KO - Earnings call transcript Q2 2021

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Operator

At this time, I’d like to welcome everyone to the Coca-Cola Company’s Second Quarter Earnings Results Conference Call. Today’s call is being recorded.

If you have any objections, please disconnect at this time. All participants will be on 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 any they should questions. participants Media if Relations have Media like introduce would to I now Mr. Vice Financial Planning Leveridge, and Tim President Analysis. of Investor Relations, Mr. may you now Leveridge, begin.

Tim Leveridge

here joining Good Executive Chief John Financial today. you and Chief and Quincey, for our morning I Chairman thank Officer; am Officer. with Murphy, and James our us

which tab at begin, section measures, of Investor reported please posted be www.coca-colacompany.com. principles. Before non-GAAP accounting the schedules may that we certain schedules under results generally under by executives company website to in we note the These reconcile accepted discussion as Financial our Information this during referred our to financial senior our morning’s

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may in statements, long-term forward-looking recent this company’s In cautionary including be in call and addition, objectives periodic earnings report. contained conjunction conference release the concerning statements earnings considered with should and most SEC our statements in contain

we call Following if this turn yourself than queue. have one and question reenter most ones then over Please questions. first one, prepared limit more pressing morning, to you ask and your the your to remarks will please the

the call me James. let to Now, turn over

James Quincey

the Thanks, of the executed world tremendous our Tim, bottling priorities, many parts good on stronger as second morning, partners, our our gradually associates quarter, In and thanks the we by to everyone. efforts and key emerging reopened.

are pandemic, changes results the the will understand that the to trajectory encouraged for to to and we John hand share our As are environment. discuss and over our recognize innovation update, marketing the out I accelerating the This system. financial path as business outlook our strategic to be flow emerge improved Then will year. our we how respond enhanced to we At gains, and are year, we by provide and laid driving more including the time, Last are for update a five we and and delivering in flexible call I we dynamic are same also efficient disciplined continued future. for global the a broad-based cash morning, must remain effective topline, priorities. even in across discuss to our guidance, deliver transformation, on our raising value and bottomline a investments may of face stronger

a demonstrates quarter We this are first of our increased mobility quarter meaningful markets delivering Consumer where trend with We improved second. in our the this results. those rates started levels system. the against are and Mobility and and the continued and as priorities business in vaccination as promising acceleration has business reaching motion. across and XXXX power in the year’s of in business levels prior improved last started our routines, to and away-from-home impacts strong to and result, this volumes strategies biggest enterprise. our steadily recovered see quarter driving return lockdown many a have Consumers we as our price/mix lap percent margin

and wave acceleration Southeast several to However, two-year quarter second areas in only our parts and in the India tightened cases, delayed the have further some openings, infections Asia remains asynchronous with dealt leading and recovery world restrictions. of Despite were a recovery, sequential results. basis our surpassed asynchronous not XXXX quarter. earnings the revenues that volume the did and our see on this of

confirming market today I channels that in that well our report the with across innovation, in at-home that our agenda building the this as and share and gaining along am We times are growth to our pleased we And XXXX our despite also brand recovered, importantly, quarter. have having that effective share achieved revenue than as with advanced broad-based working. is levels, We many management and stronger away-from-home our away-from-home share and a in categories, not made both progress fully channels emerging higher execution on said value capabilities share objective is objective quarter. gains key

recovery by strong in led business-to-consumer to bit Australia the at dive across and volume let they outpaced performing bright with Zealand categories, channels Trademark e-commerce. were deeper New macroeconomic seeing geographies. and or our into across a renewed by key improved me Coca-Cola. saw In drivers mix driven We both overall performance lockdowns. away-from-home close levels, but So continued the Asia-Pacific, momentum XXXX spots, currently and are China

with small is execution of come initiatives struggling out and pack been improved initiatives. consumer have to successes lockdown, key innovation, While of Japan there tangible customer led

further As impacted resurgence in earlier, across Asia, recovery. I mentioned in India much of the Southeast virus and

