Coca-Cola commits to marketing increase

Rosie Baker
By Rosie Baker | 23 July 2014

Coca Cola is committed to increasing its investment in marketing to reverse declines over the long term as it reports slow performance in the second quarter. The soft drinks giant saw a global fall in revenue and profit and says margins were impacted by increased spending on marketing.

The company's  view is that long term changes and performance are more important that short term blips in sales and profit.

Coca-Cola is restructuring large segments of its business and redirecting efficiency savings from elsewhere in the business to media and marketing as it attempts to reverse its halting performance and the declining sales of fizzy drinksm around the world.

Net revenues declined 1% in the second quarter and 3% year to date, it revealed in its latest results. Operating income declined 2% in both the quarter and year-to-date.

In APAC, profit and revenue was flat for the three months to the end of June, but unit case volume was up 8%. For the half-year, revenue and profit both declined 3%.

Coke's CEO Muhtar Kent told analysts on its earnings call that it is starting to offer “better quality marketing” through its focus on efficiency and effectiveness.

He touched on its World Cup marketing as well as its Share a Coke campaign, which was developed in Australia and is only now rolling out to the US, as examples.

Kent said: “At the beginning of this year, we shared our strategic plan to restore the momentum of our global business. As we now reach the midpoint of the year, we have delivered sound financial performance year to date and demonstrated sequential improvement in our global volume growth. While I am pleased with our progress to date, we remain focused on the work required to return our business to the level of sustainable growth we and our shareowners expect. For the remainder of the year, we will continue to focus intently on our five strategic priorities in order to deliver quality results and further advance our progress toward achieving our 2020 Vision.”

Coke's five strategic priorities are: global supply chain optimisation; global marketing and innovation effectiveness; operating expense leverage and operational excellence; data and information technology systems standardisation; and further integration of CCE's former North America business.

In February Kent outlined that the company would invest a further $1 billion in media and marketing by 2016.

Coca Cola handed its Australian media account to UM in March. It is thought to be worth around $30 million.

For more on Coca Cola's strategy and it's approach to real time marketing, check out the next print issue of AdNews out Friday (25 July) and read our Marketer profile of Ivan Pollard, Coca-Cola's global head of connections. You can subscribe here, or get it on iPad.

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