KO - Earnings call transcript Q2 2022

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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. [Operator Instructions] 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. Media participants should contact Coca-Cola's Media Relations department if they have any questions. to like now would introduce Mr. I Vice Leveridge, President of FP&A. and IR Tim Mr. you now Leveridge, begin. may

Tim Leveridge

John our thank the and here Chairman Officer; under Officer. Quincey, morning, for posted we've with our Chief schedules and Note Executive by certain results that morning's Chief Information which Good and may measures, section you company at James website financial generally I'm in this under of reported during joining Financial www.coca-colacompany.com. referred as our Financial Investors Murphy, non-GAAP our to accepted our discussion executives to These us schedules reconcile today. principles. senior be accounting

You analysis can of an of section our same gross margins. schedules also in and the provide our website that operating find

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

will Now over for this over turn morning, call prepared James. to turn Following I'll we remarks the Instructions] the [Operator questions. call

James Quincey

Tim, our the performance execute good to quarter, continuing by we delivered on strong Thanks, everyone. strategy. second morning, growth In and

Our quarter. in both robust, we and the value and industry volume remained share gained

to results future strong These growth, we culture, accelerate financial as and environment our growth. through agenda. discuss the even enabled investments are organization's our quarter half the costs factors will how we John This dollar X% our environment and and results for business how while first bottom the of to dedication our U.S. our resiliency give the we're headwinds to delivering that to X% is with the currency raise the and and the Our current progress line future building and operating of partners and confidence us drive people of manage sustainability bottling outlook discuss by meaningful driving the details to top alignment agenda. external of our in resilience This growth XXXX guidance. in purpose-led I'll in line flexibility are business Then morning, worldwide. results building offsetting our on increases our and hold our

to quarter, During parts. operating the asynchronous environment with moving be second many the continued

experiencing regions macro Some pressures. others are broad-based experience inflationary strength strong while continued to

away-from-home are from pandemic-related our experienced countries growth lockdowns. while affected. still like the backdrop, and is to bottlers we'd pricing pandemic, performance we geographic managed and our in consumer are all the strong the that be for though send Ukraine have to we of continue and closely year year-to-date, and Some and who volume recovering of all segments the on helped our goes revenue strong ongoing, China average those deepest elasticities the well With actions conflict And largely to sympathies cost encompass with robust to as consumer changing continues a go behavior watching as as of this across by up. have recovery. basket held a delivered signs Consumer thoughts better-than-expected

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our and We also to earnings, dollar is we recognize U.S. strength committed that impacting delivering the growth. dollar translated remain

our want, brands and what are and industry. what great of value the our them consumers, expanding providing As circumference choose customers on ultimately control, to understanding system, we can our reasons and focusing a the more consumers driving we for giving

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Additionally, Tea and in we of ambience the gained visible points base. coffee of by share driven inventory, X

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to the congratulate of of want the President October Before I to course, his Smith with I thank service X, XX-year John, best as role system him for all the I and his to also for the innumerable turn his the wish for current CFO. And over responsibility contributions company him during in assuming addition the want beginning future. a to Brian to call and tenure

to over So you. John,

John Murphy

world. grew East our briefly X% investing headwinds due business and and sales top James, pressures. brands comparable were growth full the year XX%. translated on delivered Group. top timing Africa the growth shipments quarter, currency our cases Middle quarter and We and then touch across organic behind points by XXXX momentum pleased drivers our in Concentrate the unit of guidance, X update the by I has the growth. in led our commentary provide to primarily and will Europe, larger-than-expected of the good growth, notwithstanding This of increased to continued I'll morning, behind driving cases broad-based performance in around line strong operating Thank segments. you, line and our everyone. on revenue cost We're with into resilience our second the Latin building of Unit EPS America and business with all

