Coke's Net Income FELL 14% to $2.12bn in Q3 2014 ending September 26

Still waters run deep...and Coke eyes ‘value-added dairy’ growth potential


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Coke CEO and president Muhtar Kent (Photo: Fortune Global Media)
Coke CEO and president Muhtar Kent (Photo: Fortune Global Media)

Related tags The coca-cola company Coca-cola functional beverage beverage

The Coca-Cola Company CEO Muhtar Kent will today identify value-added dairy as a top target category for still beverage retail value growth through to 2020.

Coke reported its Q3 2014 results today, and Kent will tell investors that a challenging macro-economic environment meant slower industry and company growth versus internal targets

With net sales down 0.4% year-on-year at $11.976bn for the three months ending September 26, and net income down 14% at $2.122bn, Kent will admit that Coke’s execution in various markets, notably Europe, can be improved.

Kent targets $3bn in annual cost savings by 2019

Coca-Cola wants to streamline its operating model, restructure its global supply chain, introduce zero-based budgeting​ and drive marketing efficiencies to save $3bn annually by 2019.

The company will also re-franchise the majority of its company owned bottling territories in North America by the end of 2017, and aims to re-franchise the remainder by 2020, while also pursuing re-franchise opportunities outside of this region.

One slide in Kent’s presentation entitled, ‘We remain confident in the long-term opportunity’, affirms the company’s confidence in mid single-digit revenue growth over the long term, despite short-term macroeconomic headwinds.

‘Selected profitable categories’: Dairy, juice, water, energy

Noting that Coke’s core sparkling business is ‘resilient’ (3% retail value growth in 2014 to date), Kent will then touch on growth potential in stills – namely within value-added dairy, juice and juice drinks, water, energy drinks, RTD teas and sports drinks.

While the company will strive to accelerate its top-line growth in Coca-Cola, Sprite and Fanta worldwide – with global investments scaled through a ‘networked marketing model’ – Coke will also expand its stills investment in “selected profitable categories”.

In this respect, priority brands include Monster Energy, Powerade, Keurig Green Mountain, Glaceau Smartwater, Innocent and (interesting from a dairy standpoint) protein-rich dairy brand Core Power.

Underpinning both strands of Cokes business is a continued focus on sweetener innovation, plant-based PET and small pack sizes.

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