Investor Relations

Growth Strategy

Disciplined Portfolio Growth

As we continue our journey as a total beverage company, building loved brands through disciplined portfolio growth plays an integral role in that journey. Disciplined portfolio growth through a constant focus on innovation, revenue growth management and improved execution – all supported by greater brand-building. We believe executing and improving upon these initiatives forms the foundation to deliver strong results today and in the years ahead. This strategy is driving results within our flagship brand today.


Consumer-Centric Strategy

Brand-Building

Our brand-building capabilities center around enduring principles such as human centricity, focusing on the basics, including being clear on the occasion, brand, price, pack and channel we are executing against, and finally, capitalizing on new engagement models by creating experiences from points of interruption. The ultimate goal being to increase weekly drinkers of our products.

CEO James Quincey

Watch Chairman and CEO James Quincey speak about the brand-building strategy at the 2020 CAGNY Conference

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Innovation

Innovation

At The Coca-Cola Company, we continuously leverage insights gained from our innovation centers based in various regions of the world to offer more personalized product solutions for consumers, such as tailored formulations and ingredients to match consumer tastes and lifestyles, broader packaging options and more. We’ve refined our approach to innovation through a fixed number of ten innovation spaces in order to understand where the consumer is going not only today but years into the future.

We’ve established defined metrics and routines in order to better track, gauge and forecast our progress, including:

  • Ambidextrous Culture
  • System Leadership Reviews
  • Innovation Scorecard (Lagging and Leading Indicators)
  • Benchmarking Versus Peer Companies
  • Balanced Portfolio Approach (Leader/Challenger/Explorer)

Consumer-Centric M&A

At The Coca-Cola Company, we see M&A as an enabler of our growth strategy rather than a strategy in and of itself. When evaluating M&A opportunities we must ensure we strike the right balance between strategic rationale, financial returns, and risk profile.

Costa coffee

Costa Limited M&A

On January 3, 2019, we completed the acquisition of Costa Limited from Whitbread PLC. The Costa platform will give us the ability to scale within the $500 billion global hot beverage category and create a world-class global coffee business, allowing us to better serve our customers and strengthen our ready-to-drink portfolio. Our strategy centers around:

  • Use the retail presence strategically to build the brand and experience.
  • Utilize Costa’s coffee supply chain capabilities, including sourcing, vending and distribution, to enhance Coca-Cola’s ability to provide total beverage solutions to customers.
  • Expand the Costa Express system with our foodservice and on-premise partners around the world.
  • And finally, launch the brand in both ready-to-drink and at-home consumption products around the world, complementing our existing portfolio.
  • And finally, launch the brand in both ready-to-drink and at-home consumption products around the world, complementing our existing portfolio.

Revenue Growth Management

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?’

It focuses on identifying revenue pools (where to play) and revenue growth strategies (how to win). RGM 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 in order to drive our competitive advantage in making better, more informed decisions faster by translating data into insights into actions. Digital is improving our insights both at the consumer experience level in addition to driving improved execution with our bottlers.

RGM is iterative and infinite. Thus we believe we have a long runway ahead of us.


Strategy

Developed Markets

North America Example

North America

Developing & Emerging Markets

Romania Example

Romania

Note: Data based on 2018 performance and internal estimates

Execution

Ultimately our success as a company is dependent upon our success as a system, and our bottler’s 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. Below is a case study of the North America refranchising results thus far. 

International Bottlers Expanding

ARCA Continental

SSD Transaction Packs Volume CAGR* 16%

New $250M Facility

Global Execution Cup Winner

Legacy Bottlers Scaling

Coca Cola

Outpaced NARTD Growth 3rd Consecutive Year

9K New Outlets Added

Leading Bottler in U.S. Execution Index

New Bottlers Accelerating

Coca Cola

Net Sales Revenue CAGR* — 2x Industry

>50% SSD Share +1.1 Points vs. ‘18

Multi-Use Facility with E-Comm Partnerships


The North America System Has Invested ~$750M to Support Our Innovation and RGM Agenda

* 3 year CAGR (2016-2019)
Note: System investment is over three years

The Path to Quality Leadership

Building sustainable, strong brands requires different strategies of execution in the market based on the brand’s stages of growth. Our goal is to grow our brands from Explorer, to Challenger, to ultimately the Leader in it’s category in a given market, meeting defined success criteria along that journey. On average, brands with Leadership status have margins 1.5 times greater than the nearest competitor.

CEO James Quincey

Watch Chairman and CEO James Quincy speak about the Leader, Challenger, Explorer Framework at the 2020 CAGNY Conference

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  • Building a Portfolio
1. Fund the Portfolio We Want, Not What We Have
2. Fewer, Bigger, Smarter Bets on Explorers & Challengers
3. Invest Optimally in Leaders

Disruptive Explorer

Disruptive Explorer brands have entrepreneurial audacity and the ability to disrupt markets where they are either nonexistent or irrelevant.

Patient Challenger

Patient Challenger brands work to amplify their competitive edges by focusing on consumer segmentation that matters, like behavior, values and lifestyle, and investing in experiential brand building.

Purposeful Leader

Purposeful Leaders are representative of wisdom and courage and have the opportunity to expand growth, capture value, and nurture the competitive edge.

Operationalizing The Leader, Challenger, Explorer Growth Framework

Explorer

<10% Value Share

Success Criteria

+DD% Value Growth

Key Strategies

  • Rethink marketing approaches
  • Kill Zombies, learn as we go
  • Fund new Explorers & push winners to Challengers

% Combos* Meeting Success Criteria

% Combos* Meeting Success Criteria

Challenger

10-30% Value Share

Success Criteria

Gain +1.5pt Value Share

Key Strategies

  • Coordinated marketing & commercial investments
  • Persistent and segmented marketing
  • Fight for share gains

% Combos* Meeting Success Criteria

% Combos* Meeting Success Criteria

Leader

>30% Value Share

Success Criteria

Value Growth > PCE

Key Strategies

  • Optimally funded media plans
  • Align investment with solid execution
  • Redeploy excess funds to drive exponential growth

% Combos* Meeting Success Criteria

% Combos* Meeting Success Criteria

*Combos equal a category & country combination.

Killing Zombies

Killing Zombies

Within the Leader, Challenger, Explorer Framework, we have a process of ongoing curation which analyzes what’s working and what’s not working, so we can identify and eliminate products that are underperforming, also known as “zombies,” to make room for newer products.

Disciplines in Action

Disruptive Explorer

In 2015, POWERADE rose to market leader in Mexico and now owns over 50 percent of the sports drink market in the country. This success was a result of exceptional discipline and persistence, thorough research in optimal pricing and packaging, and an integrated marketing campaign.

Disruptive Explorer

Patient Challenger

Over the past six years, Simply Beverages™ has been successfully closing its value share gap with the competition. This is the result of strategic leveraging of its edge with distinctive packaging, carafe-style bottle, fresh taste, simplicity, and powerful marketing that elicits a close-to-nature feeling.

Patient Challenger

Purposeful Leader

In 2016, we introduced Coca-Cola Zero Sugar™ in an effort to meet the needs of consumers seeking to manage their sugar intake. Featuring a new and improved no-sugar recipe that is similar to the taste of Coca-Cola Original, Coca-Cola Zero Sugar quickly experienced positive retail sales. In one year after the launch, the sales of Coca-Cola Zero Sugar were up 13 percent, almost 20 percent in Germany, 50 percent in Great Britain, and 90 percent in Mexico.

Purposeful Leader