supermarket giant Carrefour just created a video using AI to answer frequently asked questions. Instacart, the grocery delivery leader, has also partnered with OpenAI on a similar Ask Instacart feature, and Shopify integrated ChatGPT into its shopping assistant, which can help customers find the products they're looking for.
For Coca-Cola, which is coming off a strong first-quarter earnings report in which it beat estimates in its top and bottom lines and posted 12% organic revenue growth, leveraging artificial intelligence is yet another way the company can differentiate itself from competitors. It has the resources to invest in such technologies and the scale to take advantage of them in a way that many of its competitors can't match.
It may be too early to call Coca-Cola an AI stock, but the company is clearly excited about the potential of generative AI, touting the new partnership in its earnings release.
Keep your eye on Coca-Cola, as we should hear more from the company on AI later in the year. In addition to the Create Real Magic platform, AI could be a difference-maker for Coca-Cola stock down the road.
