Coca-Cola has doubled down on its strategy to cut down its portfolio and switch investment to its core brands, while also planning to bring marketing investment levels back to pre-pandemic times to boost growth.

 

Speaking recently with analysts following the announcement of the company’s fourth quarter and full year results, chairman and CEO James Quincey said the company’s long-term growth will be “powered” by its core brand portfolio. The company slashed its portfolio from 400 brands to 200 last year.

 

He explained the streamlining of brands allowed global category teams to “identify the greatest opportunities” and “allocate investments accordingly”.

 

“Targeted investments will leverage our leader brands more effectively, convert challenger and explorer brands into leaders more quickly and consistently,” said Quincey.

 

“Additionally, our portfolio streamlining allows us to focus attention and resources on what we do best – brand building and innovation. This will make room for more consumer centric products down the road.”

 

Quincey signalled the company will look to increase marketing budgets again to levels seen in 2019, but only once the vaccination rollout is more progressed and lockdown measures are eased. For comparison, the company spent around $4.3bn (£3.1bn) on marketing in 2019.

 

He said marketing investment will need to be at “similar” levels to those seen in 2018/2019 in order to “drive top line and margin increases” consistent with the company’s growth forecasts.

 

“Our portfolio streamlining allows us to focus attention and resources on what we do best – brand building and innovation.” James Quincey, Coca-Cola

To deepen its brand streamlining strategy, Coke is currently reviewing its global creative and media agencies. This was to optimise marketing operations by eliminating duplication, savings that would eventually be reinvested into its brands, Quincey added.

 

Coca-Cola net revenues declined 11% to $33bn (£23bn) in 2020, this was driven by a 7% decline in concentrate sales. While revenue in the fourth quarter was down by 5% to $8.6bn (£6.2bn).

 

“To summarise, we are confident that we will successfully navigate to a dynamic market environment in 2021 to deliver against our objectives and will emerge with more consumers higher share, stronger system economics, and greater stakeholder impact.

 

“As vaccine distributions continue will allow more visibility to how the global recovery will take shape. And given our confidence in the levers we have to manage the business; we are providing an outlook for 2021. Importantly, we’re staying true to our commitment to consumer centricity and our beverages for life strategy. We’ve made great progress in equipping the company to win for years to come as we will fulfil our purpose refresh the world and make a difference,” concluded Quincey.

SOURCE: Manny Pham