of XX% mix. to Comparable the strategic by revenue quarter in prior initiatives, impact three, in improvement of upsized finished price/mix consolidating the backdrop; X with currency business. markets, in BODYARMOR primarily of business the year, driven approximately most markets across further by goods primarily was in management versus positive due segment channels increase growth Our inflationary macro basis away-from-home driven due costs the the one, the items: gross to pricing effect and environment; down two, XXX headwinds volatile the actions was mechanical the margin an for and points along

basis XX currency increased to to respective expanded underlying when delivered $X.XX comparable margin, the Despite EPS in grew higher basis approximately value continue On from points of driven billion X% our free points driven earn create we'd X higher by Putting marketplace. On what this year-over-year. of And cash second we headwinds, cash and return approximately this anticipated points $X.X impacted front, was headwinds. costs together, increased we BODYARMOR we than flow, our the Comparable guidance. and our operating by by marketing year-to-date, by the gave last XXX their compressed prior timing X XX% spending and flow working items: of to all first the customer-facing year; incentives strong however, quarter. points. brands for investments capital annual business points, and a two, in by lower performance. of due X benefits throughout margin investments price the P&L, the acquisition primarily more due paid cycling prior we and This one, XXXX higher quarter the our in to consumer versus was the currency operating year,

range EBITDA, is the X.Xx Additionally, within our is net X debt which X.Xx. leverage to targeted of

expect far, framework As resilience using this We're a we highest have whatever growth are we expect indicate thereby earnings now top closely to consumers the bottling resource drive line we currency-neutral signs thus shown this look comparable watching XX% ready a Based on working the share to current to rates and and With our remain at and of closely EPS our of headwind that share and ensure currency-neutral XXXX. We to our to hedge maximizing we XX% positions, X-point XX% comparable category backdrop, XX% be way. our adapt. returns. We this country revenues directed are growth and XXXX. change. full per comparable the operating navigate for are environment morning, towards year X-point our growth, to we raising that dynamic guidance. are versus currency organic per And for investments net now revenue with headwind to may comes a our allocation combinations to earnings partners effectively

flow of investments. to in cash share continue growth in, from expect $XX free expect we in billion X% for XXXX. we to continue that to expect There approximately in to keep X% factored for And some $X.X continue rate We generate earnings operations, all cash comparable of our considerations less to approximately of effective in through XXXX. billion XX.X% billion mind are approximately versus XXXX capital an to we tax $XX.X And into guidance. per XXXX

and the interest Ukraine We of finished and an that behind currently expect bottling catch-up are direct year suspensions expect a commodity to rate shipments unit costs, the we line on expect to our also the the fourth expenses, due to resulting the our The conflict to our in While these transportation, full the of impact mechanical cases, run and rates, move including and current in a the now commodity for to refranchising we we price businesses. of pressures. in lastly, our expected adding with comparable sold our of to from Russia, Based concentrate impact the XXXX. expense cost-of-goods high is in on now positions, exposure mid-single Vietnam continue the digits hedge to business see approximately $X.XX partially will inflation offset cost EPS. primarily effect by single-digit rates given This expect debt. will increases to floating and comparable consolidation operating have on quarter. of media Other and interest BODYARMOR backdrop incremental goods operations. business across are increasing rising margins, goods our given impact on impact And finished Cambodia wages, be

continue environment this in navigate our confident to Along guidance to actions the of As industry the the And we offers, global bar ready do half bottling dynamic aspect operator, feel partners, ability how we our taking for growth XXXX. on focused investing every and we the are things we and and effectively we year, enter on our control. to compelling of second we by within updated raise that, business. in with those remain on in our deliver are opportunity questions. business take flexibility creating our the With we

Operator

Instructions] first Bank of Spillane [Operator America. comes question Our from from Bryan

Bryan Spillane

So really guess, growth. bit X%-or-so half, strong a organic and somewhere James year consumer. I guidance and a John, you to, having on implies a for the around little wanted second talked slowdown sales your half the to such touch full about watching first And both. had again, the

you've that also, maybe are may macro of a the are guidance? it that about weaken that a, you talk bit Is can maybe that's if touch And so underneath risks help. where there deceleration -- risk-adjusted a half in consumer versus of a the would can implied geographically are maybe little got other kind kind first of considerations that bit sort on or And or expectation just of, you reflection the little environment how the half? the second

