Coca-Cola is looking to follow a formula of “more and better” marketing and a heavy focus on innovation to grow the business.
The fizzy drinks giant posted its third quarter results today (26 October), which show that its net sales fell 7% year on year to $10.6bn (£8.66bn). Meanwhile, organic revenue growth rose 3% during the quarter, while organic sales growth rose 4% so far this year.
“The US, Japan and Western Europe delivered standout performance underpinned by innovation and world-class marketing,” Muhtar Kent, Coca-Cola’s CEO, says in a statement.
Speaking on an investor call, its COO James Quincey said the US team has been focusing heavily on “regenerating growth in the American business”, resulting in six quarters of volume and revenue growth.
“While there is no silver bullet, there are learnings to take away from it. The US focused heavily on learning and refining its proposition, better marketing, more media spend, introducing smaller packages, refranchising and getting all that right,” he said.
Coca-Cola is now looking to develop this “formula” across Western markets.
He explained: “Good marketing on its own is not enough, it needs to be placed alongside better execution. When it comes to Western Europe, new European [bottling] partners came out of the stables earlier this year. But the formula will be the same – more and better marketing, a better focus on categories, innovation and pushing ahead.”
Rolling out Coca-Cola Zero Sugar across Europe
During the call Coca-Cola also touched on the reformulation and roll-out of Coca-Cola Zero Sugar in the UK. The fizzy drinks brand originally announced it would be revamping its ‘Coke Zero’ variant in April this year after discovering that half of its consumers did not know it contained no sugar.
Coca-Cola launched a £10m campaign at the beginning of July to actively promote moderation and reduce consumers’ sugar consumption. The fizzy drinks giant wants 50% of its sales by 2020 to come from its non-sugar options.
“Good marketing on its own is not enough, it needs to be placed alongside better execution.”
James Quincey, COO, Coca-Cola
Figures released by Nielsen in September this year show that sales were up by a quarter since the campaign launched compared to the same time last year. And the company claims the reaction from consumers has been “really positive” so far.
“It has only been 12 weeks in Great Britain, and we’ve already seen a significant expansion in consumption versus the former product, realising double-digit volume growth in the quarter. We are now looking to roll it out across other European markets,” Quincey commented.
“We have been driving reformulation efforts to reduce added sugar while improving margins. In Great Britain, we have reduced sugar and calories in Sprite and Fanta by 30%.”
Focusing on its stills business
Coca-Cola is also looking to expand its ‘stills’ business. According to the brand, its portfolio includes between 14 and 20 billion-dollar brands. It is predominantly focused on “on-trend” beverages such as coconut water and premium juices, as well as ready-to-drink coffee.
“Consumer tastes are changing and we are building a strong diversified brand portfolio across sparkling and still to meet these needs,” Quincey said.
“We are looking to expand stills by lifting Honest and Smart Water from the US and shifting them to Europe. We also want to leverage strong and exciting brands, and develop Innocent into a strong regional brand.”