Coca-Cola Co.’s sales beat Wall Street’s expectations in the fourth quarter, giving the soda maker a boost after nearly a year of global lockdowns at restaurants, amusement parks and stadiums that have disrupted its business.
Organic sales fell 3% in the quarter ended Dec. 31 amid ongoing challenges from the coronavirus pandemic, slightly better than the 3.4% drop analysts surveyed by Consensus Metrix had been expecting. Global unit case volume fell 3%, a percentage point better than in the previous period, the Atlanta-based company said Wednesday in a statement.
Since the challenging second quarter of 2020, when the public venues that make up about half of its sales temporarily closed in much of the world, the company has “seen sequential improvement,” Chief Financial Officer John Murphy said in an interview. “We’re pretty much on top of the trends overall. As the vaccine rolls out, I think we’ll see mobility increase.”
During an earnings call, executives stressed that they would be seeking greater efficiency and flexibility with marketing spending, including adjusting advertising in individual markets based on the severity of the pandemic. The company has learned how to “turn the tap on and off with much greater fluency than we have done in the past,” Murphy said.
“We are building targeted experiential campaigns that are data-driven and occasion-based and always on,” Coca-Cola CEO James Quincey said. He described it as a new marketing model that would drive a soon-to-be-released first global campaign for Sprite called “Let’s Be Clear.” A company representative confirmed to Ad Age that the campaign would be handled by Gut, the independent global shop run by Anselmo Ramos and Gaston Bigio, who were formerly at WPP’s David.
Quincey also alluded to the company’s ongoing global creative and media agency review that launched in December, saying the goal is to “improve processes, eliminate duplication and drive efficiency to fuel reinvestment in our brands.”
2021 Outlook
As more of the world’s population gets vaccinated and it becomes easier to predict the future, the company has reinstated guidance. It sees organic revenue growth in the high-single digits in 2021. Still, it’s not out of the woods yet: A resurgence of the virus in December and early 2021 is still pressuring sales. Through early February, the soda maker has experienced a volume decline in the mid-single digits globally, it said.
Coca-Cola—which announced in late August that it would offer buyout packages to almost 40% of its North American workforce, followed by a round of involuntary layoffs—said its new organizational structure has resulted in an approximately 11% net reduction in roles. Murphy didn’t say whether the company plans further cost reductions. “The most important thing is to stay agile and flexible and be ready to move as the market demands. But also be ready to invest in markets as they need,” Murphy said.
To become more nimble, the company has been cutting the number of products it sells, with a goal of offering about 200 master brands, a 50% reduction from 2020 levels. That focus on core brands helped Trademark Coca-Cola volume grow 1% in the quarter, led by Coca-Cola Zero Sugar with volume growth of 3%.
Competitor PepsiCo Inc., which unlike Coke is buttressed by a retail food business, is scheduled to release fourth-quarter earnings Thursday.
Bloomberg News with contributions from Ad Age
