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The Coca-Cola Co Performance Trends 2013-2017 - results data

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In mid-February, The Coca-Cola Co released its full-year results for 2017. The soft drinks group posted a 3% lift in sales from the year in organic terms, although sales on a reported basis were down by 15%. Here, just-drinks considers Coca-Cola's performance over the last five years.

James Quincey became CEO of The Coca-Cola Co in  May 2017

James Quincey became CEO of The Coca-Cola Co in May 2017

The financial performance of The Coca-Cola Co over the past five years has to be viewed through a misty lens of restructuring costs and currency fluctuations. Refranchising of its bottling operations, in particular in the US and China, have meant that recent years of reporting by the group have come with qualifications.

Wipe the haze away, however, and the picture is one of modest, if not spectacular, growth in most regions. There has been a gradual shift in emphasis in global product mix in response to worldwide consumer trends, with ready-to-drink tea and coffee, packaged water and sports drinks all getting regular good end-of-year report cards. The company has been working hard to bring into focus its 21st Century identity as an all-round supplier of RTD non-alcoholic beverages, and not just a CSD player.

The report card's teacher's comments section routinely contains news of overall market share gain in major regions, as Coca-Cola seeks to ride out short-term negative economic trends in some territories to focus on what then-CEO Muhtar Kent called in 2014 the "long-term fundamentals" of a global rising middle class, greater urbanisation and increasing personal consumption expenditure.

The five-year period under review has been underpinned by a drive to improve productivity to release funds for media spend through a streamlined operating model, focusing on core global brands backed up by local bottling partners. The China and US restructuring through 2016 and 2017 was aimed at producing a higher-margin, brand-led but less capital-intensive operation, moving from a model where 18% of its volumes are come company-owned bottlers to around 3%.

By 2014, the number of brands in Coca-Cola's portfolio whose annual sales exceeded US$1bn reached 20 when Gold Peak and Fuze teas - as well as the I Lohas mineral water brand in Japan - all passed the milestone.

The Coca-Cola Co's Full-Year Sales 2013-2017

20132014201520162017
Sales4685445998442944186335410

Source: Company results

In 2013, Coca-Cola posted a reported revenue decline of 2% to $46.9bn. In organic terms, however, the top-line rose 3%, when the impact of structural changes and currency fluctuations were stripped out.

Global volume trends were positive in both 2013 and 2014, with growth 2% each year. Coca-Cola's sales dipped in 2014, however, by 2% to just shy of $46bn.

Reported sales dropped a further 4% to $44.3bn in 2015, but increased on an organic basis by 4%. Full-year global volumes were up 2%, led by North America, the group's flagship market.

In 2016, sales on a reported basis dipped 5% to $41.9bn, due to unfavourable impacts from foreign currency and structural changes of 12% and 9%, respectively. Organic revenue grew 3% for the year. Coca-Cola said its focus during the year had been on driving a solid performance in developed markets to offset macroeconomic pressure in emerging ones in Latin America, with North America again driving most growth. Global volumes were up 1% for the year.

Last year saw sales tumble by 15% to $35.4bn, driven by "structural headwinds" of 17% following the China and US refranchising programmes. Despite this, organic revenues were up 3%, even though volumes were even across the year, with improved margins.

Sparkling beverages

Worldwide CSD volumes were up 1% in 2013 in a declining global market, led by Coca-Cola, with growth also coming from Fanta and Sprite.

The growing role of still drinks in the Coca-Cola portfolio saw sparkling beverage growth slightly behind group volumes as a whole at +2% in 2014, although the company did claim increased global market share in both volumes and value. Coke, Sprite and Fanta were again the drive brands.

The Coca-Cola Co's global sparkling beverage growth in 2015 was 1%, with a 3% increase for Sprite and 6% for Coca-Cola Zero. These performances were offset, however, by a 6% decrease for Diet Coke/Coke Light.

CSD volumes were flat for Coca-Cola as a whole in 2016, and volumes dropped 1% in 2017. Coca-Cola Zero Sugar became a significant part of the company's sparkling beverage armoury in response to consumer trends and regulatory pressures over sugar content in some countries. The brand was launched in 2016 in France, Belgium, the Netherlands and Ireland, after its initial launch in the UK, and was rolled out to Australia and South Africa last year.

Still drinks

Volumes for the still drinks stable have consistently grown at a faster rate than sparkling beverages for The Coca-Cola Co, as a result of extra focus by the company in the face of shifting consumer trends. Worldwide volumes for still offerings grew 5% in 2013, with a strong performance across juices and juice drinks, RTD teas, packaged water, sports drinks and energy drinks.

Still beverages outpaced growth for Coca-Cola overall again in 2014, with volumes up 4%, and an increase in global value and volume share.