James Quincey

Yes, sure, Brian.

then and the in out look, are, that you're we related where ways what's half atypical to and uncertainty I'm saying, point the end, the guidance, as choppiness the with relatively -- that's and annual of come a the in kind And compare zooming to underlining you be start compound all going year, X-year given see is post-COVID consumer to you kind if the look X growth you off of is of and downhill. rate second wouldn't COVID going in and start a me to end and half kind by back Let to out And of at that much first and by when were era. the to it's zooming the COVID. the or prior take seeing as implied the X-year

In periods simpler fact, X-year and the is compound roll X-year bit, and net you actually bit of something down up, rate price or coaster those and that at you've price and if X-time then you growth volume and take is X amazing the and backwards which of X annual and at volume X. more and taken, and has through about see grown encouraging, then so up has look a what the a grown down out at you whichever the

you an what so see been period long that industry is advancing, which time got the X-ish is we've we've over And thesis percent. that grows at

are get in or encourage zoom of too the downhill. the And maybe will with see. people help And that's with growth you and And a think people on future leader even RGM basis. to position not our can that longer-term you get what whether model. weeds the kind that our with kind in the think and out, that look we share you to figure look I can about a start kind like would to gain does out start top starting end through We therefore, and second that if with from of half our the I of picture our when the portfolio, of macro lost like the trying execution, saying to long-term

Europe. purchasing reprioritization is running stable very there we only in of in a going The of how feature a same a an things And parts the of wages. the some important the is those, what second number terms the to is to it's there's term. Asia occurring world is many running of inflation thing in And big tougher clearly, a the atypical rest on I would we've balances. deposit don't look that's where ahead not net going squeeze there's things universally of in and of little are But big, categories X%. of at That's the the part time, The inflation It's Southeast of in spend out. difficult One, power say predict There's true on got squeeze. where to and power, by got relatively clearly true. world, see China of higher at you've a you've about impact know But purchasing a year. clearly U.S., places, consumer and channels turn and set short the whilst consumers. how because doing, got a

in, category the some to not travel, that's been. if some expected. then yet. you're be it's in looking channels, which parks, the income, parks, at as in of about necessarily sort to consumers That's that thing, So ever you're in away-from-home the down, if markets, beverages on But good leisure theme you're the as of -- not it's the on convenience you're channels be developed markets, with less if early grocery in seeing signs you're depending trading pressure some of looking in developed

the for good again. kind number lot over sustained is of seen, all a by back zoom so until peak let accelerated I with squeeze a to good that out is into But stable or get there. standard a we in long think a like recession layered is and years spend of this of purchase going actually on employment next There purchasing momentum on it's a net downhill. And to the opinions. we post-COVID The post-COVID. picture feels over process feel with but of about weird is second that's consumers what reprioritization How going a know there's half anyone reprioritization power. Whether path, year? into a going to going atypical going a and don't this layered be squeezing are consumer out Coke yet the me system over

Operator

comes question next Dara Mohsenian from Our from Stanley. Morgan

Dara Mohsenian

you X X sense consumer versus price/mix factors? follow-ups sites. any just specifically there helpful seeing it drop And are of how us in B, July, just just signs on and play volume out that any line if squeeze raise that. trade can just aggregate, quarter but a any towards was potential on initial A, give to or full demand the any line year It'd top end the the there you saw break power in and in a be strong of much contrast then numbers, purchasing So those Obviously, very a out? update consumer if bit you're of regions down? due to if maybe of either between compare top of are where regionally get off and of

