Note: 2019 data. The two outer donut charts represent the split of brands in terms of 2019 retail value. The innermost donut represents the split in terms of number of brands.
Compounding Quality Value
Despite all of the noise and challenges over the past 5 years, our system rallied to focus on winning in the marketplace, and drove revenue above the high end of our long-term targets. We leveraged the crisis as a catalyst to accelerate the business transformation that was already underway. And we did that because through it all we stayed clear on our purpose – which is to Refresh the World, and Make a Difference. We kept this front and center because it allowed us in the early years to re-orient our business and drive ourselves forward, and it allowed us to manage through the pandemic. And today, we remain rooted in that strategy, and continue to strive toward driving the topline and generating returns. We identified key objectives to propel us to a growth trajectory – win more consumers, gain share, maintain strong system economics, strengthen our impact across our stakeholders, and equip our organization to win in the future. These remain our north stars as we continue to navigate the uncertain macroenvironment ahead in the near term.
(a) Non-GAAP
Brand Portfolio Optimization
We put deep analysis into our portfolio optimization process to focus on brands that will continue to drive the Total Beverage Company strategy. We undertook the exercise to shape our portfolio of brands in support of our growth agenda and to ensure we emerge from the crisis strongly. We’ve streamlined our portfolio from 400 to 200 master brands, allowing global category teams to identify the greatest country and category combinations which drive the most effective return on our spend. We aspire to achieve a balanced combination of global, regional and local brands, with scale, that have the strongest potential to help us grow our consumer base, increase frequency and drive system margin accretion. We believe we now have a strong portfolio of brands that will enable us to address all drinking moments and we will continue to grow these brands through focused execution and targeted innovation where relevant.
Networked Organization
Our networked organization is coming together and is already changing the way we work – striking the right balance between scale and intimacy. We’ve created global category leads with clear decision rights to modernize our approach to Marketing and Innovation. We’ve established Platform Services to elevate and accelerate data, analytics and insights capabilities in order to accelerate topline and bottom-line growth. This reduces duplication and drives scale. The actions free up time, resources, and energy for growth and facilitate accountability and speed of execution across the frontline areas closest to the consumer.
Brand Building
World-Class Marketing...
Great marketing begins with human insights – understanding what the consumer wants, making a superior tasting product and through the consumer passion points, telling the brand story in a relatable way. We are shifting our marketing from television experiences, and our new operating structure is wiring us to partner across functions and geographies to create global solutions, enabling us to get even better at what we do best. Coupled with the scale of our new agency partnerships, we feel we’ve never been in a better position to interact with our consumers in end-to-end engagement across mediums outside of traditional media. We believe this will result in more personalized relationships with consumers, adding new drinkers to our brands while allowing for more co-creation and impactful messaging.
(a) Internal estimates for 2023
(b) Change since 2019
… Through Disciplined Resource Allocation
And we will deliver the magic of marketing by being more effective and efficient, fundamentally transforming the way we execute our marketing programs. It means a model that combines commercial prioritization backed by advanced analytics that drives leverage through scale. One area the pandemic fueled us by necessity to reevaluate was our ability to take action with the resources available to us, whether it’s dollars, whether it’s people or whether it’s time.
We always begin our decision-making process from an enterprise view, leveraging the network to focus on what's the most important set of decisions for the enterprise. Our company has invoked a spirit of learning where it's okay to try as long as we learn and iterate better the next time. And last, but certainly not least, we continue to be more data-driven, making great strides turning concepts into real life examples to help drive the growth equation. Across the enterprise, driving a discipline around where we play and how we invest using a very methodical country-category combination algorithm is helping us have confidence that the dollars we're investing can and will generate even greater return.
Innovation
Complementing our work to build great brands is our disciplined approach to innovation, in order to bring new relevant product or equipment or ideas to the table. Consumer centricity allows us to drive incremental growth through innovation. We are focusing on “more disciplined innovation”, but this does not mean “less innovation”. We are approaching innovation through different lenses and with rigorous objectives: Our pipeline for 2023 has been developed through clear routines and processes to assess the purpose and the right level of innovation. Intelligent experimentation goes beyond new flavors and brands – it also includes product, package and process. It encourages local markets to test the best ideas in a way that enables us to nurture and scale them, allowing us to expand across geographies faster than before.
Digital
The digital frontier is vast and has many fronts. Our view of digital is one of an integrated ecosystem of platforms that create value across the digital and physical world. Our digital strategy creates value not only for our consumers and customers but across our organization and our system as well. The pandemic allowed us to accelerate our digital transformation and evolve into an organization that can execute its marketing, commercial, sales and distribution strategy both in the on-line digital world as well as in the physical world.
At the heart of everything lies data, and our recent organizational changes have set us up to leverage data across the enterprise as well as the system. This, combined with cutting-edge digital tools, will facilitate more efficient marketing, strengthen our brands, and improve the execution.
Revenue Growth Management
It goes without saying that strong innovation and marketing would not take flight without excellence in execution. We have taken several steps in the ongoing evolution of our revenue growth management (RGM) agenda. RGM is a key commercial capability that answers critical business questions of ‘Within the priority categories, where is the revenue? Which pack? Which price tier? Which channel? Which customer? Which competitor?’
RGM focuses on identifying revenue pools (where to play) and revenue growth strategies (how to win). It is a capability with different markets being at different points of the journey, and adjusts based on the business objective and changing landscape.
Digital is beginning to play an integral role in our RGM strategy, providing competitive advantages which allow us to make better, more informed decisions faster, by translating data into actionable insights. Digital is improving our perception both at the consumer experience level as well as at the bottler level, driving improved execution.
RGM is iterative and infinite. Thus, we believe we have a long runway ahead of us.
(a) Comparison vs. 2019
Execution
Ultimately our success as a company is dependent upon our success as a system, and our bottlers’ ability to grow and thrive in the marketplace. That is why we went through a tremendous transformation over the past several years to put the bottling operations in the hands of the most capable and strategically aligned partners. We are seeing our transformation yielding results.
For example, in South Africa during 2021, we leveraged learnings from strong reusable performance in Latin America to invest in capabilities and activation driving demand for affordable, refillable PET packages and a universal bottle, driving positive results from a revenue, transaction and value standpoint.
Further, in Germany where collection rates are very high, we utilized refillables to expand premium packages for at-home occasions through development of a highly sustainable returnable glass bottle – again driving positive results across metrics.
Note: Data comparisons are 2021 vs 2019
(a) Revenue per unit case and transactions for refillables in South Africa
(b) Revenue per unit case for sparkling soft drink refillable glass bottles in Germany