A year later and global still volumes rose 5% with the best performance - +8% - coming from packaged water. Positive global sales trends also drove growth in the group's RTD tea of 4%, RTD coffee of 3% and sports drinks of 2%.

Then, 2016 brought double-digit volume growth in North America and high single-digit growth in Western Europe for still drinks with volumes up 3% globally.

Growth trends for the group's still segment were slower in 2017, with volumes of juice, dairy and plant-based beverages coming in flat. Water and sports drinks volumes rose 1% and tea and coffee put in the best performance, up 2%.

The Coca-Cola Co's Full-Year Sales by Region 2013-2017

Europe, Middle East & AfricaLatin AmericaNorth AmericaAsia-PacificBottling InvestmentsTotal
201380974939215905869767646854
201482664657214795746703945998
201575874074218025252673144294
2016727838191021052941988541863
2017737440291063751761060535410

Source: Company results

Europe, Middle East & Africa

In 2013, The Coca-Cola Co's volumes in Europe - which were still being reported separately from the Middle East and Africa at the time – were down 1%, although sales from the region increased 4%. Germany put in one of the best performances, with volume growth of 2%, while there was growth of 1% in north-west Europe and the Nordic countries. Weak consumer confidence held back sales in southern Europe. The company made market share gains in core CSDs and sports drinks and the consolidation of the Innocent smoothie business improved the price/mix.

Coca-Cola's sales in Eurasia & Africa, meanwhile, were ahead 2% in the year, with volumes up 7%. All business units in the region delivered volume growth in 2013, despite social unrest and challenging macro environments in some markets. The group gained volume share in the region in CSDs, juice and juice drinks, as well as in sports drinks. The 'Share a Coke' campaign helped Coca-Cola lead brand growth.

European volumes fell 2% for the company in 2014, with CSDs down 3%. Still beverages, however, were up 1%, with positive trends for juice drinks and sports drinks. Comparable sales were 2% up on the previous year.

Eurasia & Africa volumes rose 4% in 2014, with still beverages leading the charge with growth of 8%. The sparkling portfolio was up 3%, with value share gain in the soft drinks market as a whole. Like-for-like sales were up 8%. Coca-Cola recorded single-digit growth in its business units in Southern Africa, Middle East & North Africa, and Central, East & West Africa. CSD growth was led by Coke and the group made market share gains in juice and juice drinks, sports drinks and packaged water.

Still beverages were again the main engine of growth in Europe in 2015, up 7% across the year, with strong performances from packaged water, RTD tea and Innocent juices and smoothies. The CSD stable was up just 1%, although there was strong growth for Fanta towards the end of the year. Total volumes for all drinks across the year were up 2%.

Over in Eurasia & Africa, total volumes rose 3% in 2015, with still beverages up 6% driven by sports drinks, packaged water and RTD tea. Sparkling was up 2% with growth from Coke and Sprite offset by a decline for Fanta. Sub-regional growth was best in the Southern Africa, Central, East & West Africa and Turkey, Caucasus & Central Asia business units, with a decline in Middle East & North Africa.

Calendar-2016 was the first year of full reporting for EMEA as a whole for Coca-Cola and saw organic sales up 3% on volumes that were ahead by 1%. CSD volumes were flat, while still drinks were up 3%. There was volume growth in the West Africa and Middle East & North Africa reporting regions, offset by decline in Central & Eastern Europe, primarily driven by falling sales in Russia. Sparkling drinks' flat performance was bolstered by mid-single-digit volumes growth in Fanta sales in Central & Eastern Europe after the launch of a Fanta spiral bottle.

Last year saw Coca-Cola's organic sales in EMEA rise 5%, ahead of a 1% lift in volumes. The best volume growth performances were seen in the Central & Eastern Europe and Turkey business units, offset by declines in Africa and the Middle East, where sales were affected by economic challenges and strategic pack downsizing initiatives. The company gained value share in CSDs, juice, dairy and plant-based beverages.

Latin America

The region has brought some of The Coca-Cola Co's best annual improvements in sales, with value growth outpacing volumes driven by improved price/mix trends. The group's volumes increased by 1% in Latin America in 2013 with net sales ahead by 2%, helped by a 10% improvement in price/mix. The year brought the ninth consecutive annual gain of total soft drinks market share for Coca-Cola in the region, but CSD volumes were down 3%, with economic challenges in Mexico and Brazil the main causes. The year also saw the introduction of the mid-calorie Coca-Cola Lite into Argentina and Chile.

