Earnings call transcript Q4 2022

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Operator

At this time, I'd like to welcome everyone to The Coca-Cola Company's Fourth Quarter and Full Year 2022 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 Tim now introduce of would to I now Mr. FP&A. Leveridge, IR Mr. Leveridge, you may begin. and President Vice

Tim Leveridge

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

which to schedules the company website our our posted We reconcile non-GAAP during discussion section certain Investors this schedules referred Generally under as to Financial of Accounting may financial executives senior our measures, coca-colacompany.com. Principles. by reported Information These be Accepted in morning's at under results

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

the one Please we questions. call will for prepared Following question. turn remarks, over to yourself limit

have more queue. If the your first, reenter than pressing ask you then and one, please most

me turn the let to over James. call Now,

James Quincey

even our expanding we in can control. to a brands, We by in good a macro faced was line well this everyone. We what backdrop. continue we line XXXX a and dynamic delivered top as for sphere and investing bottom loved the our challenging we on very guidance, year Tim, and did We and Thanks, grew us. on create by morning, amidst focusing of strong environment. executed value part

differently a continues will also and XXXX our then our John ability results confident stage our set well detail. share on to us volatile more uncertain. guidance, deliver we're and to and outlook operating equipped in the which makes Today, and year's XXXX. fourth the that our for in quarter today, discuss our I'll and future be I'll performance XXXX how for reflect

Despite volatility strong. restrictions factors, this relatively pandemic-related and During remains as dynamic inflation, tensions, held geopolitical up currency the fourth and consumer quarter, demand the persisted. mobility well, range industry environment remained our of

we to initiatives in create value on markets In and growth to growth This retain consumers. was across this organic XX% growth maintained across revenue quarter, management fourth and strong focused add to growth delivered agility strategy with quarter, navigate our by and the the remain challenging for consumers driven We pricing environment and operating customers. our segments. revenue and continued actions

than cases in volume saw pandemic-related growth and varying in both the by our we levels value surge in maintained robust the We've volume have quarter COVID more year. China. and gained XXXX. to driven growth the restrictions offset both consolidated across consumption, the of this on business we XXXX, for Overall, the While mobility share throughout for and of the relative Russia many consistent business volume suspension markets, was and by impact

So far, executing year, the last growth and versus we XXXX, plans. on in trends with laser-focused our in growth volume line on XXXX are are

environment. to edge of global the Coca-Cola system any deliver value of brands and stepped-up to the streamlined fuel continue portfolio investments consumer-facing Our competitive in and local

and we structure which strength key on strategy. partners, long-term meaningful for services our strong with network opportunities connected further which organizational functions this And a enables coordination, system. platform our of units, identify well bottling network builds us our Our end-to-end We've top growth. helps for our as aligned this, our operating organization remain on

elements objectives: on of the predict and forecast of and policies, trying many geopolitics. value centricity locally look long-term business health on in pursuing dollar raising we firstly, secondly, momentum; across for to flywheel; line focused shareowners. supply strategic deliver generating for investing winning and excellence globally directions we of our relentless all many continue our are Instead and thirdly, economic our top to the inflation, to consumer remain whether As macro chain, EPS the through things uncertainties to from the demand, XXXX, the US consumer the delivering could growth economy, key bar war move,

capabilities deliver we right continue the in the strengthen build world, to to bar. alignment and dynamic to and a system to the raise continue We invest

We are and to enhanced executing maintaining while of on efficiently global a a local more locally. level examples we harnessing level. saw our flexibility Throughout XXXX, effectively capabilities on many win

working. deeper engagement. Our to optimize We're is and new model linked points driving consumers, drive marketing. them new This ways. in reaching experimenting unique connections occasions marketing to passion with We've and is

our are beverages occasions tying We consumption to experiences. through local consumers engaging and

accounts, launched support the is October. of Coke of Cooking to pilot reopening campaign we in Vietnam, in the example, away-from-home For

of In to that this and back along food deals with food we We than digital partner than more the month-long content resulted Coke campaign food support and used campaign traffic a consumers thousands generator. merchants. combo time The shops. commercial and is created was event these million combo by our in at a shops, for first merchandising to we stores, This purchased digital local creating help Coke with more Cooking XXX asset, influencers. X transactions XX% an uplift as and drive participating social on-ground

locally We're create consumption. immersive leveraging and experiences drive passion to points

