KO - Earnings call transcript Q3 2017

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Operator

At this time, I would like to welcome everyone to The Coca-Cola Company third quarter 2017 earnings results conference call. Today's call is being recorded.

If you have any objections, please disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. I would like to remind everyone that the purpose of this conference is to talk with investors, and therefore, questions from the media will not be addressed. Coca-Cola's department contact questions. they should participants Media if Relations have Media

I Tim Mr. Relations begin. introduce like Leveridge, Vice may Now, to Investor Leveridge, would President and you Officer.

Timothy K. Leveridge

here for and Officer; Waller, our us you Chief Officer. Kathy thank Financial and Quincey, our morning today. Good I'm with Chief James Executive joining

our be remind statements begin, including earnings long-term statements to this release considered conjunction call cautionary you earnings should with in we in the Before recent like may in conference contained concerning SEC objectives that periodic I'd company's contain statements, and and forward-looking most report.

may I like section Information would executives Principles. Accounting tab information. In schedules our for be our our by that to discussion addition, and under Investors which website the These during morning's also non-GAAP of we schedules look as to have reported Generally senior results this on certain posted in our Reports company referred measures, note under this Please Financial Accepted the website. to reconcile financial

prepared for your the this questions. call over morning, Following we'll turn remarks

As yourself question. to a limit one please reminder,

than please If more that. question the queue one, then have ask after pressing your first you and most re-enter

turn James. over call Now, to me let the

James Quincey

global grew X%. In driven the North then and, Mexico we with track into the process. you Thank bit about update our we America, we that little the like morning, was down and gained to you talk on full performance China. our little I'd were portfolio drill to drive top deliver everyone. a quarter, year and the actions you, the we're our finally, Tim. This on value line We can organic growth to expand performance and Good that bit by encouraged taking and to and refranchising Europe, quarter revenue report this are plan. in share quarter, Today, a

in certain markets from large like benefited We emerging also improvements India.

price/mix and quarter, in two by transactions focus points. X% in and outpacing packs resulting small strong baskets Our continued volume on the strategic

the ongoing year underlying date. Finally, helped both quarter and drive expansion in our strong to initiatives productivity operating margin

around to operations our Turning the world.

good and confidence with We strategy. continued growth in are our in have pleased we North our full performance sustainable America,

upcoming of we Douglas after of Head years. the As retirement. Dinkins, leadership coming thank succeeded as three-decade by well America the and as remarkable is it leader a company. President Sandy in Monday, within who with North currently system, career American the his experienced He'll will look a and Coca-Cola retire announced be on assume him Jim up the serves our We has period the success him Sandy's for Day XX. a our Coca-Cola of many as and to done Officer our Retail of outstanding will leading for Maid Investor respected Minute to you change XXXX. for system leadership job at him business unit Coca-Cola wish January set North enormous November We forward Sales America. his an on flagship introducing in segment of Jim, who and highly market North Chief through X, of

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first for where some However, Brazil of are country. light the GDP seen recovery of the signs in indications the we've the at tunnel in there end of

consumer durable translate into behind to time However, so faster goods further recovery services, and may lagging consumption of growth. goods for appears it FMCG to take be

build in continuing double-digits resulted from which sequential to packs, as year. progressed we're which our our packaging architecture, returnable we've So, entry through adjust price/pack results in infrastructure our seen the affordability out volume and good plan, grew launching have the in we improvement quarter. has Since trends

the number opportunities In we while various fast consumers' desires intelligent more low seeking competitors; of this take kind one a is our and agile, across broader of Now thing need and no small our we build in entrepreneurial each environment, consumer-centric and portfolio. options, landscape all functional risks, be changing. challenges benefits consumer and order whether to businesses: to drinks consistent see We or to sugar thrive they're of simply is with of variety. markets, see are or an evolving, more increasing in

forward growth. total new to we in accelerate categories company, way our and beverage play will becoming premium segments our As roles a key

multiple in as foundation. brands the We its are growing core leveraging portfolio strength our ways whilst of our

identifying incubating and high-growth we're brands. First,

we the has sparkling Mexico premium earned Texas rights water acquired strong in and Chico, U.S., mineral a to from that in example, the Topo For following a beyond.

for brand phase will has Brands the footprint. will rapid Emerging of VEB, Topo power & Within as the the incubator successful the of system. Chico and brand's Coca-Cola investments, been the Venturing Our the of other this and guide the culture an while its unit development serve like company distribution approach for the essence entrepreneurial within growth maintaining of Honest supporting Tea, highly

brands expand lot we're We've in processes structures those capability small similar the and Second, nurture in leveraging and we're a develop model internationally. building stronger markets. other lessons U.S., the to VEB and learned to from

