The Coca-Cola Company says “consumer-centric segmentation” has been key to managing the changing and challenging macroeconomic environment over the past 18 months.
Proactively increasing prices has been a cornerstone of the business’s strategy to combat inflation, but this is not the only component that has bolstered the company during a tough economic climate. Coca-Cola’s ability to “stay with the consumer” has been crucial, CEO James Quincey told investors on a call today (24 April).
“At its core, revenue growth management is about consumer-centric segmentation,” he said.
“Ensuring we have the right product, in the right package, in the right channel, at the right price points to drive transactions and meet consumers where they are.”
Premiumisation has driven consumption in some markets and channels, while affordability has driven it in others, he noted, stating the business had stayed close to its consumers to work out which opportunities to tap into.
The comments from the CEO come as Coca-Cola reports a “positive start” to 2023. Its net revenues grew 5% year on year to $11.0bn (£8.8bn) in the first quarter. Global unit case volume increased 3% in the quarter. Price/mix rose by 11% in the period, while there was a 1% growth in concentrate sales.
Chief financial officer John Murphy said he expects price/mix to “moderate” in the rest of the year, particularly as the company begins to lap its 2022 price increases.
He pledged the company would reinvest behind its brands with “more rigour and discipline” using its refreshed resource allocation framework. This refreshed framework helps the business to re-invest for “the best returns in the near term” while balancing its overarching longer-term goals.
It also allows Coca-Cola to adapt with speed and dynamism, Murphy said.
The company highlighted the success of Smartwater, one of its billion dollar brands, which grew volume by 8% in the first quarter, supported by innovation and a digital-focused marketing campaign.
Marketing investment overall increased in the most recent quarter, but the company did not specify by how much.
Quincey said Coca-Cola is working closely with global agency partner WPP and leveraging “digital capabilities to engage consumers through passion points”.
Over the past three years, the company’s marketing has “become much more digital”, he said. He highlighted initiatives like the Coca-Cola Creations platform, which saw the launch of limited-edition Starlight and Marshmallow flavours, as well as partnerships with the likes of Chat GPT to integrate AI into the Coca-Cola brand.
Such initiatives are “starting to drive a difference” for the business’s brands, he said. He gave the example of the US market where the Coca-Cola brand has “historically under-recruited”. The digital marketing drive has engaged Gen Z with the brand and the younger generation is “starting to come into the franchise”, he claimed.