Coca-Cola leaders recently took center stage
to talk about growth – where it is and where it will be – at the annual Consumer
Analyst Group of New York (CAGNY) conference. Last week’s investor forum was
held in Boca Raton, Fla. Gary Fayard, Chief Financial Officer, Ahmet Bozer,
Fayard opened the presentation with a progress report on our 2020 Vision, telling analysts that three years into our journey we’ve exceeded growth targets for global volume, operating income and earnings per share. He pointed out these gains have come despite one of “the most difficult macro-environments in recent history.”
Fayard also noted the strength of the Company’s cash flow, saying the Company has generated over $30B in cash from operations in the past three years.
“That capital is continually re-invested in the business, because reinvesting in our system is what drives sustainable, long-term value creation.”
Fayard called NARTD beverages a “vibrant, high growth industry”, fueled by an emerging global middle class with increasing spending power and an increasing appetite for convenience and packaged goods. He acknowledged continuing economic headwinds in different markets, but said the opportunities for growth at all levels, whether incremental or exponential, remain abundant.
Acknowledging there’s no one-size-fits-all solution
to capturing volume, Fayard walked analysts through several recent and pending
transactions – our partnership with
Fayard was followed by Bozer and Cahillane, who provided detailed analysis of their respective groups.
Together for a Better Tomorrow –
Bozer reviewed operating highlights in the Europe, Eurasia and Africa, and Pacific groups. He said Europe is positioned to capture profitable growth despite near-term economic headwinds. He described it as the “largest NARTD retail value pool in the world”, a market where we’ve gained share in the last three years, have the top three sparkling brands (Coca-Cola, Coke Light and Fanta), and where we’re still just beginning to build our still beverage portfolio. He said the Company is also well-positioned to see new growth once the region’s economic conditions improve.
Japan, China and India were among the highlights in the Pacific. Bozer spotlighted three years of record sales in Japan for example, where we have the number one share in sparkling, coffee and sports drinks. In China, Sprite is the number one sparkling brand and Coke was recently rated most favorite brand as well. Fanta is also a strong performer, having passed 100 million unit cases.
Bozer said the opening of two new bottling plants in China also “shows the continued belief of our franchise system in the Chinese opportunity.”
For all the strength of Japan and China, India may hold even greater promise.
“The opportunity in India is actually multiplied when compared to China,” Bozer explained, “because existing India per capita consumption is more or less one-third of the existing per capita consumption of China, so we have a much bigger runway to grow there.”
Bozer rounded out his comments with a discussion of
Eurasia & Africa, saying the region has seen nine percent volume growth
since the beginning of our 2020 Vision and continues to present opportunities
over the next eight years as it evolves and urbanizes. He singled out Russia as
a particularly bright spot. Brand
Together for a Better Tomorrow –
Steve Cahillane took the podium after Bozer to discuss Coca-Cola Americas. The group, consisting of North America and Latin America, includes 950 million people, representing approximately half of our Company’s volume.
For North America, Cahillane said a “clear and consistent focus” has led to 11 consecutive quarters of growth. He said although North America is a developed market, opportunity still exists thanks to a projected population increase of 30 million people in the U.S. between 2010 and 2020. Their demographics – young and diverse – also favor our business.
He said our Company is confident we can leverage that
opportunity thanks to the strength of our brands, particularly
Cahillane told investors our North America business gained both volume and value share in both sparkling and still beverages, as well as across all major still beverage categories in 2012.
“This,” he emphasized, “is what a winning portfolio looks like.”
Cahillane also touched on efforts to accelerate system investments and reiterated our commitment to raising consumer awareness around calorie balance and active, healthy lifestyles.
He rounded out his presentation with a discussion of Latin America, which he said is a source of sustainable growth that continues to offer tremendous opportunities.
“While we have seen strong growth in our two largest markets, Mexico and Brazil, the reality is that every one of our Latin America business units has delivered sustainable and balanced growth over the last three years”.
Cahillane pointed to the success of Del Valle as just one example. It’s become the number one Juice brand in Latin America, while also rising to the number one position in the category in Mexico as well. He also said Powerade continues to see accelerated growth in the market, and is on track to become the Sports Drink category leader in Latin America by 2020.
In closing out the
“We continue to take share, and it is not just volume. It is value share. So our focus is on creating long-term value for our shareowners. We think we have been delivering, and we expect to continue delivering that throughout the remainder of our 2020 Vision.”