Coke plans to ‘transform’ marketing with $1bn investment

Coca-Cola plans to make an extra $1bn in productivity savings by 2016, the majority of which it will reinvest back into marketing as it looks to reverse recent sales declines.

Coke Super Bowl ad
A still-frame from Coca-Cola’s 2014 Super Bowl ad.

The move is an extension to Coca-Cola’s previously announced productivity and reinvestment programme and comes as the soft drinks giant reported its global profits fell 4 per cent year on year to $2.1bn and net revenues dropped 4 per cent to $11.04bn in the three months to 31 December.  

For the full year, revenue decreased by 2 per cent to $46.9bn and operating income fell by 5 per cent to $10.2bn.

In 2014 Coca-Cola says it plans to reinvest savings from global supply chain optimisation and data and IT system standardisation into global brand building initiatives, with an emphasis on increased media spending.

It also plans to make improvements to the effectiveness of its marketing by “transforming” its marketing and commercial model to make more consumer-facing investments, the company says.

Muhtar Kent, Coca-Cola chairman and chief executive, says: “We are committed to accelerating marketing investments in our brands, further advancing our innovation strategies and maximising productivity and reinvestment for growth. All of us at the Coca-Cola company remain resolute in our commitment to deliver results in line with our long-term growth model and 2020 Vision for sustainable value and success.” 

In Europe, Coca-Cola grew revenues by 11 per cent to $1.3bn in the quarter and by 4 per cent to $5.3bn for the full year. Profit declined 11 per cent in the quarter to $598bn and by 3 per cent to $5.3bn for the full year.

Coca-Cola said it was impacted by ongoing macroeconomic uncertainty and weak consumer confidence over the past 12 months.

The company did mark out a strong European performance from Innocent’s branded smoothie and juices business, which it took a majority stake in last year. But while the division contributed “significantly” to the group’s European net revenues in both the quarter and the year, there was less of a marked impact on profit due to the higher costs involved in selling Innocent products and Coca-Cola’s level of investment  in the business as the company looks to accelerate its growth.

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