Latin in biggest consumers access and created in in live experiences, the festivals For to example, and music in-person our America, metaverse. one through for world, strategy with in streams digital new elevating the Rio, consumer memorable We and Rock content engagement. the live partnered music created opportunities of

reach XX% As inside across XX approximately and consumers a sales region, XXX,XXX to our than the million last increased result, we festival the boosted festival. more the versus attendees from our

year. the where based on World tournament, get the of the and camera scan we India, intelligence through before code the ICC first-party consumers label exclusive strong in Stump during sparkling activation the showed QR and their for influencers. Throughout matches, TXX for results to to Thums Up Up, content contributing period. Thums drove Up campaign send the In on period, XX-day about product on highest year. the to experienced experience favorite match one market with Up Cam for activation fans of growth strong total its India's moments ahead could amplified jump This volume growth Thums also and access India artificial portfolio This wickets. the Cricket we was volume for of of share never Cup installed a the growing total a X/X a Thums seen during activation sports use consumers personalized our data through full cricket to monthly volume

through We using interest are partnerships action power the experiences driving and platforms. across consumer of digital

about we Germany, impressions. voice perception. our positive assistant This devices of on partnered with products assistant-enabled shop and strong online customer brand voice-based and and XX reach branded campaign more only For to consumers voice. using The with voice key example, grow in drive million allowed engagement its experiences created with their results to delivered Coca-Cola learn a

that with experience engaged Additionally, had its XX% rate. a add-to-cart consumers voice-based

is And Aguas lastly, launched product XX-ounce delivering available Frescas. Freestyle offerings. which was cans. we created limited The marketing exciting digital US, launch our fruit noncarbonated Minute new media with end-to-end we're scale fountain three disruptive juices, unexpected to experiment and in as It A to In ready-to-drink insights. flavors. originally innovation and Maid in this and is the quickly real platform leveraging by Gen made momentum, led other Z a comes campaign us early

and repeat the had a Best award the Convenience Store Product New won from rate XX% XXXX, product In News.

good further much ability management by transaction to and to delivered we've done still the revenue variables. growth building execution been in and maximize saw as revenue XXXX many volume much and inflation offset capabilities additional segmenting to progress, years, and strong be There consumers for based is made by have We markets shown and our we of growth. on work our our

and digital to insights and drive to our leveraging drinkers. drive price data-backed better for affordable are will new also It We incidence and growth mix. premiumization propositions This will understand help consumers. to lead basket recruit

both and basket channels For value last example, grew for and year. key key growth We initiatives consumption premiumization incidents Europe. households of into through tapped the share key to execution volume and with higher buying in in across that the Europe, occasions affordability breaks. This in all we meals customers drive end-to-end resulted partnered and

and our better the we better we by for top-tier and We value creating trips create execution households our and XX value Through stepped-up synchronizing for demand system for our shared are creation strong how products at future base. by planet. this million customers. a XX our additional our focus we capabilities, million people, generated getting shopping and demand for added Globally, driving fulfillment, measure are success stakeholders the creation to communities

progress beverages and portfolio sugar we serving. During low- to provide intake. sustainability made XXX in smaller to across consumers to marketing products the package continue XXXX, XX-ounce Approximately manage enable drive no-calorie our have calories choices two-thirds We than of leveraged of our growth power less to and per these our priorities.

being globally packaging, of industry-leading goal On packaging set refillable XXXX. reusable XX% volume new by to our or have a we've

while of continuing reduction HFC and Additionally, system cooler map a make on carbon energy increase science-based with our achieve efficiency use free to our suppliers coolers to to targets, emissions clear creating ambition. progress road and we are the our

part solutions our we Nature our Globally, replenishment leadership by our to program. the annual linking our executives' the solutions. our water continue partners. up PET linking building while doing by to into Conservancy links working further exemplified program measures delivering equity as the diversity by and we're strengthen water We water, and scale water strategy focus incentive nature-based projects to and other XXXX of to strategy, on change inclusion On in results measures security nature-based to incentive resilience. and Overall, and between we investments our using we sustainability with performance stepped work executive embedded packaging and drive long-term are

over system to and Guided purpose, create mindset mindset strong our system our XXXX and our results capabilities objectives. further Finally, and to John, are cultivating of the growth growth efforts our acknowledge that before want to to well collective value positioned our I of it hand our be reflect by I we in on deliver employees. the behind partners investing our