Europe, recently example, and unit partnership partner, launched in a Central with we Eastern Hellenic. in For our bottling Coca-Cola

these, separate brands will discontinue and partnerships, follow to expand incubate brands Many by from we smartwater, premium quickly but We the emerging and scale dedicated if force. seek and testing Appletiser, goal a necessary. channels shifted high-value potential will and lifted fast sales through and Products will be with of outlets ZICO, will start grow and like in places. other a path,

looking we're in such segments beverages. Third, growing opportunities at premium craft as adult

sophisticated notably know, consumers, world as part flavors, of you and As most production. a quality more are ingredients, craft are distinct smaller-scale and trend. resurgence in of seeing products this seeking with Mixers unique many the adults, parts

we brands these and U.S., Britain, introduced the in excel. premium called this pair mixers in where like mixers channel. earlier the Spain, the mixers Appletiser channels in spirits, solid in the premium just we storied glass flavors a Aguas in and year, new in including Blue premium appropriate these line a in We're Barrilitos Royal with Schweppes sale BOBO foundation In to Schweppes called premium on-premise So And (XX:XX) to range even designed products a Europe. bottles on of through also brand of offer relaunched better Great building for sophisticated Bliss only can leverage Frescas we XXXX. Sky, plan to

moving That's relevance. the behind it healthy in to to while equation. expansion our only will is drive our beverage the core categories media end, growing a why we're innovate categories, into our small in increased brands core fuel sparkling these our as well, invest brands We critical, continue brands brands innovating part a investments is aggressively core non-sparkling Now and and will before as we of in continuing total to for company. within new billion-dollar

a reduces world, and new than and we same a execution did double differentiates digits. product a So and Thanks by year, volume media for work, new Coke That major to Zero globally growing in a great most Sugar Fanta. the new marketing, around the packaging, is more applying third Fanta leveraged the for Zero the the the launch results, bottle growth And we've combination spiral and new with a second to improved double-digit and We've playbook. reformulated growth revenue continue launched product, UK. in was U.S. to added the four-pillar to important We the execution with this brand We're a investment. global example, that a relaunched meaningful better growth year. the and execution, quarter. and Fanta for marketing return in integrated to the brand. since new refresh for Kingdom tastes markets improved playbook the to of our We market United we positive Sugar last this reaching on launch, this in an Zero's this our sugar, Fanta recipe concept year, a in been the in which great-tasting that quarter. look of revenue a more has And U.S., to end of and campaign, seen the acceleration shelf, and see volume and seen the roll we marketing including out trends acceleration including year-to-date Coke started UK other markets in Coca-Cola

an why testing obviously, going learning is agile essential. approach work. is and That Now everything is not to

with the added Costa rather example, And with really sugar. brand. we Rica, to in learned incremental new existing as we saw launched formula that an sweetened only an juice improvement brand no For than the Fanta and consumers

our We had ultimately for formula original So approach. need work. this bring single empowered adapt across successful, not is approach change And a if quickly. we in will are The based to isn't and consumer leaders to introduction markets on to the new local to tailor retooling brand make all model we key back strategies the be tastes market approach Further, and our lesson can our a we have flexible, each mindset these decisions. market. brand needs so and

early This XXXX. completion we on transaction coming on approach to be process. refranchised, will U.S., the Canada Unit in the expect nearing October, that the our majority transition In end partner closed as and refranchising will Operating Africa. to our a a of to is system, Unit to company the we the in Tri-State Lastly, which Coca-Cola owner refranchising complete makes Also we our leave to XXXX, Operating the be when we're moving expectation in of Beverages the be close, weeks. transactions our the of and West

refranchise we've As territory, we're also XXXX. in this to discussions happen and disclosed, in this to previously expect

saying to delivering committed hand we're full-year and I'll to call Before that Kathy, this I against end the was by over solid our quarter a targets.

building and focuses a with to entrepreneurial that plan will and We by embraces Thank over financial to growth, focusing Kathy, innovation on change, culture consumer spirit. the is key you hand execute in you continue marketing our results. and, and I'll the for on

Kathy N. Waller

few in good items I'll double-digit with expectations, today on financial about and line growth by strong James, to key start morning, driving underlying you, Thank highlighting operating before tax. growth our profit before guidance. everyone. we've moving expense organic We solid leverage delivered a talk with reported results and in revenue

resulted mentioned, which a operations, James to continue net As revenues. comparable decline we XX% refranchise in company-owned bottling our in

basis margin for grew strong positive operating those X% removal increased margin and costs Refreshments. costs slight Comparable impact. and the of Comparable all reflecting with driven Coca-Cola gross partially performance in over the by businesses divestitures, from including points, XXX increased stranded refranchising points, offset by bottling our adjusting the the basis benefit productivity, price/mix, operating XXX However, quarter, revenue ongoing and organic commodity grew we divestitures in over a continued segments. currency across