James Quincey

you are rate firstly, the get break expecting of commentary is into geographic Sure. We it expecting in and year-to-date, out slightly the the more to or clearly don't but whether that made away-from-home partly to growth see last price/mix going just home. the mix, relative on which recovering than the I volume volume half price/mix is a mean, at we price/mix it's would be some answer, increase, again downhill. actually, that both in I downhill. and balance. is I growth underline I'm the

a are there of big on. couple profound So going effects

important purchasing and a not an focused to and on on with in through we're it's reopenings keep for volume important. continue points packages to we as affordability consumer right But and in very management expecting in push can as So entry investments, be strategy low we because to which keep just strategies we growth playbooks. balance of one squeeze countries over into shift of got and the the price revenue expected that towards growth, price talked believe you've We our the channels, the categories power to to before. base. in the keep are It's shifts anchor brand this We've us. downhill, investing the works for lay biased the it very very but It to for about ourselves ahead. through are to focus for

it's that we out we're focus course, go and into as we going balance downhill. opportunities, the Of premiumization what with to into on focus a

stop or a As high-ticket experienced environment start lower that's I’ll stage. they replace and weaker replace car If significant at later. and recessionary we not They in with past country, a would were the buying the a to countries, surprising typical X said, us a more pattern away-from-home. yet in or pullback initially not some countries, significant there the I be very have things. consumer which from in experience discretionary this leader categoies the down and strong eventually recessionary categories hit item, ticket trade I'll have leader on later. the items saving grocery then mattress brands then the brands might consumers

recession, from overlay not read of lead see can you like reprioritization couple a has of we yet. the beginnings in But in which to a I as “as hard normal have effects said in even or said, seen as spend of we some years. that, typical that I last it I channels, time the of going normal reprioritization think, that confusing is, it the us into So beginning, out to the looks large making some what recession” or some is truly it's on have spend I things just things of missed into came countries, though, away gone in from some whether process, not yet, to

Operator

Lieberman comes question from Our Barclays. Lauren from next

Lauren Lieberman

have your before in curious, on at there it cost you -- blanket context you your you signs, commented this it for the right the if so you pricing just be given may pricing you where in by comments markets still be taking of a on the would you're the I on to on answer. larger some before do impacts pricing that softness. stand you've consumer hard great not from know stand typically your and give world, and give point? one view company ahead inflation. on I Where feel was James, is lead big some level categories pricing feel seeing could time given any the if of business you recession. it's like place But would be a

James Quincey

as Europe to mean, I X%. inflation We've that you markets U.S. got not emerging there's a at in are Yes. down the fits say, of XX%, and there with kind high are X% rather one atypically relatively size and the all.

a through So and it's here. time. use maintaining headline go that normal me the and our important I experience. price/mix big One, important points consider let that both price/mix we manage in point What mix of that strategy not And the of from we're point moment. lot and have obviously in of price/mix past is favoring component factor, of pre-COVID, We at to the a RGM couple a Unusually, see make of over a view an -- first from it's is mix. relative a a how half country channel to you both and the to won't reported affordability. view. reporting are

behind And relatively high the price/mix like, rate increases, and the are And number. are typical as reason as -- in the well. underlying ballpark if inflation. they slightly as that's So not you of that

don't I it. essentially inflation we we a and arrive ahead but nor a buildup passing increases to pricing get anticipate what through, We do firstly, -- of get through. because us cost want has that commented don't to behind big we recession surprising try want gone with is not to as by ahead cost of to not that's as increases do So before,

normal the And the of that would inflation expected increases in of kind ballpark are rates kind of trajectory. be the so

-- Again, And we've market. passing to the don't so increases. we're through been seeing yes, the spot chasing peak. We're we price through pass not the what is, we don't commodity

We commodities. are hedged on

And hedges to need going we not the up, know other we so the and just lot roll the are through of to the prices are cost But up a of and clearly, off, when broader-based as service inputs, and got than come commodities the seeing inflation commodities pass We've we and those. majority base. are down.

pass come through. through, And so those as them we

in locally we of And because more And increases anticipate will on bit country so far very continue year. cost inputs. each so different. through good We a broad-based we've come passed a set it's through this will

of to those We inflation slightly we'll of layover that's as will up terms or at of rate behind price/mix. like with what in continue it to through. look goes be kind headline likely inflation is the And pass

