Coca-Cola taps major trends

19 April 2012

ATLANTA: Coca-Cola, the soft drinks giant, is seeking to tap the dual trends of urbanisation and the expanding global middle class to fuel growth.

The firm is currently attempting to drive its 2020 Vision, aiming to double the revenues from 2010 by the close of this decade. Despite the financial challenges in many markets, Muhtar Kent, Coca-Cola's CEO, is optimistic.

"No matter how you slice and dice it, there will be about 1bn new people coming into the middle class," he said on a conference call. "We'll have about 800m new urbanised consumers in the decade."

In evidence of the power of this shift in action, Kent reported that approximately 22m shoppers moved into urban areas worldwide in the last three months alone, and up to 25m joined the middle class.

"I think there is still a tremendous amount of growth and middle class creation around the world, whether you take Africa, Latin America [or] Asia. And we're there," Kent added.

Coca-Cola is thus pursuing "balanced" growth across its portfolio and geographical operations. In the last quarter, the firm's top ten countries yielded 65% of the total increase in volume demand, a more "broad-based" expansion than previously.

One key outlet for Coca-Cola is China, where it is spending $4bn over three years. According to Kent, a significant portion of these resources will go towards strengthening bonds with shoppers.

Kent said: "You could allocate about 50% into infrastructure and 50% into the brand building area. That's probably a good split. And if you looked at the past three years, that's probably where it ended up."

Other markets seeing considerable recent growth have included Brazil, Russia, India, the Philippines, Thailand and South Africa. Kent argued such results were due to a patient approach.

"They're coming from the investments that we made four, five, six, seven quarters ago, and the same is going to be true from four quarters or five quarters from now based on investments we're making today," he said.

One major marketing platform for Coke this year will be the Olympic Games, of which it is a top tier sponsor. The company plans to roll out a campaign in 100 countries, combining "content, experiences and conversations".

"That's basically how we've always managed this business, investing in our brands, investing for the long term, ensuring that ... our brands remain healthy and get healthier all the time, which they are," said Kent.

Data sourced from Seeking Alpha; additional content by Warc staff