$X.X reflecting increase Year X% in generated in returned to year and of flow $X.X cash this billion in dividend repurchases. our dividends, share billion form we to excess flow, date, returned cash to the $X.X have net our year that shareowners. date we've free in to and Moving cash billion a

continue Now bottler to this as capital-light and refranchising flat expect higher-margin, the year turning return to down to outlook, process business comparable we complete to a X% we EPS model. be to

and the growth to currency in in revenue be is tax before organic now X% expect to for full divest will due structural underlying offset the on increase profit X% in before deliver our the growth improvement X-point the tax. We to in a headwind X% expect to as transition outlook currency continue a Africa, is by Beverages year. We XXXX. profit as The of we we the higher which interest discontinued in headwind to an full-year structural operation, for Coca-Cola to account operations intend outlook. The

stake As such, our longer derive income CCBA. we will equity from previous no minority in

from impact structural the impact driver the intercompany concentrate eliminating sales. from of is largest in the addition, QX profit In one-time our from

from CCBA exclude CCBA's be income a operation, our earnings. In addition, will will we net because for as comparable accounted discontinued

expect lower so comparable the currency above, a year, So offset the headwind a we in summarizing to our headwind, higher full for remains full-year the same. structural $X.XX $X.XX guidance

In the fourth outlook $X.XX a currency of $X.XX. improved the benefit quarter it roughly the benefit third terms a to and we quarter, with phasing, to expect by

However, we $X.XX expect fourth the structural to headwind the increase impact quarter.

the other to consider. As items fourth there you are model few quarter,

First, day versus benefit one to from extra the for one quarter. topline growth our period, calendar fourth additional will point equates quarter which of prior-year roughly the

quarter. of Second, America the disruption during to $XX fourth chain, that to North supply million majority third the will in caused costs, estimated leading hurricanes occurred in our quarter increase the an the impact which

X-point net significant XX-point as from X X-point of revenue XX-point And on net dollar headwind profit the we impact the we finally, net on other currency be tax. before before to in to quarter an a expect XX- cycle a and to we tailwind acquisitions, expect shift to to items last structural U.S. and a on profit of and zero- the revenue headwind volatility on divestitures Third, tailwind to year. fourth tax

will the our on comprehensive Now, guidance provide XXXX quarter, fourth quarter February. in looking fourth beyond call we more

certain However, we outlook items at are year. on reaffirming beginning the of this the provided

structural We extrapolated program we on to on to context similar expect not X-point and out should currency a into profit XXXX. of in rolling expect benefit the a quarter currencies, before be we so benefit headwind Remember, items tax. to fourth have taken hard for continue the X- a hedging be

As increase in low XXXX. finally, expect will profit currency tax. a headwind be still expect to such, to single-digit to And XXXX before that our we continue in tax on we XX% rate effective

we As Day recall, Investor are you holding on an November XX.

we'll there. forward our time, We opportunities that with longer-term look you how on we'll sharing and much more During focus then. to get

to questions. via our plan join that, open please webcast. with us So, please operator, And call for the

Operator

Certainly.

our begin from first Stanley. question-and-answer the from Speakers, Dara session. now will Morgan We question Mohsenian comes

now is line Your open.

Dara W. Mohsenian

Hey, good morning.

James Quincey

Hi Dara.

Dara W. Mohsenian

a mortar question beverages American grab pushback a been long versus pricing with retailer the and in in My CPG differentiate really lot around the was pricing just themselves or not suppliers. brick of there's U.S., the lower theoretically they struggles in as over concern CPG pricing margin but and industry North Obviously across environment look for term. general just and

that? the into on term? What you that? the focus was retailer customers? through all review in that as And give America well context, the you dynamics? as How pressured those pricing is I years, longer could also, are mean, refranchise, new So, last in a manage hoping you And do increased us if pricing longer how over your few that given that that impact on I just the Thanks. focus North in U.S. Coke's these does play at term do changes bottler from how hearing leadership by

James Quincey

Yeah, sure, a thoughts. Look, Dara. few

making to is the a customer Firstly, each the point overall grows the pricing and and starting their the execution marketing we you most the bear faster on basis focus you're important as such disproportionate conversation the the for because in for business. more we thing placements, I sure get beverage bringing category which as customer. manageable innovation, better is that than on execution, think end, becomes in-store creating the value are the And

So, the first objective. that's

pack/price the have I for customers creates and the business. we found our world in labels places some we have being present third in grocery is them our all it would, presence different Yes, perhaps, have of with part And parts of I has channels. of thought and of environments dynamics ways other for point sell leave somewhat make value of an the people, make we manage we our different each the different a we the yeah, second that helps it dynamic strategy large us. is, emerging is work customers a the channel, lots are last in And some private pricing the therefore, and extra on where other to to very marketplace, in architecture would multiple in it beverages. which is but stratification retailers U.S., multi-channel The – from been have pressure of to work we on but of or and for

create creating accounts as are other of no worked large our a years. positioned context in Jim by ourselves than is, one environment. believers for in to of So, you this company ran we the value America thought, of And in last ability the for which U.S. Dinkins because too. value the the national leading customers I'll even – He's understand there's to number North in ongoing the better leave changing with sales for this system channels, he's with lots

forefront So he leading bottling very in with he understands and a team at system. this the to our customers value clearly, has been dynamic build of with our collaboration

Operator

next Carlos HSBC. The from from question comes Laboy

Your is now line open.

Carlos Laboy

Hey everyone.

James Quincey

morning. Good

Carlos Laboy

be what list territories of North American in that were you're James, the shoots first performance might that of seeing green the some refranchised?