Calendar-2014 brought a 6% rise in still volumes, although a flat market for sparkling variants left total volumes up by just 1%. Growth came mainly from packaged water, value-added dairy drinks and sports drinks. Coca-Cola's comparable sales were up in the year by 9%, however, as the company improved its price/mix by 8%, with "positive pricing" and a more margin-friendly product mix in Brazil - the country that led regional growth - and the in the south of the region. But, increased marketing investments and a cap on profit margins imposed in Venezuela in early-2014 meant that reported sales were actually down 6%.

Regional volumes a year later inched up 1%, with still beverages up 4% and CSD sales flat. Growth was fuelled by a good performance in Mexico, offset by a decline in Brazil. Sprite put in a good performance, but there was an end-of-year slide for Fanta. Juice, sports drinks and packaged water were all in growth in 2015, as a 9% improvement in price/mix hauled organic sales in the region up by 11%.

In 2016, Latin American volumes dipped by 1%, although Coca-Cola enjoyed a 12% increase in organic sales, with a price/mix improvement of 13%. Reported sales fell 6%, however, on a negative currency impact of 18%. There was a "solid" performance from Mexico and "several inflationary markets across Latin America", though macroeconomic challenges in the Brazil and Latin Center reporting regions brought high single-digit declines in each. Across the overall region, still drinks were up 2% and CSDS fell by a similar amount.

The main development for Coca-Cola in Latin America last year was the deprioritising of low-margin water in Mexico. There was also a "revenue growth management" initiative to raise value sales and transactions ahead of volume in the south of the LatAm region. As a result, volumes for Latin America as a whole were down 2%, but organic sales increased 6%. Volumes grew in Brazil and South Latin but declined in Mexico and Latin Center. The company gained market share by value in the region.

North America

The group's heartland, North America accounted for just under half of group sales overall in 2013, when regional volumes and revenue were both flat against the previous year. CSD sales were down, but still beverages improved, with a strong performance from Powerade, which delivered high-single-digit growth in the final quarter.

Coca-Cola's operating profits for the year were hit by $21m as the result of an enforced switch in orange juice supply to higher-cost juice from Florida, after the detection of an unregistered fungicide in imports from Brazil. Profits were also hit by costs relating to the end of a US licensing agreement on RTD tea with Nestlé at the end of 2012.

The group increased its price/mix significantly in North America 2014, due to what it called a "rational approach to pricing" coupled with increased media spend. This brought increased market share in a declining market, although volumes were flat. CSDs were down 1% and still drinks grew by a similar amount. Brand Coke grew slightly in the US and the company gained volume and value share in juices and RTD tea.

A year later, and The Coca-Cola Co posted its strongest annual performance in North America for three years, with still drinks the highlight with an increase of 5%, led by juice, RTD tea and water. CSD sales were up 1%, with growth higher in the last quarter at +3%.

In 2016, organic sales for the region increased 4%, outgrowing the market, and volumes rose 1%. Growth in Sprite, Fanta and energy drinks was offset by a decline in Diet Coke. Still beverages were up 3%, driven by growth in water including double-digit growth in Smartwater. Dairy drinks, meanwhile, grew by double digits in the region.

Last year's volumes were flat in North America, organic sales increased by 3%. In the last quarter, there was mid-single-digit growth for Minute Maid, while RTD tea and coffee grew 8%.

Asia Pacific

The Coca-Cola Co's volumes in Asia Pacific at the start of our five-year coverage were up 3% year-on-year, but sales dropped 7% with a poorer price/mix of 4%. Cooling economies in India and China slowed growth, but there was an improved performance in the second half. In the final quarter of the year, regional volumes increased 8%, with China up 5% and Japan ahead by 3%. 

Asia Pacific was one of the stronger regions for Coca-Cola in 2014, with both overall and CSD volumes up 5%, and still beverages ahead by 4%. Comparable sales were ahead by 3%. There was high-single-digit growth in India in the last quarter of the year, offset in part by a 3% fall in China - mainly due to industry softness in the juice and juice drinks categories – and a 1% decline in Japan. 

The following year brought 4% growth in not only CSDs, but also in still beverages and total volumes in Asia Pacific. Coca-Cola's organic sales, meanwhile, came in flat. There were strong performances for brand Coke, Fanta and Sprite in the last quarter of 2015, when there was also double-digit growth in packaged water and RTD tea. Sales trends were strong in India in the last three months of the year, when growth hit double-digits.

Asia Pacific volumes rose 2% for Coca-Cola in 2016, with organic sales up 1%. CSDs were flat across the region, with still drinks up 5%. There was overall mid-single-digit growth for the ASEAN business unit and a low-single-digit increase for Japan. This was offset by low-single-digit decline in Greater China & Korea. Coca-Cola's Japanese volumes were boosted by sales of a holiday pack for Coke and a "bottle-can" packaging innovation for it's Georgia The Premium coffee.