key Eurasia top performing on and good are and consumer the states behind affordability still occasions through to rest Middle by rates and at-home snacking some lifted restriction, strong strong More environment Britain Turkey results, Ramadan and packages noticeable meal to as are marketing consumer are improved and a continue travel and improving. East Coke holiday performance level are confidence vaccination as Europe. we Russia, XXXX, despite show level mobility activity rates quarter this the maintained investment, sparkling both remained eating drinking world. navigated Within rising restrictions the and was resurgence. as of social consumers drinks the markets volumes As eased outperformance channels, and is event significantly to being impacted at-work In vaccination at soft many Europe a bit, tightened and a highest, landscape. Because India’s Argentina, but robust, winter restrictions as channel, EMEA, drove trailing. or performing at-home Latin and vaccination strongest delivered Brazil In and our by the brands well gained we lockdowns in in programs leading broad Chile Pakistan, execution in and drove with even diverse much-improved new as quarter. was into recovery hospitality that volumes as share gains brands. for as while in associates away-from-home strong increased. the out well the America, season our have In the Great where the of share to helped and the and they such of North mobility the during stimulus business, Africa eased the first and relative are and heading higher XX despite encouraged grow. bottle delivering recovery. In restrictions have in volume half gatherings of rolled mix and consumer of our away-from-home, with alignment frequent also demand Mexico a in travel, programs drive based this resilience most the away-from-home system the seeing in emphasis America, and countries

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year-to-date margin the in to this operating and BIG pandemic-related progress improve from made Our share Africa. Bottling faced XXX India Investment gain basis managed the against or particularly Southeast sequentially approximately Vietnam, great also points increasing productivity and comparable South Philippines Asia, but growth and XXXX agenda, Group levels. India, challenges in

engaging loved towards global enabling building way, always Beverages what coordinated have our even passion best, points around continuously ideas a done digital testing with us in a better increasingly collaborating faster are brands move ambition. even teams and are we lens, getting to By for Life the their world. consumers and category we at around Our

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into consumer in of are the Putting asynchronous the together, will embed given to awareness capabilities year comes we the partnership when We all possible actions the our to marketing half of all range of a second outcomes pandemic the issues recovery. there’s and it realize we create this taking. it the

of behind invest for rest momentum expectations we in relative mentality year. are to over-delivered XXXX, into first we our raised going While towards have a the the growth will the guidance and biased this and half

us Our stakeholders. to capture move networked beginning help create for to faster opportunities organization and our is value

we increasingly to we As excited equipped win, the and about future. are system, a are

Now, discuss results the the John second drivers I and call will over outlook. our to turn our to updated quarter of

John Murphy

Thank the the In guidance. revised beginning drivers built mix the our of many we second across you, This mobility as on markets. quarter consumer highlight momentum will performance, and well James. the the as second business year our as from improved of our I quarter, increased morning,

comprised revenue biggest up concentrate XXXX. of up case QX XX% impacts of price/mix we XX%. Our XX% lapped XX% was was of as and organic Unit improvement pandemic the growth shipments

segment last like and goods and through. in timing we the channels additional with package Improvement costs higher inflationary margin, in Channel to and our businesses coming our impacts even quarter. mix year-to-date affected and days in year, cases comparable to mix year, unit certain cycling destocking showed this relative year outpaced growth shipments in from last five quarter experienced first the including finished the Our the positively gross impacted significant also away-from-home which price/mix. transportation due certain improvement positive

our goal emerge said stronger we have and markets we pandemic, as are throughout reopen. of As investing ahead the is to recovery

saw year-over-year, pullback investments, result, we last comparable driven interest also a a in the marketing improvement dollars a XXX-basis-point bottling by from cycling topline. Below strong our with As the step-up margins in stronger, as our reduced we expense from operating on comparable have Even a partners year. those period we operating well benefit as income, emerged income, improvement our doubled the a basis. equity delivered same in significant as

quarter EPS increase comparable $X.XX of an a second XX% of As result, was year-over-year.

We last free also delivered of flow strong year-to-date results. cash year’s approximately double $X billion,

of have the cash driven times Our operating return leverage of our times. to last range business also improved. flow X.X performance guidance we reiterated clearly within quarter, targeted environment the Since the has X and our to

of the to We visibility, we Given deliver for to year. the growth and full increased are our revenue improvement raising year-over-year year-to-date EPS of expect now XXXX. XX% and comparable organic XX% outlook XX% in growth the to XX%

guidance for began improved and the continues $X implies a focus over where our dividend targeted and significantly closer the updated billion our on edging free payout is progress to from of at to least of generation long-term. ratio level we XX% cash steady yield cash year Our flow

experience So tightness a causing as think of result. keep the as remainder things chain year dynamic the to we a in asynchronous addition few The in the supply creating be recovery many demand of phase to about environment continues mind. parts to a to

spend revenue more supply in to allocate priorities, marketing action marketing quality this about as half off navigating system improve three diversification some feel the management. in and and spend, challenges back to anticipate While hedges management working capabilities we volatility investment, by manage our the recent the similar upward well manner. pressures related to of the regard productivity pressure year experiencing to our of using ongoing the disruption, many growth With appropriate increase year that are Despite and team inventory pandemic chain rolling the toward a we we driven levels XXXX, spend levers. isolated commodities consumer-facing XXXX, supplier the points, of take have with targeted in rest and in is good through we