James Quincey

focus most first management past think, once any to I you mark, the XX-month Well, like and thing, the new to new look having performance green as mean it's much the heavily that and at things. shoot gets by directed attention get which important is I

vast majority territories were cycling of of after interesting thing refranchising, expect And building still majority when got the territories. performance would on they the have I initially course, the of ahead and we're seeing work that have where of term, better hard months, of the got refranchised and is vast think performing you before. in it's XX for But so, we people long that the real most the

but the from existing better with customer not is partly theory finding refranchise true, on universe sorts the the just of the outlets build conjunction the American places team re-foundation of performing with the great in to in that which way a outlets performance doing better we're in and CCR to of customers the North in is of also which And seeing is expanding able coming new been why case they've formats small that did. So local work customer partners. the

Operator

The next Nik question RBC. from comes Modi from

now is open. line Your

Nik Modi

Thanks. morning everyone. Good

James Quincey

morning. Good

Nik Modi

markets from just a James, you is have in and launch cannibalization on could about and interaction much kind us Classic overlapping Coke data you the on some Coke Zero early also how When of you points with the rates? U.S., think Sugar. question there give the the quick if that context

James Quincey

comment get the the XX specificity, that think mathematical there months, Yeah, is I not my And I of consumers sometimes on to continued the Zero franchise. Original. volume for into like than bit a those going more Coke into I'm either refranchising, we're at It's acceleration whole to is there and interesting, Coke but additional franchise. the as marketplaces. it's Sugar. Light mean, particularly been coming Coke ones where look is seeing headline coming is Sugar Zero times it additional the lifting or But back cannibalizing Coke net, Yes, in

expect think that to to obviously But key net be a the be positive. it's unrealistic to zero. cannibalization I is

slightly how net It's pleased but playing in different of are with we we on the in different countries, are it's a encouraged. those positive So, mix and out. countries the franchise Coke depending it's

Operator

from Bernstein. Ali question Dibadj next The comes from

open. now Your line is

Ali Dibadj

guys. Hey,

Kathy N. Waller

Hi.

James Quincey

Good morning.

Ali Dibadj

the a productivity I wanted progress update to an perspective. get from on

should brand first answer Topo the Please versus you choose coming for the talk So reinvestment tacks, positioning to the dropping to how essentially, we if question, mentioned to want in can question, bottom generous going And the drop the LaCroix marketplace? priority bottom phase phase? that example you're dollars if one in last second one. be are billions billion and to lower $X.X of brass to expect you where versus Chico much about And we choose the time, line? you line on Thanks. to a

Kathy N. Waller

Okay, one to generous so first plans I not. decide will and the can James or he take if be

earlier Ali, So billion first we original program of then million on. the all, from two $XXX that program program, separate $X and announced we programs, those we added the that the

target would goods, half we billion Lean so drive different with activities. we And places, this growth. that year. say productivity On cost would had do The around the OpEx. coming Those about is got quarter, million of the reinvested DME, million said always program, three our to I year. program, this to and clearly on Enterprise $XXX started are that And from last associated just is of be activities $XXX $X on we're really target. Of

two really will So be reinvestment benefits years. those that that the about again, bottom and half to of will go and of said hit split they'll line. we've – and in see those and the they XXXX, XXXX you'll half And between

you on plan along. programs, both far. and target So with continue has go to And we program the will we off to Lean are as started well update we Enterprise so

James Quincey

And Ali, respect come one Chico, everyone's if we to a at have can question that back time, time. we'll Topo so we

Operator

next comes Credit Grandet from from The question Suisse. Laurent

Your (USA) now Grandet Kathy. morning, line open. Credit morning, Laurent Good - LLC Good Securities is James. Suisse

James Quincey

morning. Good

Kathy N. Waller

Grandet Credit question Laurent morning. LLC Good - is My Suisse Securities e-commerce. about (USA)

get earnings the down Your saying the commentary objectives, in tell than big and the of way there? ahead you last channel, share that the you and are e-commerce please larger investing your they you of were size to plan a they people elsewhere. how that data, doing market how had after e-commerce opportunity us in in Could laid curve the and of

James Quincey

Sure.

generally Firstly, we share, of online. speaking, in over-index terms

Remember, chains or are there restaurants, omnichannel, and restaurants well. grocery. the some a of you think all of one what in not is mean just I that spectrum. say pure-play sorts QSR with there have It's not can by own is second thing bricks-and-mortars There thing. I who is have the there I a e-commerce. And e-commerce that aggregator We restaurant are players. And lot e-commerce platforms aggregators. say are their are we're as work part, would and platforms,

different digitally enabled. wide is of customers are how So of a consumers with spectrum interacting versions there's that

over-index. very we As I generally said,

when their value each Our beverage category drive customer, that we objective And generally with do work the better with helping happens. them is to for consumers. speaking,

idea of or And so pure-play. in you grocery traditional omnichannel progress e-commerce, whether can the see

restaurant or quick on service progress see platforms. can You

participant, lot and the idea. sense, of simplest activity. their central to in the a work business with the a them lot within faster a growth, it many the on business their grow lot overall of be strategy. create of of have back value of we engagement therefore, comes can for help can it them. If of beverage we context key value these help creates lot And them to companies a But there's we a than with for So how

Operator

comes The from Spillane Bank Lynch. America next from of question Bryan Merrill

is Your line now open.