Operator

comes Our Powers Steve Deutsche Bank. from next question from

Steve Powers

helpful this leverage. productivity to could and profit is to for profit? Just line balance also dropping John, as whether, is cost the I well. question maybe investment And that to given biasing savings how may John. probably whether and new more those then horizon, into of if hoping to at insight of and be in philosophy the your on on the higher and demand harvesting think that expense congrats, at the Or But here the straight I still I through growth you was as priorities savings your you could just prospects into accelerated guess sight year them through environment, the philosophy role. reinvest be some Yes, And from context this would us bit shifting there. drive deteriorating over more is inflationary called a more now savings of you those the more and cost pressure out revenue all the towards all give comment

John Murphy

sustain mentioned I look think And second continue of I we in far. resources that have Thanks, as the and the on momentum the we year, Yes, we're that look to to Sure. so script brands the enjoyed focused our very markets our to year-to-date to half providing to momentum. to that we Steve. continue the

to bias number look forward. overall think, a account. the of the into go factors, cost as at I the When line there's to take So is I support base, clear we top

past. we the ongoing inputs broad-based on even business. across on We concentrate and the our we commodities but into have -- marketing increases on productivity, inflationary expenses the discussed increases a James board, that taking we've have core only do focus other highlighted, And not levers and do have operating number expenses. there's board in As our an we're in of

think simplify business. with taking of able partners our key strategic scale actions the able to and more benefits years, we've We've couple leverage do the a we the to one over of COVID. I across supply been even network. And -- of the of been the to world number relationships last way streamline we're have of build, We deepened our

guidance the us I number and the a against continue areas. expect to this can you we're top to mitigate line to take we've actions inflationary support so is productivity reflective the to given key drive And morning, to that pressures in think, of seeing to continue overarching that of board. across But to those the bias continue invest the to across board

Operator

from Kaumal comes Our Suisse. Credit from next Gajrawala question

Kaumil Gajrawala

congratulations. John,

terms another your few again, Or or procedures how you've EPS of perhaps mentioned growing And you about James, might place years dollar-based be a now, that? different of strengthening commitment policies what we in you have talk Can to the through things if dollar the last maybe in remarks. in dollar about period For cycle? to prepared it growth. maybe versus years accomplish to go you talked new try

James Quincey

-- Yes. mean reading by much I me start let very them.

strategic continuous ultimately, increases basis, done, of and all to shareholders. the said Our and to in position dollar Company goals strengthen a are the to, on deliver the EPS when Coke back

And our face is yet into ability, focused the going to that's Clearly, turns Star, or what both unexpected to adaptability. to at to we're the strategies the moment, all increasing up and that we're coming out be the further on and could years, And twists we've months in even and so what broken that reality. North necessary continue to make pursue. that a the resilience

took COVID lockdowns. the place to of was of the to amount learning to respond One that be of features the the crisis able

the was So first very lockdown painful.

yet, and negative able there in that And company the China considerable China mitigate was was The a onwards quarter, second in the volume through it onwards. in lockdown each second view. second month And less and at were China. accommodate both one, we manage to total quarter. and through in of actually, a so point and it

mind, China to the due So the and of a both business business disappearance in negative the lockdown. quite QX bear Russian had

strategy last has the to us guiding resilience the for ahead we of adaptability, to to are is been twists of turns yet manage the continuing both and that give idea through on a focus double-down us. focusing on that and wherewithal feel, -- this So going us the number of with years

Operator

from Our Herzog Sachs. Bonnie next question Goldman comes from

Bonnie Herzog

a in a should to a whether your of have the I just guidance? question you hear greater of And consumers if your think recession then updated sense as over-indexed considered risk a potentially implement considered relative this. to on on terms in given guidance. James, and this strategy but business your you can on your just Could guess peers on-premise touched potential the and your you so, then business curious you I if scenarios is the us to And on maybe to you we on you've new touch how in back channel? out And guidance scenario? give potential about see this, you a severe dining pull entertainment. mitigate considered