continues spot of as our to well the on to rates XXXX, as remain dependent That positions. hedge currency pandemic, a X% outlook contemplate based the EPS comparable in X% volatile approximately markets recovery the and currency said, to X% to current topline and to tailwind Our X% macroeconomic factors. and from on

fourth people well are many We will running some leveling the have as days through shipments in with our summarize, quarter. also additional our out the the To system ahead have year-to-date, timing fewer tackled considerations pandemic, as concentrate but our are of we company the challenges and bit our a that to six organization across operate we strategic of our networked and markets. on hard and are efficiently brand thanks our the our stronger, in to up the With potential running, have enormous and a on to work we effectively, unlock and priorities. more emerging and focus path our

look Overall, our we earlier, to to with mentioned as spread continuing progress the our as are reopening. the to but remain James see of we benefits with As of continue Operator, the half we that that, pleased face our eyed results. such we variant, in are at Delta the clear ready obstacles, take rest the year, the contributed markets of many commitment With to the the we COVID-XX of are for year grateful first questions. the across ecosystem stakeholders from and others

Operator

with question Our first Dara Morgan from Stanley. [Operator Mohsenian comes Instructions]

is Your line open.

Dara Mohsenian

guys. Hey,

consumer you going behavior back? you forward in strategy those changes than how where the compares raised as concerns and impacts of topline it’s maybe full presumably the just COVID with some year expected markets now But consumer lasting markets? what what also the your revenue see that better in on how guidance? that U.S., you discuss front, versus can in behavior expected, coming quickly How originally So, have the dissipated, like is

James Quincey

am Yeah. well characterize past affecting where are high sure mainly COVID, Dara. the as Well, would Sure, vulnerable. there’s to levels as like the of parts the the firstly, other lot the of U.S. certainly where COVID It’s some a has the unvaccinated, moved markets I I the vaccination COVID. not most phase serious of of

can So the it’s not over that see and numbers. in we

If reopening in what’s a moved a of look the this things it’s a as take into U.S., second interesting happened for at phase. you couple just

down once go Firstly, go before to confidence are the on and these that away-from-home will to want second and consumers, humans they believed with social allows to all we calls, this experiences come to that out talked virus they out as have quarter. have see much be back their beginning the creatures social always They of people restrictions you off very the channels. panorama we happen the will that of the and to and go in can

they we compared fell large last to look the reached XXXX. levels all can away-from-home channels, of year, see quarter you the yet But not have at if they logical obviously second our year. is obviously rebounds how last much given which So

of levels. ones the delivery, last pickup they You went which like and that can of pushed channels take Those a least pushed couple back though bounced year they even are XXXX down they -- back closed the was channels QSR, one at as as have yet dining. dining, in or in-room above still fully kind many restaurant of QSRs reopened have not and

down like -- example, three they quarters now, went for bars they So taverns, you very year. -- well whereas QSR QX by take about last channels are if last doing did Q and and well

the and are go flocked up have channels. people reopened, have gone levels to they they can they you still and by means course, back XXXX through that away-from-home have various odd, of but not XXX% back Now,

travel about. very You and are transportation like obviously

gains because may is brands think, those I created point there, have and behaviors those not So back not expanded you last and held at or not -- XX and that well channels, last this bounced a those engagement over still some fully fully with in people interestingly, or still -- view, of have that brands generally part confidence are had at-home restrictions back. which gone still in new and those COVID gains who positively, the XXXX the with in are be on Company’s quarter second good enduring. from some consumer the look and months if has Coca-Cola that interaction products extra at-home But

that So can child gains on year. the over both in a possible year, we we e-commerce, business bit at for last will look exponentially. that it’s which basically this poster grown time to before the the quite QX grew hang the That was had some has you regain growth little which and at-home. of away-from-home in stabilized, And

held were even obviously have to to so step-up. they that getting stores, of last large some that are the grow year. year, They But last continued bouncing did can well in growth-on-growth year stores the So you a also small which on see and this are back. you impacted

U.S., COVID very trajectory. and of a in visible places look down the at vaccinated, if an you that that development So, therefore, resilience reopening other yet or U.K. pattern words, are see away-from-home not restrictions and of I net-net, in complete, you and driving Europe. is the other step-up the percentage business think high look at what’s of it’s business. I at-home a the going you there’s in-progress enduring coming population in the business rebound the the that’s like whether into other is and the countries And In but around think, stages

Operator

Thank you.

comes… question next Your

Dara Mohsenian

Okay.

Operator

Lauren from Lieberman with … Barclays.

