Coke boosts brand equity

21 October 2010

ATLANTA: Coca-Cola, the soft drinks giant, will invest in emerging markets, corporate social responsibility and building brand equity as it seeks to drive growth.

Muhter Kent, the company's chief executive, argued on a conference call that a 5% uptick in volume sales and 8% revenue improvement during the last quarter were largely fuelled by popular loyalty to its products.

"We always put our brands first in everything that we do, across each and every one of our operating groups," he said.

"Our brand equity is growing stronger around the world as evidenced by a measurable increase in consumer preference for our brands this quarter, as well as more potent global growth for our flagship brand, Coca-Cola."

North America, where trading conditions have been particularly difficult in the recession, contributed to such a positive picture.

"Brand Coca-Cola health measures keep improving as we increased our favourite brand score versus our primary competitor amongst the most critical consumer segments," said Kent.

"We continue to invest in our brands and it's paying off. Coca-Cola remains the number one favourite brand and has widened that lead over its nearest competitor; [the] ratio is now 1.6: 1 versus 1.4 in a year-to-date 2008."

Coke Zero, Sprite and Fanta all posted heightened sales across the reporting period, similarly attributed to a long-term emphasis on specific areas.

"This performance is not a new turn of events or simply due to price discounting, but rather the results of … clear, consistent and competitively sustainable strategy focused on innovation, consumer engagement as well as brand building," Kent said.

Powerade saw demand surge by more than 30%, and has gained seven points of volume share when combined with Glaceau since 2007.

"This is the power of valuable brands and strong system execution working together in the marketplace," Kent said.

Several developing nations have assumed priority status for the Atlanta-based firm, which will allocate $3bn (€2.2bn; £1.9bn) to China, $5bn to Mexico, $6bn to Brazil and $12bn to Africa going forward.

"Our focus in China is primarily on building our business with great brands across multiple categories to drive strong performance over time," Kent continued.

"The measure of our success in this country will be how we grow our total business between now and 2020."

Looking more broadly, Kent suggested corporate social responsibility is to play a key role in the organisation's future plans.

"We realise and appreciate that many near-term challenges remain with our consumers and customers around the world," Kent said.

"We are also committed to building a better tomorrow … We are doing this is by delivering on our promise to be the global leader in sustainable water use and the industry leader in packaging energy and climate protection."

For example, the company has introduced eco-friendly "PlantBottles", and aims to have 2.5bn units in circulation this year and 5bn next year.

Elsewhere, it has worked with the Bill & Melinda Gates Foundation to launch community-facing projects in Kenya and Uganda.

"We see a world that is yearning not just for the beverages provided by The Coca-Cola Company, but also for the values and ideals that our brands represent … like community, like fun, happiness and the hope for a better tomorrow," said Kent.

"Our brands are at an all-time high in terms of their current metrics around the world, including here in the United States."

Data sourced from Seeking Alpha; additional content by Warc staff