Analysis - Will 2014 see The Coca-Cola Co bounce back?
Coca-Cola's CEO expects to see the group recover in 2014
The Coca-Cola Co reported a disappointing set of full-year numbers yesterday (18 February), with profits and sales sliding after a tough fourth quarter. In a post-results conference call, the company’s CEO Muhtar Kent talked of the now-familiar problem of “ongoing global macroeconomic challenges”.
But, will 2014 see the world’s largest soft drinks group bounce back?
Stifel analyst Mark Swartzberg sees a “silver lining” among Coca-Cola’s Q4 news. He points to the group’s plans to increase marketing spend on its brands by generating an “incremental” US$1bn in productivity by 2016. “This is as much as a 30% increase in brand support,” says Swartzberg.
“In 2004, the last time marketing spend was structurally increased, by 20%, global volume growth accelerated.”
However, the analyst warns that the playing field has changed in those ten years. “We believe the environment is more challenging,” he says.
Coca-Cola itself also warned today that last year's bottling transactions in North America will affect this year’s sales and operating profits.
Pressure also remains on the CSD category as a whole, linked to growing consumer concern over calorie intake and obesity. But, Coca-Cola is leading the charge in flagging up the amount of no-calorie and low-calorie options it now offers.
Coca-Cola’s chief told analysts that 2014 should be a year of “steady improvements” for the company.
I guess he's paid to be right about these things.
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