The Coca-Cola Company has claimed initiatives aimed at “upping the bar on marketing” are paying off after raising revenue guidance for the year.
Announcing results for the three months ended 30 June 2023, the company said net revenue increased 6% to $12.bn (£9.3bn). Gross profit was up by 9% to $7.06bn (£5.5.bn), it said.
The company said it expects to see “sustained” positive volume growth going forward. It announced it was raising its forecast for the year and now expects to see organic revenue growth of 8% to 9% in 2023. It had previously estimated growth between 7% and 8% in the year.
Forecasted revenue growth will come from positive volume growth as well as price, it said.
It credits successful execution of what it has dubbed its “all-weather strategy”, which sees it focus on optimising returns as well as on topline strategies, aided and augmented by the efforts of its marketing teams.
“We continue to deliver on our strategy through a combination of world-class marketing and innovation, excellence in revenue growth management and strong execution across our portfolio,” CEO James Quincey told investors on a call today (26 July).
Coca-Cola revenue growth initiatives have included a focus on lowering the entry points for consumers to its brands through price-pack architecture. It is also working more effectively with its retailers through the roll-out of digitised B2B platforms. The company reports that in the year-to-date it has connected 6.5 million retail customers to the platform, double the number it achieved last year.
There has also been a “real focus on upping the bar on marketing”, Quincey said. The company has been undergoing what its CMO Manolo Arroyo termed last year the “largest transformation” its marketing function has ever undergone. This has seen it focus on innovation, effectiveness and portfolio, and has included an overhaul of its agency structure.
The company is also looking to reach younger Gen Z consumers with its brands and tie its drinks to passion-points.
For the Coca-Cola brand, the business has sought to tie the drink more closely to consumption occasions. Part of these efforts have been its ‘A Recipe for Magic’ campaign, led by an advert featuring model Gigi Hadid enjoying a meal paired with Coca-Cola. The company attributed the increased linkage between Coca-Cola and consumption occasions to the brand’s volume growth in the most recent quarter.
Another area where the marketing transformation is bearing fruit is in Coca-Cola’s ready-to-drink alcohol strategy. Its collaboration between brand name Coca-Cola and Jack Daniel’s was only launched in many markets earlier this year, but is already showing “promising results”, Quincey said.
The success in this area is indicative of “the marketing transformation coming to life”, he said. The company upped marketing spend year-over-year this quarter. It did not specify its marketing spend, but detailed that its selling, general and administrative expenses had increased 9% year-over-year to $7.1bn (£5.5bn).
Chief financial officer John Murphy expressed confidence that the company had “numerous levers” at its disposal to build topline growth, but remains focused on improving the business.
“We continue to build a culture that emphasises raising the bar in every aspect of how we do business,” he said.
While volume decline was particularly notable across the entire EMEA region at 5% for the quarter, developed markets, such as in Western Europe are beginning to see inflationary pressures moderate, it said. The company expects it has already made the price increases it needs to this year.
“We think in the developed markets we’ve got through the pricing that needed to be taken in 2023,” he said. “We don’t foresee substantive new pricing.”