Coca-Cola has goals it aims to reach by 2020

Coca-Cola has goals it aims to reach by 2020

Earlier today (21 February), Coca-Cola Co’s CEO Muhtar Kent revealed that the company is upping its marketing spend this year to US$400m.

Kent talked of redeploying spend on consumer promotions to focus on pushing its brands, particularly Diet Coke, through media coverage.  The move is part of an attempt to stem the decline at the group, who this week reported a slide in full-year profits and sales, after a particularly tough Q4.  

But, is this enough to placate the doom-mongers? 

Analyst Mark Swartzberg of Stifel has branded Kent’s announcement today as “encouraging”. But, he adds: “We think the basic reality - significant increase in spend to restore achievement of the company's long term volume target of 3% to 4% - reflects rising secular pressure on a large portion of the company's portfolio.”

As the world’s largest soft drinks firm, Coca-Cola, as much as any company, has felt the sting from not only macroeconomic pressures across its global markets, but also the impact of health-conscious consumers switching from sugary CSDs to other, healthier options. The firm is keen, however, to highlight that 40% of its portfolio now comprises low- or no-calorie options.

However, Swartzberg still has concerns. The analyst even believes Coca-Cola should abandon its high-profile 2020 Vision. The strategy, launched in 2009, sets out the group’s goal to have doubled annual sales over the 11-year period.

“We think the board should consider eliminating (the) 2020 Vision, replacing it with targets that place primary emphasis on cash flow and economic profit, putting revenue objectives in a more value-enhancing framework,” says Swartzberg. 

And yet, with such a high-profile commitment, the chances of Kent and his colleagues ditching the strategy appear unlikely. Coca-Cola might keep its 2020 Vision, but some thorough health checks along the way will no doubt be required.