The
What do you see as the key takeaways from this quarter’s results?
At a high level, we delivered results in line with our plan and remain on track to deliver our financial targets for the full year. As we expected, organic revenue growth in the quarter was impacted by the fact that there were two fewer days in the financial reporting period than in the same period last year. When you consider that one day of revenue in the first quarter this year was worth roughly $100 million to the company, you can see how a couple less days can significantly impact our results. In addition, Easter shifted into the second quarter this year, which put pressure on our top-line results.
Beyond the mechanics of reporting, though, I would highlight that we are making progress in our transformation to becoming an ever-more consumer-centric, total beverage company. During the quarter, we completed the acquisition of AdeS, the leading soy-based beverage brand in Latin America. We continued to expand smartwater and Honest Tea in Europe. We saw excellent growth for
The company announced that it expects job reductions in the coming months as part of efforts to accelerate growth. Why are these reductions necessary?
In February, we shared with our people that we are in the process of designing a new operating model to support our growth strategy as we transform our business into a true total beverage company. And that this new operating model would anticipate our being a smaller company post-refranchising, leverage new technologies and have a leaner, more focused corporate organization. This new structure we are putting in place is also part of creating the culture and speed necessary to support our new growth strategy. While there will be savings and job reductions associated with these changes, our first goal is to reduce complexity, simplify processes and speed decision making.
Today, we shared that we expect approximately 1,200 job reductions as we put in place the leaner corporate organization. While this will clearly be difficult for those impacted, these changes are critical for us to create an environment where we can accelerate growth and become the consumer-centric, total beverage company we need to be in a fast-changing world. As has long been our culture at
'We are making progress in our transformation to becoming an ever-more consumer-centric, total beverage company.'
The company also said it expects to achieve an additional $800 million in annualized productivity savings over the next few years. What is ‘productivity’? And why is it important?
Productivity means finding new, innovative ways to achieve more output with less input for any task or activity, or deciding to no longer do it because business needs or priorities have changed. This process of innovation or reallocation of resources is what creates economic growth for a country or a company if reinvested wisely. This is our objective, too – to free up resources to reinvest in growth as a consumer-centric total beverage company.
Consumer products companies across the board are finding it harder to grow. Beyond increasing productivity, what other actions are you taking to accelerate growth?
As we further transform into a total beverage company, we are shifting to what we are calling a “category cluster” model to focus on growth across five strategic beverage categories – sparkling soft drinks; energy; juice, dairy and plant-based drinks; water, enhanced water and sports drinks; and tea and coffee. While we’ve competed in each of these categories at various levels around the world for years, we are now being more disciplined about our investments across these categories globally in order to broaden our consumer-centric portfolio. This work includes launching new products through innovation, changing recipes for existing products to reduce added sugar, and acquiring new, on-trend brands in categories like tea, coffee and plant-based drinks. Together, these efforts will build a portfolio for the long term that closely matches what our consumers and customers want.
We also recently appointed a new Chief Growth Officer who will lead this work and bring together our global marketing, customer and commercial leadership, and strategy teams to drive a coordinated growth strategy across an expanding beverage landscape around the world.
As more consumers look for food and drinks with less sugar, how are you responding to these changing demands on your sparkling soft drink portfolio?
We’ve been clear that we need to reshape the growth equation for sparkling soft drinks. People still love the category, and it’s still growing in terms of revenue. But we know we need to do things differently to help people moderate their intake of added sugar. We support the World Health Organization’s recommendation that people limit added sugar to 10 percent of their daily caloric intake. That’s why we are implementing a number of programs focused on reducing the amount of sugar in our drinks. This includes reformulating drinks to reduce sugar and still offer people products they love that taste great. It also includes ongoing investments in sugar alternatives and a continued push to develop and promote smaller, more convenient packages with less sugar like our mini-cans and smaller aluminum and glass bottles.
We are also continuing to see strong momentum with our revamped recipe for
Next week you will become Coke’s new CEO. What differences will people see under your leadership?
I’ve tried to lay out where we need to go for our next stage of growth, how we must organize differently and the changes in our culture that are required. To take one aspect – speed. To keep up with the fast-moving consumer landscape around us, our organization has to be ready and willing to change at a faster pace probably than at any time in our history.
Hopefully you’ll see that we’ve laid out a clear path to transform the company for the future to be bigger than our past – to be a company that is bigger than the
Note
This Q&A includes certain "non-GAAP financial measures" as defined under U.S. federal securities laws. Refer to our first quarter 2017 earnings release issued on April 25, 2017, available on the Company's website at www.coca-colacompany.com (in the “Investors” section), for full financial results and a reconciliation of non-GAAP financial measures.
Forward-Looking Statements
This press release may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The
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