to our know as business, we While the remains uncertainty we page momentum we a have in year. new turn

drive beyond. would can in. XXXX We'll in talk encourage person about return We will CAGNY continue on listen when to all of growth you in expanding and control we to sphere Tuesday the in detail to we to of more and next this what focus

turn that, call the John. I'll With over to

John Murphy

in environment. and to line-led as the as results for we offset X% across broad-based and decline of fourth quarter, top declined operating grew business than In drive were in cases a Russia Unit in organic by the investments dynamic continued James, we morning, most execute strong marketplace in suspension growth markets growth you, the XX%. revenues Thank China. good everyone. We more and the

the Concentrate day X and sales primarily by the quarter, cases for of driven concentrate timing points of were shipments. unit one ahead additional

by and initiatives and actions management with growth of pricing growth channel was Our across price/mix favorable revenue mix. XX% driven along segments operating package

mainly strong driven a year, line was currency the margin Underlying costs. BODYARMOR for the quarter effect backdrop consolidating and mechanical gross down margin points headwinds macro basis gross in year, versus organic was by driven of by business. prior by higher the offset XX Comparable commodity prior growth in goods revenue approximately the the with finished volatile

investments as, This again, driven well We increased line continued currency to retain existing operating new consumers. to the XX top and margin costs underlying accelerate points significantly and operating across quarter. marketing segments. as expanded expansion marketing P&L, across to due margin the growth robust by our headwinds, operating was higher primarily consumers comparable basis engage for Despite

full the headwinds. line currency in and margin with year be cost this despite year acquisition resulted in comparable Importantly, significant operating prior

year pension partially income strong due $X.XX X% higher line $X.XX, of by increase other underlying we interest Therefore, with the comparable This was from to of of impacted the prior versus driven comparable in headwinds. income performance, currency line, net prior EPS resulted offset full quarter EPS by year despite were of currency the by expense, Below higher-than-expected points higher year. with XX lower an cycling last business in year, headwinds. fourth along

flow free the XX% occurred higher-than-anticipated the volatile $X.X environment in decline prior a For payments. versus due of decline face and the to the of our year, cash deliberate buildup a of year. of inventory billion, tax commodity we of versus expectations delivered Much the

benefits capital higher from in cash was prior incentive year by and XXXX. impacted the Additionally, working flow cycling payments

our remains generation we flow agenda. on Even cash make to flow underlying and items, continue progress our these cash with strong,

ahead XXX%, three-year target. Our above our cash average is long-term free flow ratio conversion of

X as net balance remains is XXXX, with strong times. end targeted EBITDA sheet our leverage of of the of range which times Our our X.X X.X below of to debt

few the IRS the in resilience allocation dispute long-term our maintaining plans. and capital the the of of financial years time, the learning remain Our mindful business last continue investing amidst dividend the as from all build with well our same, ongoing is to growth and our how flexibility we are priorities delivering it tax of in important for prioritize shareowners. growth, drive to At we to as remain same

As the dynamic. expect James mentioned, remain to in operating XXXX, we environment

a the health have to in investing key and deliver long-term excellence dollar a growth. portfolio, with business. business; us will continue flexible winning reinvest structure We the confidence of EPS pursuing that generating to system focused strategy, globally, ability adaptable This and on right the for US objectives, very the and we three our the gives locally; the a

With morning, this for that strong builds in XXXX. mind, provided in on XXXX we guidance our that results

X% expect We growth price/mix X% amidst comparable inflationary to And ongoing organic of currency-neutral of by X% per share environment. expect growth X%, led revenue the earnings XXXX. we primarily versus to

we current Based outlook an initial headwind to currency and positions, headwind and on in three comparable four-point earnings to provided environment October, year two comparable to currency hedge approximate currency net an approximate XXXX. three-point to on we volatile. improved, Since the share anticipate our currency has per for remains but rates full revenues our

in rates Based a commodity on goods cost mid-single-digit current hedge impact range sold of XXXX. comparable positions, on the we inflation and of in expect price per-case

for underlying expect to effective be in XXXX. growth share we to comparable earnings expect all to our in, continue And per rate X% $X.XX XXXX. We of tax versus X% XX.X%

approximately We $X.X cash through billion billion flow in free approximately less generate capital $XX.X investments. XXXX in $X.X billion to from in expect cash operations approximately of