Lauren Lieberman

stronger and package some that about Great. on full in of and curious be to this achieve terms on about I into margins. quarter to leverage think year, your and was high restructuring achieve are this profitability the the you how will able of come some bigger operating been you kind premiumization. even result perspective new Thanks. the and watermark Good ability of if a sales offered morning. definitely what have you still a you already the vein but mix work and doing in growth picture have to changing been you I think John, better frankly, of know the of was out you also able XXXX, But as thinking

with perhaps of sort term again, my is directly awareness than related timing that to question? so, quarter a more longer this question it’s something Thanks. the margin And

John Murphy

getting rest call to Thanks, all let’s primarily we let’s so some And are we I with there back spare the Yeah. by it’s a would year-to-date first end operating the will even I saw significant where we the to the gross marketing you. explain back would back will also like it the and at think the by our progress think, to pleased of of be, or and margin Lauren. XXXX take the being and part to before, we costs the happened you compression gross on driven levels take scale-back to answer right, in of a first that year. part us margin step picture. margins continue I investments, despite think to XXXX, the the we gross see them close -- about same your period. of two-year saw are line In XXXX, question But In the get is, expansion

and key also James as are in script, on for very investing the our our -- also brands the focused are markets We in we highlighted future.

have already a we second of priority step-up as We that have major for the half a year-to-date and continue the good year. to seen

a just nature see front be mid- long-term. the margin to there you -- news, just take see margins in focus for on some you quite I -- I if But end there, two-year said, business of to versus the the going given XXXX getting So, you will the will XXXX XXXX, are operating significant year better good think, a than compression of, back what will on by is be picture, this not gross into the nutshell, XXXX. back, reinvesting the

we topline stronger our marketing streamlined driving So look much part that’s you one. at first focused business now onwards, about from that a the the we innovation the support and on. talked brands to is Part flywheel are of XXXX two have agenda through if portfolio

of as into the a lever. growth have not We is driver in execution and future wraps and that levers our of the and with through in bottling which being a continued marketplace partners the of all our RGM least variety innovation about talked

to a be So margin going same was overall hyper arm been. in on shot is into on as it our the and us XXXX, the XXXX, that It’s path. QX for to equation improving XXXX, goal has focused the continue to continue good

Operator

Our with from next RBC. Modi Nik question comes

Nik Modi

And I if some hoping Thanks. more WABI you what data Good was exactly and that from standpoint, you you that are the know work about rolling you I have talk could out? on little just get topics direct-to-consumer everyone. where get won’t Maybe seen a it’s that out that to initiative I can you are James, from think other you to us and the can that U.S. was some access market. because maybe direct whereas rolling platforms bit morning, data give -- something you you countries. if it could fact in a

James Quincey

it specifically BXB and do I will come Sure. to just beverages WABI direct-to-consumer how, digital is a both to do either for or to multi-category set of features in a both for back ecosystem the that or us allow orders. and

the space. in we is Now more BXB predominantly WABI our are using partnership where bottlers in with

an a hailing but that the have the very XX run America, whole product app If XXX app minutes and XX, deliver essentially or the very they accept the WABI like they time, and Latin XXX, to to order. consumer app. order will used appropriate then can and mom-and-pop to that it meters from order are the shops space in and likely And We short that the Fantas around uses or you mom-and-pops set done of high to stores, much that ride was where just consumer high goes these that have model the is in they be nearest some the in want a have whatever, a Sprites of WABI, order and place Cokes consumer service BXC, density the cities, into given or of doing case XX which they density in a very less. experiments the the are minutes to of

to so and with interesting the do restaurants used also we like the that in Argentina platform of very have actually And QSR is thing. some places same it

it’s experiment. interesting So an

insights are We and a lot data. getting of

have other categories you the place whole to also FMCG insights series just that. BXC and expanded categories other not beverages, lots on for of add on a order an of interesting mom-and-pop now data partners actually We at so place the so getting of can

the we The number the is whether the a the fragmented necessarily is doing bottlers which of trade, with you order. the the capture order don’t is mom-and-pops to using with the other world, of person need that or cafes and BXB at it that the one expanding, up of of with rollout particularly digitization devices course, accelerate thing in smartphones store to turn an the it everywhere relationship to part smart now be around restaurants sales of are and

continue And some open purchases are a categories, but and the are the beverage drive of digitization expand the bottler both it Anyway, working the and net sometimes selling in the lot approach, depending execution the but with multi-category effectiveness consumer the wholesalers suppliers. to et the are leverage a Coke the we account and to at sales to of execution, retailers in-store getting the that come. and to them again, force whole to drive either of that activations know so minded we the drive all we back, learnings exactly or the create depth deliver a globally is, platforms of taking. retailer who platform not see to the as with order being as and us development and cetera. the but impulse where interaction the bottling you and to And tremendous world, that’s just through think with we of And we more takes use blending the what see format standing we all relationship with either links advantaged are, give a system the on the is what of retailer non-beverage with our works, to partners our drive of position with the experiments that set it’s ongoing a approach to process. importantly, Again, the on efficiency, have improves in also just got the experiments how where just we there are of

