Coke Flags Marketing Cuts in Spending Review

21 July 2008

ATLANTA: The Coca-Cola Company's marketing budget is about to be squeezed as the world's number one soft drinks maker tightens its belt to make savings of up to $500 million (€315m; £250.7m) by the end of 2011.

The global economic slump and, in particular, difficult conditions in its domestic market, have resulted in flat sales volumes through the second quarter and a 9% fall in operating income at Coke's North American division.

The sluggishness led to a 23% profit fall to $1.42bn in Q2, compounded by writedowns related to Coca-Cola Enterprises, its biggest US bottler.

Newly enthroned ceo Muhtar Kent, commenting on the latest figures, warned marketing would be under scrutiny as the company reviewed all its outgoings.

He said Coke will be looking to generate a better return on its investment through increased use of global campaigns.

He added: "Our objective is to reinvest marketing efficiencies ... that we realize into efficient brand-building activities to drive the long-term health of our business." 

Kent acknowledged that during economically depressed times, the company's products had to be perceived as "affordable" luxuries.

"In fact, you see us shifting some of our emphasis in our marketing programs ... [and] also in the area of packaging, ensuring that we remain affordable and ensuring that we can continue to capture all beverage opportunities around the world," he said.

"What you see us doing is making sure that we remain relevant to the consumer."

Cfo Gary Fayard commented on the plans, saying Coke needed to maintain a "disciplined" approach to marketing, with an increase in direct marketing spending to "build a stronger bond with consumers".

Data sourced from; additional content by WARC staff