Coca-Cola prioritizes offering more value to consumers: ‘We're not chasing the competitors. We're chasing the consumers and the retailers,’ says CEO
Coca-Cola's reported global net sales grew 10% to $11.1bn with unit case volume growth of 4% in Q3 2022 (the three months ended Sept. 30, 2022) compared to the same period last year driven by strength and recovery in away-from-home channels.
In North America, reported net revenues grew 21% and unit case volume was up 1% for the quarter compared to the same period last year with sparkling soft drinks and dairy beverages leading growth for the quarter.
“After a strong first half of the year, we continued our momentum in the third quarter with effective execution across our global system, despite a macro backdrop that remains challenging. In the face of these pressures, consumers stayed resilient, and we continued to invest behind our loved brands to drive value in the marketplace and growth in our business,” said Quincey.
As a result, Coca-Cola raised its top-line and bottom-line guidance expecting to deliver organic revenue growth of 14% to 15% for the full 2022 year and a total capital investment of $1.5bn across the company.
Investment priorities: BODYARMOR and Powerade
Coca-Cola is bolstering its position in the areas of sports drinks and advanced hydration beverages with ongoing investment in BODYARMOR (which Coca-Cola acquired the remaining stake of in November 2021) and Powerade.
“It's a competitive industry. There are a lot of good competitors, big and small. So we absolutely are worried what they're up to,” said Quincey.
But, the company’s focus is ultimately growing its brands as much as possible and Coca-Cola is bullish on the potential of its current sports drinks portfolio.
“The US bottlers are very energized about the BODYARMOR and Powerade plans going forward. A lot of innovation on the brand, on the product, on the packaging is set up… But what guides us is, are we satisfying the consumer and the retailer? We're not chasing the competitors. We're chasing the consumers and the retailers,” said Quincey.
Delivering affordable options to consumers
Even with inflation continuing and an economic recession looming, ensuring affordability for all consumers through a range of product options such as smaller multi-packs or smaller bottles, is a central piece to Coca-Cola’s company strategy.
In North America, the company launched the Coca-Cola Value Collection in Q3 2022 featuring smaller multi-packs and larger can sizes of its core brands.
“It's about extending the price ladder and, in recessionary times, about making sure the entry price point, whether it be on the larger packs or on the smaller packs, becomes as low down in the price spectrum, the actual out-of-pocket, as possible,” said Quincey.
Quincey did note that despite the company introducing products at more affordable price points, consumer trade-down behavior and the pressure from a private label is increasing.
“You can see some growth in private label across a number of categories. In beverages, you could see it tick up a little in water and juices,” said Quincey.
“Our focus and our confidence in our year-to-go and going into next year is about the momentum we've created in our business over the years and our ability to not just to continue with marketing and innovation, but to leverage all the thinking behind revenue growth management and the price/pack form of architectures to maximize affordability and, therefore, accessibility of our categories for those consumers that are under pressure and, of course, backed by excellence in execution and generating value for retailers by our system that will help us get through what is likely, in all likelihood, going to be a tighter situation for the next six to 12 months.”
The road ahead
Still contending with a challenging and volatile economic environment, Coca-Cola remains focused on driving market share and consumer engagement across its brands through new product innovation and other consumer-centric efforts.
“As we look forward beyond this year, we continue to see great opportunity for our industry. We are allocating resources in a disciplined way to gain share. Success from our marketing model is based on two critical components: linking occasions and passion points to drive engagement, and leveraging experiments to optimize our marketing,” said Quincey.
According to the company, investments in new product innovations such as the ready-to-drink Jack Daniels and Coca-Cola beverage launched earlier this year, and experiential marketing campaigns, contributed more than 25% to incremental gross profit year-to-date.
“This drives deeper connections with consumers, reaching them in new and unique ways,” noted Quincey.