Operator

question Bank the next Our of of from America. line Spillane comes Bryan with

Bryan Spillane

morning. Good Hey.

the margins have read it a One I just to plan that terms spend guess, we I terms think, items, been more don’t how if savings I of around for reorganization know or versus, follow-up way to captured to how increase the question you actually in can the you year, the if marketing more this go? just increased I of two I us what in just provide. you kind Lauren’s then is second, I the in now can have then your John, missed was plan? if heard, but just there of the earlier from So And it, stand and think is where I much and was of much give spend today original

John Murphy

Thanks, Bryan. Yeah.

a year-to-date, part, I the looking On again, the quarter. the second think, at think, big I we first in saw rebound

we us being changes and We have doubling on big is the of rest the and spend. to I months investment the When the activities just will that’s one agenda XXXX delivering but an year, recent to look a think, we to hood well-prepared that see XXXX, getting are back the of quality with comparing improve year under though, of our for have made levels spend that for also robust you the in very eye both consumer facing dollars.

working able are same the areas, digital that the with as we is to be more media, with to pleased particularly And newer actually so of you think that with my and are making progress in some space, Manolo, cetera. generate the objective we about et our

think, Regarding ability think our conditions us the numbers, a a piece of some to to about me, the pivot degree of it for equation, it’s I as bigger flexibility bets behind dictate. gives hard of provide overall to market rather ongoing invest than and savings, the

And so to be to it’s opportunities really savings we as and less well-positioned much around go taking to those bottomline see after to flex around having them. more the

Operator

Powers comes question of next line from the Our Steve Bank. Deutsche with

Steve Powers

being you of or a or that versus where most have to half? see volume revenue with the panning from am inflation back mix also good growth And I bit Dara you two-year are further maybe seems through in in a price/mix you range? a sequential but too, updated improvement for led the led today the on of sourced and that out globally, on bias XXXX underlying you in you the acceleration see perspective, call more whether curious started but the I and James, versus system segment top a to the especially to of being at following half as as guess, Thanks end how and morning. basis fights a XXXX, John answer acceleration whether from back guidance where wants up about just both, thinking Thanks. the

James Quincey

Sure. Yeah.

to to So back raising we guidance. and believe the we made our and expectations get wanted obviously, progress the we year, we are are emerging levels XXXX obviously stronger, we good and we for said

said, into year, clear the and look that takes back we the exist being puts the we are out John of there. about eyed as As half

back to for off. of we two-year markets go basis markets we the looking, second and and two-year destocking year, two-year first have first days at restocking generally gallons, steady, But it it’s a suggest or steady really rapidly QX. to price/mix. start some sequential down. gallons we look see through think Obviously, looking speaking, whichever have XXXX, in basis, the the more look de-stocking half Clearly, you plenty two-year look very of to if on I we there’s the then last improvement some on on the up of stack and are are and into a is look at vaccinations restrictions actually, on basis, quarter. extra happen, different obviously, take basis price/mix volume got a because on the the done get stocking we quarter volume price/mix that in as is, you more the this in time want the improvements stacked more thing to whether similarly come whether room go moderate, -- the famous volume at have be expect the what gallons we things to a price/mix quarter, because and asynchronization expecting continued a you a although, been a see I But yes, would countries to basis. basis, this year and notwithstanding two-year you at were on And

it about. see always sort have talked ballpark in You the of we

model that two we a on year the talked always have three on average kind price see any two-year of annual second to quarter. to We annual, taking and you on the basis expecting on in about start increase, that are when long-term and the growth in you start an looking

price/mix essentially QX XX different, not our see in continue at because it’s of to you not radically by cycling in quarter. much expectations last re-opening. is saw of terms channel are year, all the second once And it’s driven in of package heavily But the this look notwithstanding a which -- had going during we have the negative to something so that same approach number Clearly that, more mix. through underlying XX you kind we and historically maintaining pre-COVID

Operator

Goldman next Our Bonnie line from question of the comes Sachs. Herzog with

Bonnie Herzog

Thank a you. Good guidance. question morning. I actually your on had

especially but full flow beat new growth the guidance raised didn’t through bottomline, you quarter, second suggests the given your be negative. strength given the in the on now outlook EPS in your You will year half you entire saw the

was might pressures few investments you is months I drivers last the versus have really called the that worse to up this, hoping it Thanks. cost the behind of gotten ahead that out recovery? understand the planned in stepped So

John Murphy

cases, the Thanks, second year, gallons half the the to normalize Bonnie. of we ahead we A year. saw couple of the which of would of expect comments, one in first half is,

got factor So into I you to that account. think have

a Secondly, in quarter. would days come we extra they had few and fourth off quarter first in the the

sort of investments full designed but marketing full then not So than to as that’s strong of back step our margins And space big the we to secondly, we we year. discussed, piece too, end year with continuing the up investment and better as XXXX. have have a as the equation for the that already in look XXXX, to

factored So that’s all in.

