The Coca-Cola Company’s innovation across its products, packaging and processes is affording it a “competitive advantage” and driving profit growth, CEO James Quincey says.
Speaking to investors during the company’s full-year results today (13 February), he said that in 2023, innovation contributed approximately 30% of the gross profit growth. Gross profit grew by 9% in the year, to $27.23bn (£21.68bn).
“We’re applying digital tools, ingredient processing technology, and AI to create bolder and more successful innovation,” Quincey said, claiming that success rates on innovation tripled in 2023, versus 2019 levels.
In the UK, 2023 saw Coca-Cola roll out its first venture into alcoholic beverages, after collaborating with Jack Daniels. It also used its Coca‑Cola Creations Flavour platform to release Coca‑Cola 3000 Zero Sugar, which was “co-created with AI”.
“Taste superiority” is the ultimate driver of successful innovation, Quincey stated. He cited Coca-Cola Zero Sugar as an “ongoing example” of this. The product saw 5% volume growth in 2023.
Make this the year you innovate
“We’re applying learnings from this multi-year success and driving taste superiority elsewhere,” he said.
Coca-Cola is also being more innovative in how it deploys its marketing spend. It has been undergoing a marketing transformation, which has seen it shift its media spend away from being focused on TV and towards digital channels.
Under the company’s previous model, it took several months to create a TV ad, Quincey stated, asserting that the company is now “producing 1,000s of pieces of content that are contextually relevant and measuring these results in real time”.
“We’re engaging differently with consumers and it’s delivering results,” Quincey said, citing Kantar’s valuation of the Coca-Cola brand, which increased by $8bn year-over-year.
Chief financial officer for the business, John Murphy said the impact of the marketing spend was evident in the company’s results.
Coca-Cola CEO: Marketing acts as a ‘motor’ to drive financial results
“The positive volume and top-line growth that we’re realising today demonstrates the effectiveness of our marketing spend,” he said.
The Coca-Cola Company grew net revenues by 6% to $45.8bn (£36.37bn). It also grew volumes by 2% in the full year, despite having increased prices.
The company touted the strength of its revenue growth management capabilities, including price pack architecture to ensure its brand could reach consumers with “the right package, at the right price” for allowing it to grow volumes in an inflationary environment.
The company is seeing the impact of inflation waning in most regions, with Quincey adding pricing had “normalised” in over 90% of the business’s markets.
While the company has emerged from an inflationary pricing strategy, it will continue to strategically increase prices where it can, he said.
“We will earn our right to take an appropriate level of pricing [in 2024],” Quincey pledged.
Why Coca-Cola is making a ‘unified’ global push behind the Sprite brand
As well as growing through strategic pricing, the company also expressed confidence that the total sparkling beverage market would continue to grow and that Coca-Cola would “benefit disproportionately from that growth”.
Outside of trademark co*ke, Quincey said the business is putting more focus on Fanta and Sprite as brands.
“We’re also increasing the focus on Fanta and Sprite, organisationally splitting them out into two sub-teams… this has allowed us to bring more clarity and more focus… and to drive growth there too,” he said.
Last year, Fanta unveiled its first-ever global identity. The business also put a more concerted effort behind Sprite.
“Instead of each of the markets doing their own thing, maybe at different times, we are now trying to put all of our efforts together at the same time behind Sprite,” sparkling flavours and brand lead Aaliyah Shafiq-Ely told Marketing Week in February 2023.
