Coke's Net Income FELL 14% to $2.12bn in Q3 2014 ending September 26

Still waters run deep...and Coke eyes ‘value-added dairy’ growth potential

By Ben BOUCKLEY contact

- Last updated on GMT

Coke CEO and president Muhtar Kent (Photo: Fortune Global Media)
Coke CEO and president Muhtar Kent (Photo: Fortune Global Media)

Related tags: The coca-cola company, Coca-cola

The Coca-Cola Company CEO Muhtar Kent will today identify value-added dairy as a top target category for still beverage retail value growth through to 2020.

Coke reported its Q3 2014 results today, and Kent will tell investors that a challenging macro-economic environment meant slower industry and company growth versus internal targets

With net sales down 0.4% year-on-year at $11.976bn for the three months ending September 26, and net income down 14% at $2.122bn, Kent will admit that Coke’s execution in various markets, notably Europe, can be improved.

Kent targets $3bn in annual cost savings by 2019

Coca-Cola wants to streamline its operating model, restructure its global supply chain, introduce zero-based budgeting​ and drive marketing efficiencies to save $3bn annually by 2019.

The company will also re-franchise the majority of its company owned bottling territories in North America by the end of 2017, and aims to re-franchise the remainder by 2020, while also pursuing re-franchise opportunities outside of this region.

One slide in Kent’s presentation entitled, ‘We remain confident in the long-term opportunity’, affirms the company’s confidence in mid single-digit revenue growth over the long term, despite short-term macroeconomic headwinds.

‘Selected profitable categories’: Dairy, juice, water, energy

Noting that Coke’s core sparkling business is ‘resilient’ (3% retail value growth in 2014 to date), Kent will then touch on growth potential in stills – namely within value-added dairy, juice and juice drinks, water, energy drinks, RTD teas and sports drinks.

While the company will strive to accelerate its top-line growth in Coca-Cola, Sprite and Fanta worldwide – with global investments scaled through a ‘networked marketing model’ – Coke will also expand its stills investment in “selected profitable categories”.

In this respect, priority brands include Monster Energy, Powerade, Keurig Green Mountain, Glaceau Smartwater, Innocent and (interesting from a dairy standpoint) protein-rich dairy brand Core Power.

Underpinning both strands of Cokes business is a continued focus on sweetener innovation, plant-based PET and small pack sizes.

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2 comments

Dairy Beverage

Posted by Divya,

Dairy from a nutritional aspect will add value to current Coke portfolio. Concepts like liquid breakfast, probiotics/prebiotics, infant food could be an area to ponder.

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Cola

Posted by Darrell Duchesneau,

Coke and Pepsi still only see commodity pricing for Colas invented over 100 years ago and made with cheapest ingredients. Everything is defense. You might look at the future of colas and other CSD items called Purple Stuff.
Per store sales are awesome and at 100 % and more price points.

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