James Quincey

about why Look, of uncertainty, of is year. on year. we've right, focus into been is growing in debating whole of growing We're than and our -- What is in they still preparing likely there's operators guidance number rather growing. the this coming we scenarios. in last considered of which our potential do out way the each We've which Clearly, the having thinking reflected quarters "Look, most we've what lean We're growth." scenario forward, said, guidance. feel let's we think lot a the a is

the the overall on meantime, end Certainly, we're whatever So being bias they come. and is the are doubling may And in in and everywhere. as to maintain And resilience time world same country by the that up to and let's well, generally going. arrive, make sure in our completely world. that the by in growth adaptability going recessions, down not region different for and if keep

we're to and very on focus growth to it's so And much, resilience bias going adaptability. and we have a

fact and half Experience us in can that I COVID. at recession height moment, half at from away the at says a business home our numbers, we system through. great Clearly, it was is favorable. that clearly, a round think of have home, that the businesses, disadvantage of see the

Company?" years, you me or and the Coke The Let revenue "Well, of the net you that's happened again, and the round X all X%. reinforce and system last for say, is, you growth think about zoom out numbers, in Coke in organic number when the what's

we way that's And our we're and have what so seen on. focused through,

Operator

Teixeira Our next from question Andrea from JPMorgan. comes

Andrea Teixeira

clarification was believe that Congrats to the concentrate on for environment. potential the pricing to increasing general. I a in bottlers concentrate from is My some costs, operate in and and John. the higher or for spoke to about I more flow-through some your this if commentary the checking inflation. incidence of on Arca the cost inflationary question And adjustments high but a takes Europe puts -- is just of a just the and there percentage

You're exit or been more momentum seeing your you're moderate there on-premise the seeing rate embedded keeping had as any guidance? in

John Murphy

Andreas. Thanks,

changes to that our bottling point, economic of and pricing the I from what on work is the last how James marketplace on as the activities we partners, on you growth, on of work to marketplace. many we're an periods we volatility, the on whatever And to us drive pricing. think regard -- call we greater much model topic think, It's growth, think that as and as allows have with appreciate, model That under-led as allows change context understand highlighted, what us high by seeing instance of certainty focused in the So I whole is. growth doesn't need low stability, that our expect not very stay significant of what both much. so I to focus front, in the to momentum. any to With focused continuing allows the in we to delivering through the to on

not out there's -- changes. a not lot a to So report on

sustaining allows continue that to to -- one to is itself to momentum. allows that reasons the us about model and industry us the the what deliver on opportunities that actually about of think optimistic talked allows us I to continue we've be the has

Operator

Ottenstein next question Rob comes from ISI. from Evercore Our

Rob Ottenstein

and just bottlers pressures the themselves? play I countries little the growth. bottling a system. just leaning that on obviously, up into the the share, the bit the getting mean, more there? are first pricing, into question stand And maybe, Can you does wanted refranchising talk are with on inflation. a the on more about bit of then specifically but just presumably, the of kind about on that a you where talked I both in hurt you pattern general. How bottlers from number you the thought follow pricing, incident in number on little Swire one, to

much does how work the terms how you in bottlers pricing and So discussion between of appropriate? the is

James Quincey

some Yes. technology trying I we're the with RGM the strategic see to country pricing conversation the consumer, a on the given brand integrated where RGM. way bring in mean, bottles thinking, clearly strategy look, some conversation any is the start with

We do costs, very costs in the idea. to be very are yes, some difference pricing, an inflationary then both we have that. environment, if hard both nature. cost the basis, those going to to to ultimately, We have The through there's and to much exposed consumer shape are in through way, work or form passed

are has bottlers the history in not ones high been just bottlers And good system so currently, the let essentially help in of stay the there and situations some of the good consumer The shape. inflation that And where health. markets retailers it that inflation talked model see a model, you'll the was in of exactly designed John In value high on very look in I the world, the in higher in if even the of me high where there's bottlers the emerging inflation for sorts markets, and the around incidence think invented good was and health, was and the but for an to environment that about, the of way, you bottlers the are underline are everyone times inflation a volatility. in focused we're creating and in. invented developed

