Coca-Cola ‘confident increased investment in marketing is working’
Coca-Cola says it is seeing ‘better performance’ after improving the quality of its advertising by increasing its spend on media and adopting zero-based budgeting.
Speaking on a call with investors today (22 July) following the company’s financial results for Q2, CEO Muhtar Kent said marketing is driving growth across both emerging and developing markets.
He added that the company saw a double-digit increase in media spend during the period.
“With better quality we’re seeing better performance,” he said. “We’re confident the step-up investment in marketing is working.”
He added that the company has kicked off the next phase of its work on adopting “zero-based budgeting”, a strategy it introduced last year meaning marketers have to justify spending on all new brand activity rather than budgets being based on the previous year’s spend.
“It’s a mechanism that helps our leaders make tough choices to free up resources that can be redeployed and invested to fund growth,” Kent said, adding that the company implemented the strategy in Europe during the quarter.
The company’s organic revenue grew by 4% in the quarter while its global volume also rose by 2%.
It saw global growth in its sparkling beverage volume, driven by its Coca-Cola Zero, Sprite, Fanta and Coca-Cola brands, although this was slightly offset by a 7% decline in Diet Coke.
Its Europe business also saw gains in both value and volume share of its sparkling beverages which the company says was “driven by strong marketing investments and new product launches”.
Speaking on the results, Kent said: “Our second quarter results were in line with our expectations and mark continued progress toward restoring momentum in our global business.
“We are executing against our strategic initiatives and remain focused on driving efficiencies through productivity and making disciplined investment decisions to accelerate growth.”
In April the company credited its increased spend in marketing and innovation for strong first quarter results.
Its move to increase media spend is 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.
In February, Kent said that the company will continue to increase the quality of its media as it sees marketing execution “speed up incremental value”, plans that have already become apparent in the UK.
In May the company also rolled out its ‘One Brand’ Strategy, which places the company’s four cola product variants, Coca-Cola, Diet Coke, Coca-Cola Zero and Coca-Cola Life, underneath the Coca-Cola master brand rather than being marketed as separate brands.