Coca-Cola to reinvest productivity savings into brand building marketing

Coca-Cola is launching a global cost-cutting initiative that will see productivity savings reinvested into brand building marketing campaigns.

Coca-Cola’s Olympic campaign featuring Thomas Turgoose

The first initiative, part of a wider programme dubbed “Productivity and Reinvestment”, aims to make up to $400m (£253m) in annual savings by 2015, which will be redirected to “system-wide brand building initiatives” as well as mitigating rising commodity costs.

Coca-Cola says the programme will “drive profitable growth through marketing and innovation effectiveness” by making productivity savings on operationalprocesses such as those conducted by its IT systems, supply chain and simplifying how it uses data.

The company says productivity is a “core pillar” of its “2020 Vision”, which sets out its target to double revenue in the next eight years.

The announcement comes as Coca-Cola’s net operating revenue grew 33% to $46.5bn (£29.4bn) for the full year to 31 December, fuelled by growth in its sparkling beverage division. Operating income rose 20% year on year to $10.2bn (£6.5bn).

In Europe, net operating revenues rose 4% to $5.5bn (£3.5bn) in the period, driven by the Coca-Cola and Coca-Cola Zero brands. Operating income also rose 4%, to $3.1bn (£1.9bn).

Coca-Cola says it leveraged integrated marketing campaigns centred around Christmas and the 2012 Olympic Torch relay in the last three months of the year, which helped grow its sparking beverage volume by 1% in the quarter.

The beverage maker adds that a continued focus on segmenting occasion-based package and price points also helped drive revenue growth.

Muhtar Kent, Coca-Cola’s chairman and chief executive officer, says: “Our solid performance reflects the continued investments we have made over time and in every economic condition to strengthen the health of our brands, starting with brand Coca-Cola, the very oxygen of our business.”

Coca-Cola celebrated its 125th anniversary last year and rolled out a series of campaigns to mark the occasion, including re-running its famous 1970s “hilltop” campaign and featuring the anniversary on limited edition packaging.

Read what MW learnt when it visited Coca-Cola’s Atlanta HQ in May here.

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