Finally, regional organic sales and volumes were both up 1% in 2017. Volumes were helped by last quarter high-single-digit growth in ASEAN, partially mitigated by declines in Greater China & Korea and Japan. The year also saw the "deprioritising" of low-margin water in China and Japan, as the group upped its focus on higher-margin categories.

What can the soft drinks industry learn from The Coca-Cola Co? - Comment

With the FIFA World Cup tournament in Russia just around the corner, the most suitable analogy when considering The Coca-Cola Co's recent performance would be to look at how the group's brands are performing on the global stage and, ultimately, decide whether the company will win or lose.

Results for Coca-Cola's team of brands have not been spectacular over the last five years but, in a challenging marketplace, any growth should be welcomed. In terms of tactics, the last five years have been a 'game of two halves'. The last two or three years have seen some fundamental changes in the group's strategic approach. A shift in thinking, coupled with the appointment of new leadership has seen Coca-Cola look to simplify how it does things and to restructure to put the emphasis further on to its portfolio of brands.

The headline shift has been to set about refranchising its bottling operations to return to a more "capital-light asset model". This will allow Coca-Cola to concentrate on its strength of brand management whilst letting the bottling system do what it does best; getting as much as the portfolio as possible into on- and off-premise outlets in 200 markets around the world.

Coca-Cola is now more in control of building the brand equity that facilitates much of the margin growth that will deliver the higher profit levels it aspires to

The old adage rings true: Coca-Cola has recognised that 'volume is for vanity and profit is for sanity'. Since 2015, the emphasis has been less on how much a consumer drinks and more on how much they spend on their refreshment. The restructuring means that Coca-Cola is now more in control of building the brand equity that facilitates much of the margin growth that will deliver the higher profit levels it aspires to.

A third major change during the last five years has been the adoption of the category cluster model. The movement of eggs to other baskets to make Coca-Cola a 'Total Beverage Company' had previously been assessed by crudely splitting the market between sparkling and stills. Now, the company dissects its markets by sparkling, energy, juice/dairy/plant, hydration and RTD tea & coffee. Strategy can then be fine-tuned, resources allocated and brand opportunities identified more effectively.

The introduction of brands into these clusters has also been transformed, and a new approach to innovation has been put in place. Smart companies learn as much from their failures as their triumphs, and the often-shambolic introduction of Coke Life into new markets has obviously played a part in Coca-Cola's change of style. Pioneering new concepts and ideas are now nurtured and given time to develop before the "Zombies", as Coca-Cola refers to them, are killed off and the 'building stars' are scaled up into the first team and deployed to new markets.

The company will be active in the transfer market too and if a brand is the right fit, then they can be added to the squad. Coca-Cola has demonstrated the effectiveness of this technique with the recent successes of Innocent, Zico and Honest Tea, among others. This was most profitably-illustrated with the purchase three years ago of shares and the strategic partnership with Monster Beverage Corp. Monster has finally enabled Coca-Cola to be properly represented in the rapidly-expanding global energy drink segment.

Consumer trends are constantly evolving, but so too will the products further down Coca-Cola's conveyor belt

The end result will be a conveyer belt of developing brands entering category clusters all over the world to join existing market leaders. Consumer trends are constantly evolving, but so too will the products further down the conveyor belt. This will ensure that the category clusters can always be serviced with the optimum balance of brand portfolio. 

The rise of Coke Zero, which enjoyed double-digit revenue growth last year and entered 20 new markets, highlights how valuable the new policy can be if executed well.  

The group's overall plan seems entirely plausible, but then it should do on paper. The reality on the ground may be different and bottlers will need to buy into any new innovation or product development because there is risk involved for them as well. Experience has shown that when a new product is added to the portfolio, retailers will demand that an existing product concedes shelf space. Therein lies the risk to Coca-Cola's bottling partners, and this could be a trigger for tension.

If the strategy does work, then we'll see an acceleration in the production of 'billion-dollar brands'. For Coca-Cola, these have already risen from 17 in 2013 to 21 in 2018. You would also expect that the new model will throw up enough new products to help dilute the worldwide share of CSDs from the current figure of 70%.

A good short-term test of how the new approach performs will be the further roll-out of Glaceau Smartwater and, more notably, Fuze Iced Tea. The latter has been fast-tracked as a replacement for the Nestea Iced Tea brand following the ending last year of the Beverage Partners Worldwide tie-up with Nestle, and has entered a number of new countries this year.    

What will be critical in facilitating future prosperity will be for Coca-Cola to foster a local perspective to its brand-building and marketing efforts, as well as a global one.

We may increasingly live in a global village, but every market is different and one size does not fit all.

Click here for The Coca-Cola Co's company page on just-drinks


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