XXXX. this we effective in what system, that work the the very the the it Coke company to achieve focused be the brand and in ultimately, in good the the helping stand us are shape bottlers post-COVID a in middle muscle of company terms And we at well has and and terms on And need terms in good of to shape in the as stay So bottlers. investments, together I is think of to investments. the strategy here of and both marketplace why marketplace in and in achieve developed proven that's to the RGM is

that's of of important bottling I thing. most predominantly the think CCBA. think India global some was then left the And in I right Vietnam then then Cambodia. obviously, little very the system, we and so we're and for partner And Swire operations And with the own

Operator

next Our comes from Securities. from Chris question Carey Wells Fargo

Chris Carey

outlook is We've question the my in on trends both for The sales today actually was for scanner normalization slightly lowered some BODYARMOR. So and profit. brand. seen

give just So I again, and that that you on a you're offering. for could seeing developments both the bit top line wonder if a specific of of of union and state some the line bottom

James Quincey

Yes.

provide we and advanced any into reinvigorating category. guidance been clear, the job to clearly, for of drink we've great bringing the brand. great BODYARMOR a sports -- growth And It's didn't people it's done Just a strong hydration itself. It's high with innovation.

last year, in as and think And it good on comparisons. and some connecting of and from in Coke over drive kind the fully continuing shape. we're are in address We to we do brand kind international And and category effect do it true that's we've itself. got will to forward I continuing the obviously keep it the and of the when what needs had lapping process disruption of We're some system to to opportunities, the those to time.

Operator

from from Our next Jefferies. Grundy Kevin question comes

Kevin Grundy

you. for question Congrats on strong a James, results.

but we're implications pressures You large maybe kind of the very some and not directly. touched from seeing publicly on U.S. It's some business from margin your potential retail of customers. of on this,

but those large understanding cannot, go anyone I'm the which than in or general compression, issues are any grocery, by matter. sure not notable margin suppliers nevertheless, industry should merchandise unnoticed more So for that around

of potential Just called for, where ability business your from trade participate, is price potentially on likelihood less implications if this take in demands you it's categories dollars. whether to comment greater on

be to because question any margin from on pressure U.S. fallout I may the was Lauren's think is talked the it you I a the seeing we're about retail the specifically very in question But customers do not is little bit question, very you see So specific. you pricing. ask redundant at large

James Quincey

the way wallet whether be we their value pressure purchasing consumers' creation that point Look, the something from world, there And parts it's under store, they're come or different pressure. of a whether a to as they're because it other clearly, of spend will the reprioritizing the to approach in from it's pullbacks, Yes. take is losing or power U.S. retailers view. store

category those therefore, stores. investing consumers to is category to can Our well the consumers they for our And on and in the than business, attractive of in, create we've making would got to in the focus would average retailers the value realize to generate consumers like, out idea look, do faster from ideally, we're our the that it. their retailers. brands And grow value bring to their

growth. Of course, ourselves we gain those would category like share see to within

much, we around. environment get here them. growth working growth think recessionary table, there's we're consumer, focused as for us, growth I growth, a able retailers. value everyone going been as story story, to But going for something be on creates said, sit for the driving ahead the drive And that's business. bring the that's a we I really the we've to today, very creating to is which for more what If that of So who a touches much clearly, it's to difficult

Operator

next Our Consumer Cooper comes Research. question Brett from from Edge

Brett Cooper

up can is more than selling for that is the now off-premise America. XX-ounce number bottle. In for XXXX. place we see in price/mix from Question North is developed in And The see or on your year-to-date the we a you markets about where XQ price/mix. can and $X best data, XX%

rise medium So And in other rapid recruitment segment been price requires has profitable from mix then whether package to that can term? market drive how offer markets, pack. if meaningful on points prices color the generate over try retainment can down in the in trade hit you key shift in is to order like question you so the don't what just and you some in a a consumer the to done order you've