Operator

from Kaumil Suisse. with question Gajrawala Credit next comes Our the line of

Kaumil Gajrawala

Can leverage help changed in Hi. simplifying help your -- you business just revenue leverage it, us, operating revenue just a X% us an recent can X% you Can does you mean bit could us lives years? And with maybe maybe growth, idea the a has X% XX%? but if profit where down P&L? what like, maybe mean looks over you just give a does

John Murphy

say to that algorithm. I’d long-term Yeah. us refer our back

long-term businesses one is We are algorithm can coming to We when you reflects the, with of still discussing very deliver the the puts that a the the all over moment think as interesting we we at we take have that the been still years. have what that managing takes period. and best that

to changing clearly, to But just think back the don’t the foreseeable -- Now, we changes, refer in need I’d would that future. mix the we that. you as I the and business see review algorithm

Operator

line with next from Our comes question J.P. Andrea Morgan. the Teixeira of

Andrea Teixeira

Hi. Thank you so much.

the the So I tracking has just been on-premise how go wanted to exit to as the back you quarter.

worldwide that at-home and you was as confident we James, are that sounds, the to and as the I at can, seeing to adding that recovery So you see looking see the hoping an you adding you consumption. quite example, were obviously, that we that are it to mentioned, if lapping, U.S. is are sounds confident to going

was have goods volume the basis you how I places can the relative relative but and you your think coming I in come quarter quantify levels? levels, to the same where to XXXX see is a XXXX? exit called single in back how infections in hoping to on developed how global So to serve mix terms and how you and back finished sits out -- of

James Quincey

business. negative Sure. on I restrictions of in course up a the during second back there infections have quarter, the impacts help. offer come few have do will greater when and go that try the thoughts countries gone, you Clearly, might see when and

the have the worked in agile short-term over and Now and business beverages impacts XX able to consumers help love, very hard the we get the more last adaptable make in very to our it more often restrictions to but the months, the business. pivot they

quarter, first in spiked a where if negative the they in a sudden they you were then some doing the the job back. months places They but June. India, business were infections up have brought had of and of they restrictions negative, earlier strong Similarly, reopened, and and have second restrictions in quarter, bounced of year few done the at went into all set they restrictions. then have restrictions when and look so So Vietnam some in so large good went of they avoiding fine recently the a

clearly, it more these of they made to occur around business business. do impact going to lockdown, occur, do adapted while levels resilient So the we it’s and the wherever world, have when the

suffer going to to are We and are going the less, we is quicker impact going but to bounce business. it back

the of the pandemic basis and a XXXX we quarter outlook, make business. the And infections its consumption restrictions difference And it of to levels future you going consumption, and relates a if think second variants, about on the that now levels stack the is of consumption as of course can to two-year look in and I have of immediate that I the as look then the to what clearly, volumes levels direction COVID, so improved are the travel June. of immediate the are steadily such exited of see worldwide a as rate, we now ahead you slightly through on

see that I not of reflections at a followed the the goes on a two from as about said because question in are you at-home work, now and people stack out now the on tracking, two-year the the some been by on decline of image basis that at-home as at the XXXX or levels opening you first well. at-home. Clearly, mirror has tracking down Dara see the and and U.S., them in so in So and the

we there’s the downhill, why sequential but in some. feel that that’s improvement some So coming moderate

Operator

comes Evercore. of line question Rob the next Ottenstein from Our with

Rob Ottenstein

that in please X% your initiatives. intensity? management you year that the pricing I with would promo of second revenue you say look higher more the growth input heard QX, about of little pricing to I you headline you you heard X%. levels Can was talk in historical sort and Thank address of to half very Great. think at also a maybe costs say much. I bit

of kind to your inflation where able to be in key able thoughts maybe years and So about additional an is have we many have consumer take the more environment you. than seen your pricing in we in talk how on Thank geographies prices?