Bryan D. Spillane

good everyone. morning, Hi,

Kathy N. Waller

Good morning.

James Quincey

Good morning, Bryan.

Bryan D. Spillane

are a that Hi. volume. I America. if organic to far give I environment? give unit sales just start some can to unit to case lot a case of And, maybe Can you James, say Latin you again. actions the unit of well. to drag guess that growth adjust you are environment a could a about been where just volume, guess taken business have update an to of, Second, base A), on has Venezuela, question clean I a the the us far a a drag we how on from at little Coke bit I'm bottoming? Central A us been away for is or of America being away trying and Brazil, description it's get it's grow as maybe you'd how maybe we maybe just sense the from

James Quincey

we've tunnel on slightly by struggling the to our a hoping see the are struggled. pieces. to going at bit at Each a No, happy is, as headline light some script, year. term. as Brazil? in for of to take investing is price/package story, wouldn't medium signs, There that. say the the I architecture Am end completely is returnables, not I so. end What I'm or the taking volume in them durables reestablish of we've In one does of Brazil the but in I to me commented that's although protect mean? has try around think architecture, that the I the in actions talked tunnel. the around of over-promoting price/pack end and country been about and a is let the FMCG the lagging work different new light the try Brazil, infrastructure,

all end do that I through think control. start the of year the will still the there's the year. fourth improving that quarter. bottoming more by that's hopeful been somewhat out will sequentially can as that in am has It things our I we out But within play we've and gone

the at able to I impact year, to extent that overall a which our going XXXX, encouraging. will Venezuela shrunk heavily the the same think I and can point focus in It's it quarter size to get is declines hopeful tragedy. of more will play out think I a very year. to this by to it and in see be numbers simple but fourth really But have effort, this it won't bottom signs we We'll I to think see, numbers once will almost XXXX. our end with stop so would are the through, into the love think I similarly to Colombia it's and Brazil. significant fourth situation. the tough that in say then the impacting better. not would term. I'm get the going be of human is short Venezuela we And reality quarter a more it's

So through is been a all think the tough sum very that been I what the I of beginning, said taking we've year. at action. We've

We got But end the the are in happy of with some We've the things do by to more of set work year. the should be done. floor we've places.

Operator

Goldman The from Judy from Sachs. next question Hong comes

Your line open. is now

Judy E. Hong

Thank you. Good morning.

James Quincey

Good morning.

Kathy N. Waller

morning. Good

Judy E. Hong

quarter bigger think non-sparkling the clusters? growth all you perspective the can at in look behind segments China? you're of then give Why actually I performance investment setting aside doing around maybe your increasing category do in you your the some some of you You across think us James, softened your we there. And I seeing aren't stronger about what brands. talked growth, think of really your

or investments elaborate that shifting investment, portfolio brands these maybe to the and sparkling looking will really the on you by total your So increase further can from be funded strategy whether investments. to

James Quincey

there think as categories, the I Look, categories the in think, are disaggregate intersect there, the a Judy. we with few geographies. questions obviously, I

let But is claimed story the we try by texture what so on. going neither category. me a by little see not And nor and to add geography,

beverage bit improving growth sparkling shows a think I in think the a quarter. slightly volumetrically got little that trend. better And I that

back So has got sparkling revenue at of with I that's volumetrically the the negative better coming think the and across to beginning It's growth. year, line, slightly whereas the better. firstly, it zero was

customers focus and places, the in Zero pricing. trend volume smaller on of with a good some Coke So getting packages, Sprite sequentially better our Fanta, re-launch Sugar, working is

think So, progress good there's there. I

on seeing strongly, plant-based chilled love is premium of In fairlife, more even the to better to the dairy drinks, there end, like a lot doing juices, would terms we're juices, what faster. grow have really top capacity things going

some drinks seeing of come growth end it's there's the juice nectars. has more the out, in volume where some You're spectrum, in

of I converting think people and down. that's up part converting

So, trend there. continued I think there's

In teas, own We're in up players. continue lots growth, to brands growth coffee. growth. our We've in going We're tea. volume other partnerships invest of terms brands. performance with In price pleased good our the teas. of we've some some with U.S., there, to launched in Coffee, in launched

some of heavily large it plans and decision back had the have in parts done is of have pleased deliberately bulk our do one was some rate got coming. has Japan we water. about quarter. better. The We of a very have In but pulled quarter a water in where the we a too bump where innovations to been affected that, we water, low-margin, gone new we of have growth that All in bit and well well. place the the in on in world less those numbers. We've coffee choiceful so successfully Not have into

Operator

comes question from from Barclays. Lauren next The Lieberman

open. Your line now is

Lauren Rae Lieberman

you. Good thank Great, morning.

Kathy N. Waller

Good morning.

