The Coca-Cola Company is continuing its “total beverage” mission this year by putting more focus on categories with long growth runways such as coffee, sports drinks, and alcohol, CEO James Quincey said during the company’s Q4 and full year earnings call this week.
Asked during the call’s Q&A session about key initiatives for 2023, Quincey reiterated the company’s long term goal of “being a total beverage company everywhere” by focusing on incremental progress through “different category [and] country combinations.”
Two examples, he noted, are expanding Coke’s play in the coffee and sports drinks categories, specifically through the Costa and BodyArmor brands. While Coke has regularly discussed its ambitions in these segments for years, Quincey said the growth timeline had been setback by the pandemic. Even with BodyArmor’s significant level of scale prior to its acquisition in 2021, the brand experienced more disruption during its integration into the Coke system last year than anticipated.
“Despite all the experimentation, despite all the learning, despite all the initial steps, in big strategic terms we haven’t advanced because, essentially, COVID put it on hold for three years,” Quincey said. “We now need to get the execution ramped up for cost against the vision and in the coming years demonstrate that that holds water.”
Other categories of interest include alcohol, a space where Coke has seen a “degree of traction,” particularly as it rolls out its Jack Daniels and Coca-Cola collaboration, Quincey said. Early data from Mexico last year was “encouraging” and “ahead of expectations,” and the U.S. launch is planned for late March, he said.
The Jack & Coke beverage, a 5% ABV ready-to-drink made in collaboration with Jack Daniels’ owner Brown-Forman, is just one of several RTD alcohol products Coke has launched or announced over the past year. The company previously partnered with Molson Coors Beverage Company to launch Topo Chico Hard Seltzer and it also has signed a deal with Constellation Brands to distribute a hard Fresca line.
Quincey added elsewhere during the Q&A that the Jack & Coke product also plays into Coke’s broader focus on introducing more premium products into its portfolio, noting the launch will be “accretive to revenue” and the use of smaller and sleek cans in this and other new products helps to “put more premium packaging into the marketplace.”
Speaking to Yahoo Finance Live, Coke CFO John Murphy said the company sees “a lot of white space” in the alcohol sector and is continuing to put support behind the initiative.
“It’s going to be a cumulative impact on a number of initiatives that I believe will give us the wherewithal to see this as a material source of long-term growth,” Murphy told Yahoo.
Q4 & Full-Year Numbers
Although global case volume fell -1% in Q4, Coca-Cola reported that volume grew 5% overall in 2022. Net revenue was up 7% to $10.1 billion for the quarter and increased 11% to $43 billion for the full year, despite numerous challenges in the global market including the war in Eastern Europe, inflation, and continued pandemic headwinds. As the company looks to the present, Quincey said during Wednesday’s call that the first several weeks of 2023 have shown similarity to Q1 2022.
“So far, in 2023, the volume growth trends versus 2019 are in line with last year, and we are laser-focused on executing on our growth plans,” he said. “Our streamlined portfolio of global and local brands and stepped-up consumer-facing investments continue to fuel the competitive edge of the Coca-Cola system to deliver value in any environment.”
In the U.S., Quincey said the company is working to introduce more innovation tailored towards Gen Z consumers, highlighting last year’s introduction of Minute Maid Agua Frescas. Originally released as a limited edition canned product, the line has already achieved 60% repeat rate and the drinks have been introduced into on-premise accounts via Coke’s Freestyle fountain machines, he said.