James Quincey

Yeah.

to then strategy taken the that, overall we the them in of for hedging to kind the pricing growth overall in you that and if within and will then, the that good we of that if when have our you through will obviously share brands, hedging way had to takes comments have investment then steady see RGM are of all and saying about creating would am the overall we what see easier basis and the to consumer that I to us through focus in steady we try business strategies and I best because the and they that use do obviously, rational RGM, to a the but input input is and gain do. belief on investment the beverage and pricing approach be is for and the and for pack price clearly, of category on their not retail course, time. we executed then costs and two-year a pandemic, ahead over made the sudden the meet our make effects in costs our point course want. what with and of one use for that data, leverage to that managing of So, size price And includes, staged execution, increases we customers geography, manage strength the of out to steady channel we stack of continue minimize brand over is our And bumps, the increases amount of

do that be historically. as have that we categories, strong people costs, able so well, will resonance brands through pass to who have those And consumer we have done believe

other whilst -- we of have very as high inflation experience U.S. the the which for period been of have of levels time in inflation. in extended has has country moderate Europe, been world an or it double-digit We plenty in

the improving the the structure steady margin so keep the engaged keep that in to system. through stay a and manage on momentum strategy is with and how of the the capability consumer business to And or

Operator

from with the comes question next Our line HSBC. of Laboy Carlos

Carlos Laboy

wanted more there experiments and some you drive in that thriving along and robust experiments, this about see big become really four everyone. coming this where you maybe James, and small revenues, with developed we of collaboration three share America. us ago said years this wins morning, are But to you years Good out Yes. might area? experimentation some as in perhaps markets is have sight, clear stand in how line and we don’t

James Quincey

Latin to If pick I I Sure. WABI, few and as of just the connected the mean, both started the continue we BXC of Carlos. have BXB. collaborations which up and ones elliptically drive America sort today. to we in that Thanks, a innovations.

capability with that to used of beyond the or and our on the platform have that. parts in BXB improve the work We world, helping other beyond, digitization work together Europe bottlers us the to be whether

So of out America. experiments of are expansions you those Latin seeing

You will U.S. this AHA, the expansions the continued has be experiments of year. U.S., see so it which to in perform whether well in far very

in done We have U.S. launched the that in China or fairlife, in which has very well

taking are We well. to China as that

there’s east. of so from west the some the kind And moving to

way is of continued were it. countries things expand experiments kind on round. Chico There in the we It’s are non-black and got expanding as of have now have in continents tea Seltzer on to ASEAN of Asia idea. taking the each in we place some segments experimented Topo which where a going in some the Hard in that of started a and You global kind

some great are really out experiments there So there.

a the factor U.S. the have with recently we materials, put bottle driving of rPET, really the like a around Europe, ones to packaging into coming the PET, key You use economy market. that could started recycled which in is some go even in to packaging XX-ounce circular the of really XXX%

from certainly to kind -- them and and go just be directions. but And discipline expanding place. starting in working never or to any around which be work happen more out, are all have to and having which a point, are the deserve we starting satisfied see the starting you they globally. to and stopping as to working, legs to It’s are next those interestingly, see So and developed not starting aren’t actually ones to through philosophical experiments at more experiments which shot to really direction. out there taken move in east the developing all It’s world west really one ideas coming or of

John Murphy

XX months I may, last that I that continue. tremendous to in also months think across it’s XX delivering a the chain results collaboration in James, world if the amount over think, I supply of individual entities And the will the partnership is there’s

Operator

Our Kevin from comes line next of the with question Jefferies. Grundy

Kevin Grundy

that on question just Great. questioning question James, Thanks. A early there morning. have for picking and some innovation, the you up for last Good line of of hard the had specifically success there. my seltzers around

So, James, could seltzer you more some those early of to hoping you. it for exploration broadly, alcohol the you particularly had that learnings. alcohol in then perhaps share whether further And the Your pertains outside I category? as mentioned bit was the us, company success Thank helpful. the the with comments emboldens of non-alcohol? have a would in space sort there you James, be

James Quincey

Sure. Yeah.

in of much It’s and number not category and are characteristics the characteristics need It’s very still got about. to phase. are learning we familiar with, that we the a alcohol. So a characteristics important regulatory particularly we learn business with

and a anything to point there space. the the the out to or got before have understand coming one other. flavored beverage stage more strategic we not of or view learn for there we to in decide more a direction vision alcoholic So of anything want concluding We is that us bigger

mean, so makes category country. or the XX what in we is particular I we exists discovered As it to-date. it of a markets any relates clearly, if mean, I have obviously the to in far, some learnings difference doesn’t exist are

