ATLANTA – During Coca-Cola’s annual meeting of shareowners, Chairman and CEO Muhtar Kent reflected on a challenging 2014 and outlined how the company will capture the “vast opportunity” he sees in 2015 and beyond.
“We did not take the challenges of last year sitting down,” he told an audience of nearly 700 shareowners today at Cobb Galleria Centre in Atlanta. “We rolled up our sleeves and took decisive action to restore our growth momentum.”
Here are eight key points Kent made during his opening keynote:
1. Room For Growth in a Growing Industry: Each day, 2 billion households worldwide each consume about 26 drinks, roughly 1.5 of which are Coke products. The nonalcoholic ready-to-drink (NARTD) beverage industry has grown by nearly $200 billion since 2009 and is estimated to grow another $300 billion by 2020. “That's a total of half-a-trillion dollars of growth," Kent said. "We continue to see incredible market potential ahead."
2. Coke is Refocused On its Core Business Model: In 2014, the company refranchised about 5 percent of its U.S. bottle/can volume and plans to boost that number to 15 percent this year and to 20 percent in 2016. “Our goal is to have two-thirds of our North America bottle/can volume refranchised by the end of 2017,” Kent said. Coke also took steps in 2014 to drive growth in key markets through investments in its bottling system in Indonesia (the world’s fourth-most populous country and Africa (home to the youngest billion), “giving us every opportunity to win and grow in these young, vibrant markets,” Kent said.
3. Targeted, Disciplined Investments: “This means ramping up our media spending to build our brands and deliver against our strongest, most promising opportunities,” Kent explained. “But we’re not only investing in more marketing… we’re investing in better marketing.” He also cited the company’s strategic investments in innovative technologies and specific categories via partnerships with Keurig Green Mountain, Monster and Select Milk Producers.
4. Different Strategies For Different Markets: Coke’s focus on revenue and profit growth includes more distinct and clearly segmented roles for different countries. “In emerging markets, we know volume is key,” Kent said. “In developing markets, we know it takes a balance of volume and pricing… and in developed markets, we see price/mix as our most powerful growth lever.”
5. Coke Delivered its Share of Hits in 2014: “Our 2014 FIFA World Cup campaign reached 175 countries, and Share a Coke electrified many new markets, including the United States,” Kent said. “And Coca-Cola Life found new fans in the U.S., Great Britain, Mexico and beyond, on its way to reaching 19 markets by the end of 2015.” Gold Peak, FUZE Tea and I LOHAS also joined Coke’s portfolio of brands to cross $1 billion in annual retail sales, which now stands at 20 and counting.
6. Brand Coca-Cola is Growing: The company’s flagship brand posted more than $80 billion in retail sales in 2014. That’s roughly the same as all the world’s energy drinks and ready-to-drink tea, combined. And Coke’s retail value has grown at a compound annual rate of 7 percent since 2009. “Which tells me we have plenty of room to grow the world’s most delicious and refreshing beverage,” added Kent.
7. Early 2015 Results Are Promising, But ‘We’re Not Satisfied’: Coke posted solid first quarter results, with net revenue up 8 percent and currency-neutral profit before tax up double digits. “All around, a strong quarter we can be proud of,” Kent said. “But it’s only one quarter… we’re not satisfied." Looking ahead, he said the company would remain “focused on consumers and meeting them where they are… strengthening brand relevance… and increasing the availability of smaller packages, including entry packs like mini cans, iconic glass bottles and aluminum bottles.”
8. Leading the Industry: The Coca-Cola Company is the No. 1 player in sparkling beverages, still beverages, ready-to-drink coffee, and juices and juice drinks. “All of which entitles us to nothing,” Kent concluded. “But it is great to be able to pursue the opportunities ahead from the pole position, as the market leader.”
Watch an archived webcast of the shareowners meeting here, and read about special guest Warren Buffett's appearance here.
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