Coca-Cola reports double-digit increases in media spend as sales improve

Coca-Cola has published quarterly results that show signs of improvement in its sales performance globally, with its decision a year ago to increase media and marketing spend partly credited for improved performance.

Coca-Cola’s Q4 and final 2014 results were slightly ahead of expectations and an improvement on previous quarters, with global volume growing by 1% in Q4.

The company gained global volume and value share across categories, including in its sparkling and still beverages with the likes of Sprite and Coke performing well. It also grew share in its juice and juice drinks, ready-to-drink tea and packaged water categories.

While organic revenues declined by 2% in the quarter, if currency fluctuations are excluded net revenues grew by 4% in the period.

In a call with investors today (10 February) Coca-Cola executives said the company invested heavily behind media in 2014, with double-digit increases in media investment in both Q4 and the full year.

Marketing spend also grew by high single digits in the quarter and mid single digits in the full financial year, the company says, a move in line with the five-point marketing-led plan the company introduced last year in hopes of driving a resurgence in its revenues, following successive quarters of decline in 2013.

Last year, CEO Muhtar Kent claimed the company hoped to make an extra $1bn in productivity savings by 2016, the majority of which it said it would reinvest back into marketing.

In October, it also announced plans to adopt “zero-based budgeting”, meaning marketers have to justify spending on all new brand activity rather than budgets being based on the previous year’s spend.

Now, Kent said that the company will continue to increase the quality of its media under its new chief marketing officer, Marcos de Quinto, as it sees marketing execution “speed up incremental value”.

Elsewhere, the company will also look to reach a “new range of consumption occasions” through the launch of Minute Maid Fairlife milk as well as through its stakes in Monster Energy drinks and Keurig Green Mountain, brands it hopes to grow.

“This is not only about changing consumer trends but also about our commitment to innovation,” Kent said. The additions of Gold Peak tea, Fuze Tea and I Lohas mineral water to Coca-Cola’s portfolio in 2014 also brought the total number of billion dollar brands to 20, according to the company.

The company claims 2015 will be a transition year as it continues to look to its 2014 strategy, stating that while these actions will lay the groundwork for the year, it will take time for them to pay off in full. However, Coca-Cola expects to be back to high single-digit growth in 2016.

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