Coca-Cola set to boost marketing spend

23 April 2010

ATLANTA: Coca-Cola, the soft drinks giant, is planning to increase its marketing expenditure this year in support of a variety of new products and a range of sponsorship initiatives.

According to the company, its investment in communications is "going to be up in the mid-single digits or more" over the course of 2010 as a whole.

"We are relentlessly focused on investing in our brands," Muhtar Kent, Coca-Cola's chairman/ceo, said on a conference call with investors.

"Our strategy and focus to build the long-term equity of our brands remains decisively clear."

Coca-Cola was one of the official sponsors of the Winter Olympics in Canada earlier this year, and saw several key brand metrics improve in the country as a result, Kent reported.

Its other major marketing activities include the FIFA World Cup Trophy Tour, running prior to the football tournament being held in South Africa in June, which has generated impressive results thus far.

"The tour has now travelled to 27 international markets, engaging thousands of consumers and earning an average of $2 million (€1.5m; £1.3m) of media value in each and every country visited," said Kent.

Similarly, Powerade, the sports drink, will unveil its first global advertising campaign during the World Cup, with a particular emphasis on digital.

To derive the maximum benefit from its association with the World Cup, Coca-Cola has also established a partnership with Wal-Mart, where the two firms will share certain information and insights.

"By using a jointly produced global toolkit, we will drive incremental sales for Wal-Mart and our company, while making the excitement of the World Cup more affordable and accessible for everyday fans," said Kent.

Coke is also an official global partner of the 2010 World Expo in Shanghai, and it expects more than 100 million people to visit the "Coca-Cola Happiness Factory" pavilion during the 184 day event.

More broadly, the company's incremental unit sales have grown by more than $100m in China in the last six months alone, Kent revealed.

It recently introduced Spritea, which "taps into the combined popularity of green tea and Sprite," in the country, and is set to launch a new tea brand, Yuan Ye, in China to build on this momentum.

"We're just getting started in China and remain resolute in our commitment to invest for solid long-term growth," said Kent.

The beverage maker's other successful innovations include the roll out of I Lohas mineral water, which has a more eco-friendly bottle, in Japan.

I Lohas is now the number one brand in its category despite only hitting store shelves in May 2009, and Coca-Cola will start selling Fanta White, a "sparkling, lactic drink", in this market later this year.

The company also increased the size of its share in Innocent, the UK-based smoothie manufacturer, this month, as it seeks to advance its position in the health and wellness category.

"We are competing and winning around the world ... leveraging our unique scale as well as the increased presence of our brands," Kent added.

Nowhere is this more applicable than in its home market, where the company has signed up to a project developed by Michelle Obama, the First Lady, to reduce childhood obesity.

"Our favorite brand scores are higher than they have been in over a decade," said Kent.

"We believe innovative marketing, merchandizing, strong execution, and clear communications will be the key to restoring trademark Coca-Cola growth in North America."

Data sourced from Seeking Alpha; additional content by Warc staff