James Quincey

and getting important the Look, the pricing into changes. category try right I down to stuff. the mean I -- packaging is and disaggregate we're think, some channel price/mix, of very

work is or anchored we multipacks going pack be for of looking mix. only the which increase segment of the stay sizes slices. in value, and said, And we about that looking then in was on much driving not where take retaining very we clearly, as whilst of And price, times, I channel. but premiumization. focused to but with up do we as affordability that's whether different use specific will to resegment the more what talked sizes point also individual And they almost You for marketplace are just, and the X consumer dynamic many pack price were It's something going is I the diversity in or the other strategy premiumization probably combinations to the in presume focus XX-ounce. a going multipacks. to X impossible consumers. rate, across whether be to affordability, key pack to alluded packs X the packaging on to spectrum that And we've is on, different of also package therefore, move

factor in packaging becomes the important price options material points the multipack and diversity of number the and the That's the So play allows the to that the elasticities. of diversity of options. spectrum or dynamic you size across

cans, important anchored the strategy. the the the diversification able of There's us up. of of And the to kind bottles to of packages, another that allows one going demand one be I curve mini overall using some do spectrum. the smaller-sized introduction the probably to the the so But PET in staying growth whole most capture think dynamic is

Operator

from comes Chappell from Securities. question Truist next Our Bill

Bill Chappell

pack And that any like, And Or of of guess, would of prices going the back country real you've back not increases? being a mix down, not, hold not I pack have no are acceleration -- would higher from price the reason sizes, sizes. mix, was half flowed of kind I the are I Just come there's any line maybe feel necessarily but think roll you down, there had said down you follow-up smaller prices road So one the the hey, product that? do elasticity. is these mean, just some any through, you on benefited higher mix. to is here. that I to are things commodity seeing the if margin? guess you trade as if pack you if in and, any We're you're seeing which

James Quincey

Okay.

earlier, Let bit I we to me try spikes. commodity start a that end. unpack price and don't the commented and at

and there smooth from of So again. back a that a hedging program March are long-term up. come the up commodities price commodity we have curve, you January pricing of chase relationships, the through and a like, on if then down bottlers we lot our many too, commodities. Because didn't shot some to -- of and we We use have

there So spot the what's overall commodity in the important is trend price, not the market. underlying

And so we haven't up. priced

Now that, basket other labor. the commodities, said some and having up services commodities ones, of are energy and so particularly and still is trending --

the question, likely the a term, even short the which the imports, if the does and the be you commodities basket economy back, being not of and commodities basically, think of cost not seem need sum the for or majority sum but mean, to I deflation on other to to price the the global So don't everything total -- the services they'd I and don't I else, not deflationary foresee environment. really basis. in of the a enter of whether before roll in the services suddenly certainly most the overall it's take have imports, we a scenario

unlikely. in price I So rollbacks sense, very think seems that

it's moment. rate come I think but likely the inflation deflationary more therefore, increase at foresee don't we're I can big down, a and of that burst much -- softens, global the

to intimately didn't mix. things. the the is Well, one of a I clearly, terms of related mixed mix mention mix pack as pack In -- channel

we being is So have positive price mix to immediate home, packs. away-from-home got somewhat at effect versus larger packs, IC we've a rather -- synonymous that than consumption more packs, for

-- And are they X so relatively they're same, the the correlated. not but

fountain, So reopening U.S., has increased as example, sizes smaller in people pack has the the for travel. increased

with goal much same, reasonably very not correlation. close but channel a size the pack mix, there's So

Operator

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

James Quincey

our for the we company Great. us in first much, long brands, business. that value the our momentum feel morning. we second with the everyone. in of with far sustain performance of exemplified our bottlers for We're pleased the quarter very half. in half and so second our your Thanks Clearly, thanks the strength for And We interest, joining the investment entered confidence run. the and can the this execution

Operator

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

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The Coca-Cola Company (KO) 26 Jul 222022 Q2 Earnings call transcript