Coca-Cola says ad spend plus other direct marketing spend totalled $11bn over the two-year period 2010 to 2011

Coca-Cola says ad spend plus other direct marketing spend totalled $11bn over the two-year period 2010 to 2011

The CFO of The Coca-Cola Co has told investors that the company is "leading the way" on direct marketing spend, seemingly in response to claims by PepsiCo that the two firms' spends will soon be on a par.

Speaking at the Consumer Analyst Group New York conference yesterday (22 February), CFO Gary Fayard told attendees that the company's advertising spend is around 60% of its total direct marketing. He said Coca-Cola has invested nearly $11bn in direct marketing in the last two years.

"If you then add what the bottler system across the world spends in direct marketing, that $11bn goes to about $17bn across the last two years," Fayard said. "We know that brands are not built in a year, you have to continue to sustainably invest behind those brands."

Fayard's comments appeared to be aimed at rival PepsiCo, which earlier this month outlined plans to significantly increase marketing spend, particularly in North America soft drinks.

Analyst group Stifel Nicolaus said that Coca-Cola's reiteration of its total spend is in response to PepsiCo's estimate that its new marketing spend levels are on a par with those of Coca-Cola.

The analysts said that, based on Coke's figures, PepsiCo has a lot of work to do. "This and other factors such as the time necessary for added spend to work are why we believe PepsiCo is unlikely to see a quick pickup in North America beverage share trends," they said.

Fayard said that Coca-Cola is already increasing marketing spend "at or ahead of volume growth" in the US and has no plans to spend further. "We've got a great plan in place for the US, and we are confident in our plan," he said. 

In light of Coca-Cola's presentation, Stifel analysts slightly raised their earnings guidance on the firm for 2012, due to lower commodity cost forecasts, largely in Europe and Pacific regions. 

Separately, speaking of an imminent completion of Tingyi's tie-up deal with PepsiCo in China, Fayard said Coca-Cola was confident that it had no competition issues in the country.

"China is a new dynamic, there is no question," he told attendees. "It's a new dynamic, but just like every other market that we compete in, you execute, you execute well. We've got the distribution, we continue to play our game and I think we'll be okay."