James Quincey

Good morning, Lauren.

Lauren Rae Lieberman

jumped it ask for the is conversation me so was sticking out total North about, sparkling a to price/mix, to X%. want America bit that around in but North X% America, price/mix up just Just with

Thanks. Was with So mix? what water was Was it the the something in Are performance? in drag category there? particular, Was one that for in price? question, smartwater? it it then, since re-accelerating plans particular place I if there it business? get answer, was in And

James Quincey

So, on we're a North think yeah. terms price/mix. is of to the of a see trend in going I I Look, re-accelerate the America smartwater. bit key to mean,

we business about Obviously, inventory quarter. our that the been of summer. talked a of ahead that's out example, boxed from fountain the in remember third growth point You'll quarter, revenue last in the was for extra

less. look So period, said as understand way second add easiest at is to what X%, what did look summer X% price/mix the years in North with look is think in to we America got. trend the see I year-to-date inventory line and can is and And look average a think, as more quarter is which there, natural third we the is I and X% in and quarter simple on to revenue or the terms, through in disasters let's and previous with I line you through together

focus the on And that smaller what focus the packages, a volume. ongoing you think the track saw So I of a portfolio, reinvigorating the think drives you of just third ultimately price/mix ahead that's of blips quarter. when record with you strategy, driving ahead past I in of some focus volume, transactions ignore an blips is you once successful on a North see revenue, what look the American

And to to our and we so, it. we're drive continue strategy, committed

Operator

Grundy Jefferies. The next from comes question from Kevin

now is open. line Your

Kevin Grundy

morning. Good Thanks.

Kathy N. Waller

morning. Good

James Quincey

Good morning, Kevin.

Kevin Grundy

the difficult beverages to of in sports and investment ramping most share ask North America and discussed include sticking some address drinks losses, I James, which will your in in carbonated they competitive market the a And, to expectations probably guess, they've had America. time key key these that context have North had of with in soft quarters of drinks. categories you relates topic with long But I one question competitor just activity. So the to respect your my

strategy, your talk with about ability intermediate term to respect to up and flex respond, a which if spending you near to in to necessary, your your So, been you've environment expectations competitive helpful. Can your guidance? lot has talked within you. the about Thank

James Quincey

strategy. Look, a think the I not market our There jockeying. of large, lot There's of In one is activity, are the of one continue just It's we American and innovation, markets around the large on competitor focus we of most face. North multiple to the medium a competitive competitors end, small. lot will a lot world. certainly

And quarters underlying have brands We with consumer, if will by working in work that execution or may long-term beverage where category, get we portfolio occasionally includes clear our people, the that it on We we to think driving the to create previous value course, strategy. gain ultimately, shown which we game short-term disruptions plan. on strategy, back course, long-term, the the by for play the customers the our we value to I a decisions we long-term and take that that Of believe have to growth. been through inspired will deployed this share a able look quarterly certain commented even a it's drive, of that Will steady cause right there happen, and as that customers respond. improved for about We over products. to create beverage think with all we calls. respond category category, refranchising. strategy investment be has basis, increased the actions. bottler will because to the have It's I've customers competitors do? and But always the to and supported,

Operator

from comes from JPMorgan. Andrea Teixeira question next The

open. now is line Your

Andrea F. Teixeira

can Thank you. James, execution in the bottlers America. if North you of on better refranchised comment the about expand

coming you So gap it better say mostly better the trade smaller performance that Sugar, I by coming pricing? had from the as mix? performance innovation you of is or the And by before been in to would X% refranchised negative how against fizzy the or execution volumes of volumes is if wanted has better terms Zero the So at Coke packs? to just basically, territories and was flat against relates BIG ask you execution driven –

James Quincey

the worked and that the is marketing, the right I all the that's portfolio when if top execution. for no you together, question best right the result. having of the It's bring pieces consumers, all together. the part about those There's answer possible right things the think when right get innovation the you

better was the organization of devolution think was to In from bottling the of they We company. of team. more supply the some and accountability, foundation that refranchised That refounded we were have execution the been execution manufacturing of national chain pushed build bottlers, created processes. of this the by CCR I able that terms of on what empowerment, down into

able that into an passion, and think bringing their take knowledge better turned to local local even their that, entrepreneurialism, been bottlers have result. I the their

working As more I to also, able at like by format, and typified things being mentioned the time, some like execution better larger typified to of service customers. with earlier, same of things that's yet the the increase outlets, smaller by the degree

bullet. across better from it's little a smallest support of wasn't spectrum, innovation portfolio silver was an So plan. a the largest getting in the to the marketing customers, bit ability across customers our There been to the work fact It board. in and

Operator

The from Brett next question comes Cooper Consumer Edge. from

open. line Your is now

Brett Cooper

morning. Good

James Quincey

Good morning.

