Coca-Cola plans to continue investing in its brands to navigate inflation this year while becoming “even more effective” with its marketing spend, the company said as it announced its first quarter results for 2022.
This will mean “leveraging” work produced during the pandemic and being “flexible” with its investment mix at a local level, chief financial officer John Murphy said on a call with investors today (25 April).
“We are leveraging the work that we have been doing over the last couple of years to be even more effective in how we’re spending our marketing dollars, whether it’s on building our brand or on supporting our RTM [real-time marketing] efforts in the marketplace,” he said.
Murphy did not give specific details on how the company had changed its marketing investments since its last quarter, but said the investments within the business can vary “depending on what [it] needs to do locally”.
In its results call for the final quarter of 2021, Coca-Cola had committed to increasing consumer-facing marketing spend to levels similar to 2019. Today, Murphy reiterated that the company would “continue to prioritise consumer-facing marketing to maximise returns while driving productivity”.
Coca-Cola saw a “strong” set of results in the first quarter of 2022. Net revenue rose 16% to $10.5bn (£8.3bn) in the quarter. It also saw the number of sales it made increase. Unit case volume grew 8% during the quarter.
We have a bias to invest behind our brands in marketing innovation.
James Quincey, Coca-Cola
James Quincey, CEO of Coca-Cola said the company saw “strong sales” across all operating segments, “driven by marketing investments”.
“Our accelerated agenda in marketing and innovation is tying our beverages to daily consumption occasions, adding and creating value for brands,” he added.
Despite the increase in sales, the company kept its outlook for 2022 the same, citing geopolitical tensions and “uncertain consumer sentiment” as some of the reasons to remain cautious looking forward.
Amid rising costs, Quincey said the company wanted to “stay connected to people who are coming under purchasing power pressure” through finding packaging and price options that could reach that more entry level consumer.
He also reiterated Coca-Cola’s commitment towards “earning” the right to make price increases through initiatives like marketing and innovation.
A continued focus on innovation
Innovation has been a key focus for the business since Covid-19 took effect.
In February, Coca-Cola launched a new innovation platform for limited-edition products co-created between marketing, creative, design and tech. The innovation drive saw Coca-Cola launch Starlight, a limited-edition “space Coke” which imagines how outer space might taste.
Today, the company said its global marketing leaders now “primarily focus on innovation as well as marketing efficiency and effectiveness”. Coca-Cola had been restructuring its leadership team since August 2020 to better “capture growth in the fast-changing marketplace”.
Innovation looks set to remain a key focus for the business going forward, despite the current inflationary environment.
“We have a bias to invest [sic] behind our brands in marketing innovation,” said Quincey.
Collaboration across all parts of the business is one method through which Coca-Cola is driving innovation. Quincey said the company is working closely with its bottlers to work out “what are the marketing and innovation programmes that are going to work wherever we are in the world”, whether that be in retail or away-from-home environments.
In today’s results, Coca-Cola said that a good recovery in its away-from-home sales was partly responsible for its strong revenues. However, the company is continuing to pursue “end-to-end consumer engagement” through its marketing strategy, which involves leveraging insights as well as “passion points” to reach consumers.
In September, Coca-Cola unveiled ‘Real Magic’, its first new global brand platform since 2016. Under this new platform, the beverage giant said it would change the way it communicates with consumers, by moving away from broadcast communications to create an ecosystem of experiences.
Under this ecosystem, and part of achieving end-to-end consumer engagement, comes the launch of a new initiative, ‘Magic Weekends’, which falls under the ‘Real Magic’ brand platform. This campaign will see Coca-Cola collaborate with food service aggregators, such as DoorDash in the US, to promote its products.
The campaign has already launched in the US with DoorDash and will be rolled out to all nine of the business’ geographical operating units. The aim of the campaign is to drive sales by reaching consumers at the point-of-sale.