Coca-Cola will take a “dynamic” approach to marketing investment in its 2023 financial year, utilising data to ensure its spend is working effectively.
During the pandemic the soft drinks giant demonstrated its ability to be “fast and adaptable” with its spend if needs be, CEO James Quincey told investors on a call today (14 February).
The coming year is going to be another that is difficult to predict, he added, meaning it is important the company has the capacity to pull back on spend in particular areas if and when appropriate.
However, he repeated an assertion he made last year that the business has “a bias to invest for growth”, and said this is something it will not lose. Indeed, Coca-Cola “stepped up” its marketing investments over the last two years and the business indicated it would continue this pattern “to support momentum”.
“We largely feel we’ve achieved the appropriate level of marketing spend,” Quincey said. “That’s going to increase in 2023 because we’re growing the business… We are going to manage that with an agile hand depending on the circumstance.”
In late 2021, Coca-Cola introduced a new marketing model designed to make the business “truly consumer centric”. That transformation included a total overhaul of its agency structure, with new appointments across creative, media and strategy. According to the business, the model is beginning to pay off by helping it to tie its beverages to consumption occasions and driving “deeper connections” with consumers.
Coca-Cola saw its net revenues increase by 11% in 2022, increasing to $43bn (£35.21bn). Its unit case volumes grew by 5% for the full year, but declined by 1% in the last three months of 2022.
Going into its 2023 financial year the company will look to “up [its] game” and build on the model, deepening relationships with consumers through initiatives like digital experiences. It is also leveraging data insights to better understand its consumer and segment its market.
Driving both affordability and premiumisation
Coca-Cola is also utilising data to understand its specific growth opportunities in each market. It is seeking to drive both affordability and premiumisation to cater to differing consumer needs and drive growth.
“We are going to continue to see a lot of opportunity to push forward right across the world with affordability options,” Quincey said, stating the company was looking at levers such as price pack mix to “keep lower-income consumers engaged” with its brands during the current economic environment.
At the same time, the business is also looking to drive premiumisation where appropriate to drive revenues. This could be done through brand launches, Quincey said, giving the example of the Coca-Cola Jack Daniel’s ready-to-drink product, or it could be done through more premium packaging or packs.
The company has already been pursuing this strategy in Europe, where it reported growth in volume and value share in the last year.
Despite the current challenging environment, consumer demand is holding up relatively well, Quincey said, and the company is confident in its abilities going forward. The business expects revenue growth of 7-9% in 2023.
“We have the right portfolio, a very focused strategy, a flexible and adaptable structure, and a system with the ability to reinvest in the business,” added chief financial officer John Murphy.