Brett Cooper

negative, And the reinvestment. the on cases already turning some reinvestment, negative and program or savings have. question were started much would as probably investment as didn't get markets A company emerging were in of when they and otherwise

come emerging assumption some funds, As investment there? you to those my from of improving, increased we're on that in And then assume just that the is will signs see is we'll what investments if and from? safe coming developed expand undertaken seeing you've activity accelerate markets markets, then where can learned Thanks. it finally, you've

James Quincey

growth. I'm we that bounce to they're position. it's as for as to But And begin will the where invest therefore, to absolutely not our to back, yes, markets bounce were to they market degree investing assume going we back all sure we're drive see be So opportunity the pre-crisis. the emerging same going safe to

invest that generally turn to there's positioned it's better for very Now even and particularly some to gain back specifically, position it pull a emerging other downturn, adopt than down. of that would situations just We the when competitive underline markets the strategy try in to you speaking aggressively don't markets, some so better very through tend I when we upturn. are the

loss the that, the up we we beginning, we you in and to started said things at I on we that as we to things as Having to do that will we've case about said India, China. see acceleration, the the not investment pulled markets. cord of started do see can it's the So start talked in

partners. innovation they be the As of to We're not positions or new focused be successful. whether It be we're momentum be It it in near-leadership conjunction leadership come be see but be behind starting on consumer category to we across stuff. they brands, positions with that good large more mediocre trying helping shotgun. investing those. our niche, generate profitable strong or back, us and achieve or trying consumer We're portfolio? the won't to execution driving they needs do be bottling they the Will interesting to Yes.

Operator

from next Stifel. The question Mark from Swartzberg comes

open. now is line Your

Mark David Swartzberg

in you you're simply into Kathy. where exercise also improvement James James, Africa the you question, of Thanks, Western think opportunity price/mix for refranchising-related more and sustained those or will of has markets? runway how and good begun price/mix in China a where and My refranchising, morning, much is the soon you and refranchising one in Europe, begin, face in little front

James Quincey

European better Yes, Western offset little quarter we've a weather think creation the start poor to weather [Coca-Cola bouncy Europe, I in in had it of CCEP good localized that was the with that in third very Partners]. some a QX. the was

growth. more volume little the you to on price/mix, more perhaps and can volume blips, Europe. talked Western in a about Western in think expectations between in where U.S., good little think If a Europe past look back I see momentum and coming in we I've those comparison therefore have, and I balance you price previously growth Europe in

U.S. forward, is package of we price As a looking go more equation. assertively part mix the the led for architecture

Europe idea think I for So the sustained a balance. that Western is

volume looking of rebuild a course China a China And there's element. price/mix again be of for there slightly the to degree moderate momentum with a a In price/mix. will and expansion more where Africa. of different volumetrically, the terms in is Africa, portfolio situation of place Clearly, opportunity we're there's although

Operator

Bill question next from The SunTrust. comes from Chappell

is line now open. Your

William B. Chappell

Thanks, good morning.

Kathy N. Waller

morning. Good

Timothy K. Leveridge

Good morning, Bill.

James Quincey

morning. Good

William B. Chappell

little if weather, of alluded James, bit impact the can slowdown the or to the to both you just quarter, you category. quantify and you about hurricanes think and you talk Mexico? just anything on quarter? touching bit then on the lingering impact, a then in I had a a what little there's more way any and Any the did slowdown said for then the

James Quincey

but there not certainly or Rico, quarter, in all one. occurred big into Texas, quarter, basin, because Puerto the a we're temporary consumer not attach don't fan Mexico the not in of the Caribbean nor natural clearly the are disasters third Florida, was sentiment one-off bit Clearly, the and more a to of trends, the quarter earthquakes, hopefully so with through consumer it a clearly natural impact. talking same The in the I'm whether not, think I'm bit putting these was the is there whole really weather there's to new the softening an was basket, Mexico. it in an number enduring of I all impact. miserable a third going disasters

will think the over I see. We'll year. slowly balance that of the reverse

think don't issue there's a I in Mexico. So big

of think Of places too full be to think for really system to to will and last on where those the our it Mexico was that over continue. able I there that work developed architecture decades quarter revenue I a to revenue few drive portfolio course, a one we've and continue and and it's price we're system in as strong the the looking package

Operator

from The next question comes from BMO Capital Sharma Markets. Amit

Your line now open. is

Amit Sharma

Good morning, everyone. Hi.

Kathy N. Waller

morning. Good

Timothy K. Leveridge

morning. Good

James Quincey

Good morning.

Amit Sharma

you Jim CCR transition be? about see can Dinkins as talk transition happens do in the an leadership key muscles reorient And organization would portfolio? then opportunity you as as would priorities to that develop you here, about change leadership maybe talking to James, this the the what new

James Quincey

to face time he for last humongous got experience, run knows the the leader. think refranchising take Clearly, the leader we those need a another to in out this in forever and across full to new We've the the We to for I the circumstances development. a mean, company's great and he will is new that chapter this change that begin in customers made so and evolves carried We've just I the same a strategy evolve It's fact strategies, place. to to He's of a years. before. to needs capabilities. strategy the you need capabilities portfolio has us need he not marketing about I evolve decision What continue leadership whole the growth. some like right all a I to a right task Jim got think in be? Sandy that And changes. next There's they stage spectrum about experience, under new We and got we as be does continuing knew the think execute it one. a America person. leader successfully that But things don't global of had one America. build leaders over few that is the changes America, to the North North Look, way had North

