Coca-Cola ‘significantly’ ups marketing spend in preparation for ‘dynamic’ 2023
The drinks giant’s core strategy for dealing with the likely challenging economic environment in 2023 will be to “lean into growth”, its CEO has said.
Coca-Cola plans to maintain marketing investment over the final three months of 2022 after “significantly” upping spend in the third quarter, as it looks to maintain the “long-term health of the business”, CEO James Quincey has said.
Speaking on a call with investors today (25 October), Quincey and CFO John Murphy said Coca-Cola is prioritising top-line growth as it navigates the current macroeconomic challenges, and reiterated that marketing investment is a crucial driver of that.
Having “significantly stepped up” its consumer-facing marketing investments over the last three months, the drinks giant claims it has already seen this spend pay off in brands such as Sprite, which is now a $1bn brand.
Coca-Cola also saw net revenues in the quarter grow 10% to $11.1bn, and unit case volume grow 4%. The business has raised its full-year guidance and now expects to deliver organic revenue growth of 14-15%.
Heading into the final quarter of the year, marketing spend will remain a priority for the business as it preps for a challenging 2023.
“We are investing in consumer facing marketing to get a fast start for next year,” said Murphy.
Success from our marketing model is based on two critical components: linking occasions and passion points to drive engagement, and leveraging experiments to optimise our marketing.
James Quincey, Coca-Cola
The company is beginning to see consumer behaviours change, particularly in Europe, where it says it is seeing some switch to private label products and consumers changing how they buy or consume their beverages, such as a shift away from out of home consumption and towards discount retailers.
Despite this environment, Coca-Cola is confident in its ability to succeed.
“Beyond this year, we continue to see great opportunity for our industry. We’re allocating resources in a disciplined way to gain share,” said Quincey.
The business’s core strategy for dealing with the “dynamic” economic environment in 2023 will be to “lean into growth”, he added. However, the company is not ruling out making cuts in marketing spend in particular markets if necessary.
“If there are parts of the world where circumstances do not merit continued high levels of marketing investment and there are reasons to pare back, then… we absolutely will lean on our increased degree of agility and adaptability to make those adjustments in the moment,” Quincey said.
Coke CMO: Effectiveness is about engaging consumers in ‘radically different’ ways
He added that the business is leveraging its competencies in areas such as marketing and innovation, as well as in revenue growth management and price-pack architecture, to “maximise affordability” for its consumers. The business is “mining insights” to understand what consumers need from its brands during these times.
Delivering what he terms “world-class marketing” is part of Coca-Cola’s mission to “expand the circumference of what [it] can control” amid turbulent economic times, he said, adding that there are two crucial elements underpinning the business’s marketing success.
“Success from our marketing model is based on two critical components: linking occasions and passion points to drive engagement, and leveraging experiments to optimise our marketing,” he said.