the the on of track are be world around the We in by XX to markets year. end

to it exists. category are the We where learning what compete takes

where are exist. category grow the learning it what help it takes We doesn’t to

or in number one out are and and traction So the good we America, performer velocity happens. I in in Brazil, of terms it’s velocity good some have needed while interesting where it’s there. an of are focused lot nationally, done traction, what’s Europe to happening small got think we example, course where development the as work obviously relatively it’s a overall still for is of focused particularly seltzer well good where or we pleased, it’s And that and Molson southern of very kind good in U.S., so in launch, in undeveloped where more which very rates activity. very number bullish, is well trying how of Mexico, Similarly in it’s in to are customers, two Latin Texas, in done Retail too. understand in and and it’s in display Texas we of are of kind the looking category. we and for Florida two hard the There’s it’s Europe, example, California, lots more activity states, they getting

see So continue looking expand. we that to are to

course, is bars has in the Of that of seltzer category that overall less much down category, been we us, of has to in not restaurants because conscious surprise terms its big category That’s are it an predominantly that U.S. a the hard category. at-home ultimately and overall channel a growth rates come

clearly, And at-home from gone out, have away-from-home. back some to people occasions have so as moved those of

got the interesting. still long-term in of some for category lessened. U.S. tailwinds consumers. it’s it’s not potential surprising we lot lockdowns the too very It’s So got think have very It’s a some strong that on-trend in the But of the

we to on are that look that to so push at can see where continuing invest and go. we and And

Operator

from Sean King of line question Our next with comes UBS. the

Sean King

from later given light excitement to really starting you question. activation on Can or event? general any a Olympics given the Great. the of the pandemic around stand do Thanks pent-up this for you this of week, world? this sort plans outlook a on marketing disruption opportunity driven for the any shed just benefit How type

James Quincey

activation of clearly, terms are one, in beverages mean, keeping all the back not Olympics activation essentially the I to really those and were to of get the mean, But activations led to our Japan, appropriately, cetera. market athletes, they and where going at of And to it’s broadcast cost then restrictions, so two the the is -- the that I going much investment as as any and brands. the activating extra et the leverage airtime because supporting Japan not kind dialed then having so we ways in supply are for airtime the physical a very move physical in countries like looking itself. in it, have going the anything, about and large the happen. it’s happen in programs. actual too given of in Yeah. us we away uncertainty whether from will or large at are slight market, this But activation to places market year fixed happen of Olympics U.S. leveraging our to marketing the of to the galley to part going specific Olympics isn’t

can that, going one even in actually of the You today deputy, note who to what’s said knows still will the start. happen it people whether Tokyo

for can approach the taking rights activation, very our take are much of any used away the in physical take away the only the use be general event brands. So have that the Olympics fixed marketing we of cost of any and times and we

Operator

with Laurent line the Grandet from Guggenheim. comes question next of Our

Laurent Grandet

you new on squeezing has in. you in already Coca-Cola where Zero coming Got re-launch from Coke Hey. competition. been Regular both launched, morning, for is for or Zero, had and seeing are me Coca-Cola please, market everyone. Diet the to a it question Good countries Thanks Regular, with packaging so recipe value actually or the

So Thanks. any color help. would

James Quincey

Zero answer country Laurent, from Diet or the country and that in way, different Light it Yeah. I got we mean, size depending obviously, of starting Classic. a point you if in are depends has still slightly of has the is a are -- mix the or a each because

about If is clearly Coke business Sugar we self-cannibalization. a Zero of mix get it’s not it matters. very most we is that that like just driving but Two, a necessary, all was What the exciting be are the starting So not of it about Coke from is Coke Coke coming exciting. and helping point perhaps What’s expand we would lot everything. it franchise. Light,

only growth if or words, on Coke are the where of Coke is the Light the fast start in Diet you of looking globally, Coke other very of Coke it both at in Original, and you of some So, the cannibalization coming Zero, depending which world. standing can from Coke you see back growth

So it’s Coke a net franchise. accretion to the

Operator

any this James like for call closing session. and would concludes back Ladies gentlemen, our over the remarks. now Quincey question-and-answer I to to turn

James Quincey

everyone. Thanks very much

at stronger. could see just we set opportunity once allowed deliver the to said that for you results of our beginning, look that we we both ourselves the in effort all partners the to for As we Hopefully the associates, emerge our the on partners and our are delivering raise outlook. to extraordinary us out our And and results have priorities to guidance. want bottling thank the our again guidance and take to these of

strong. is system Our

strong. are partners bottling Our

behind and huge ahead invest to for growth your of momentum continue investment interest, us. your today. the We us for and joining opportunity Thanks

Operator

Ladies conference call. today’s this gentlemen, participating. concludes Thank for and you

now may disconnect. You

The Coca-Cola Company (KO) 21 Jul 212021 Q2 Earnings call transcript