Of course, ideas. we'll identify new learn things new and we'll

So They new for North a continued It's I got long-term. the they and things great back. mojo think team. to execute to capabilities in know complete American It's and journey They've build do the it's the the evolve to and of a more business. their need about great the mission system. short-term

Operator

Ottenstein from next Robert comes from The question Evercore.

now is open. line Your

Robert Ottenstein

increasing desire very the and about competitors. Thank talked you new helped brands, James, innovation many consumers new in beginning, for Great. driving variety of much. you that

is in the that's trends about comment whether think out but you world those if wondering and and the comment something mostly how U.S., and that sort the of perhaps of Thank more perhaps you in in is talk I'm of playing could ahead it get of of those take a countries. that take that opportunities seen you've the and rest about the can U.S., if of, that capture you. first kind in to U.S. it learnings advantage other I

James Quincey

Yeah. Look, think U.S. trend. the not I it's just

arguably, is I where, But think greater Japan is than beverage the U.S. at central look diversity the even can the point You following.

through, is the of as teens each consumes back of fact. one young beverages than behavior the adults more over and, and generation look generation commercial Each time buys what it comes importantly, and at look key previous you there's If one. you

looking each other developed generation true commercial diversity. The that It's highest U.S. for they that Therefore, fact parts that places and which It's have around That's you a for same It's across true true markets. beverages ever-increasing world disposable of is greater in of and those the do go not markets second variety the of amounts can along Japan. of important income, the more so drinks. coming wealthy diversity. drink emerging even see the in is amounts in thing. they They other buy and

has they learnings learnings that are actually the grows from over bit We've from the take global parts, portfolio, smaller Europe, growth available find the got one by years lots I and the best just different of places tougher. Japan, was brands from to what from end, new been world. fuel the and ways understanding number are the last the actually the Australia ourselves the directional, across allowing the beverages, typified, and are the global diversity yet the of of least of not of U.S., entry to world, at mean, best in outsized are middle in from the in so And other brands. brands. the by to many finding that, The

over So you yet, the franchises but fueling and machine having frontier franchises. variety, franchises, have those consumer necessarily by innovation to testing to time keep the flavor graduating of large-scale consumer not single

Operator

next from question Holland Andrew comes from Soc The Gén.

now is line Your open.

Timothy K. Leveridge

Société Andrew Andrew, SA Can Générale are me? hear - (UK) Yes. Holland you you there?

Timothy K. Leveridge

Yeah, please.

Kathy N. Waller

Yes. SA Andrew Okay. Holland - Générale (UK) Société

again. try I'll Sorry,

to sure XXXX. I'm is think, in out related up I'm state for that just were the of in we March. as So that process, pretty example, buy half what in ago last just long you're is taking concluding XXXX. wants for time left of to year, the that, as not on expecting you business is that mindful where dropped now completion that second CCBA, a it? this anybody it (XX:XX) earth that long, expecting so I Are sale wondering you're saying

James Quincey

process simple and last then that And prospective Andrew. approval. work month closing is time-regulated are not regulatory to so, partners and that regulatory with is led No, includes in The conclusion, clearance that's or South we interested say interest. our XXXX that's now we when And proceed have and is us closing. it substantive we to will Africa wrong because and the got that answer the in the fact regulatory the

simple answer. the that's So

we for successful So and joining Thank I We're as year. a track And we delivered to I you in joining interest, ladies us. thank more our Thank think our to XX. And during that's think you forward your To Investor we look close for quarter. sharing on time, again, gentlemen. you. on in. and your for always, investment with it. out That's a conclude, Day November solid you company

Operator

Thank participation. concludes you today's And your that conference. for

disconnect. now may You

Timothy K. Leveridge	The Coca-Cola Co.
James Quincey	The Coca-Cola Co.
Kathy N. Waller	The Coca-Cola Co.
Dara W. Mohsenian	Morgan Stanley & Co. LLC
Carlos Laboy	HSBC Securities USA, Inc.
Nik Modi	RBC Capital Markets LLC
Ali Dibadj	Sanford C. Bernstein & Co. LLC
Laurent Grandet	Credit Suisse Securities (NYSE:USA) LLC
Bryan D. Spillane	Bank of America-Merrill Lynch
Judy E. Hong	Goldman Sachs & Co.
Lauren Rae Lieberman	Barclays Capital, Inc.
Kevin Grundy	Jefferies LLC
Andrea F. Teixeira	JPMorgan Securities LLC
Brett Cooper	Consumer Edge Research LLC
Mark David Swartzberg	Stifel, Nicolaus & Co., Inc.
William B. Chappell	SunTrust Robinson Humphrey, Inc.
Amit Sharma	BMO Capital Markets (United States)
Robert Ottenstein	Evercore Group LLC
Andrew Holland	Société Générale SA (UK)

The Coca-Cola Company (KO) 25 Oct 172017 Q3 Earnings call transcript