million; M&A discrete a operations would transition of million. of $XX.X approximately that $XXX payments various payments the with $XXX XXXX; to of associated included $XXX are highlight increase in approximately transactions I two versus of scheduled billion cash tax like million from items:

allowing free long-term any implied the be the to separate case US process. Recently, our include with these, an within court guidance. to tax would appeals payments a to now ultimately involving The and case our Excluding cash our tax a conversion not in case, flow a dispute us court on our opinion final move tax decision ongoing issued forward guidance This apply render related IRS. will opinion income company. does this our with the

bearing deliver to discussed, As ultimately for have we and appeal, allocation believe we defend expect our and prevail. Overall, in to drive long-term on There capital we a some our on this keep business previously intend claims agenda our will mind our XXXX. don't to to on vigorously considerations position growth. assert are ability

initiatives we moderate from as price expect year. We to year mix through the the prior cycle our pricing

cooling, the inflationary are we inflation, be While appears operating see costs. expecting environment elevated still our to to across

momentum. we We have stepped debt. effective continue up to to rate our marketing investments for expect the last interest ongoing to interest few years support net will see given floating higher rising exposure backdrop expense and the to we our given And of invest rates,

a the XXXX, one there Finally, one first many delivered of be due to in environments. driving in will our less and Having quarter calendar, day results types on the additional day in are in focused strong growth fourth equation top reporting quarter. line-led we

for with guidance people bottling have year. the world, the we we our thanks strong have around great the and deliver alignment to to positioned plans well for the coming have on we are XXXX, incredible partners We the

questions. With we that, are operator, take ready to

Operator

[Operator Lauren question Instructions] from Please Lieberman first from Barclays. go Our ahead. comes

is Your line open.

Lauren Lieberman

X would Thanks. how outlook up relative fourth this line little in and outlook to that Thanks, overall in on just top that and could light the just John's a kind morning. was the just for led you for equation. puts good hoping through of color talk think on more top Great. be I quarter guess X the line you comment, have XXXX put I bit takes great? about of year of growth to a mid-teens kind revenue

James Quincey

Good Yeah, Lauren. morning, sure.

outlook confident year about the top the line. our feel drive to as said, Firstly, from John we

starting connect that me Let XXXX. perhaps to

commented, growth steady know year. continued constant one. that and we see I China accommodate growth the momentum As minus also of you into and of of that, growth, in volume suspension And through a we comment CAGR a you we year, volume a COVID beginning the the if we take three-year would XXXX. the restrictions headline reported pretty has Russia growth momentum saw through including fourth the But of quarter. number the

So innovation, the on we to volume the momentum that achieve of have by accommodate strong see able we for marketing the and affordability the and RGM need been face volume or focus ongoing inflation. premiumization execution the momentum to underlying our in

to And go XXXX. from to part in John through a to beginning of eight as commented, levels inflation full net input out year. XXXX likely some of do costs we both moderating given we were see inflation go likely close we've we and the to PMO sort see of growth is because, last see our moderate as as the as of to the through that's also the revenue likely And course, more we out of to what the price achieving -- because pricing we're QX, begin increases what for what And to obviously, is cycle we're seven beginning moderating, but 'XX year. the we coming own

to growth the out, to then the you get that year, on close out And then organic that logically, eight. average towards when of moderates growth. level revenue And end seven of get the as the a to you looking more rate we normalized

of to we last continue growth to about. talked the the and the that we ultimately. we're the through has business underlying year, good will good, see rate momentum And is I function five of as long-term powering at a what momentum a sort we'll model growth that So, ahead our confident top previously relative level revenue moderating the moderating have to years, think power remain of been going strong years inflation are of line

Lauren Lieberman

Great.

Okay.

apologize. -- Just a that, just on quick clarifying I point

it still case do sales expect So, of a from year volumes second expect, the to volume terms in half want do do or expect? whether growth just volume, of think you you or you you not and in concentrate about still, about standpoint, talk to the unit

James Quincey

Yes.

So last had started year, firstly, with and we unit PMO. growth look, the in good growth with year we long-term case growth, -- the obviously

depend how our whether environment the in dynamics we cases get expect to come growth have a moderate, turns rate, or forward, does out inflation much an we As normal what's growth price/ look pressure on how Exactly of we revenue unit on will does consumer second called under. and mix out, the on basis. the and the half ongoing balance that between the

Our central with trend. the to as remains price/mix talked combined organic executing organic plan. case see focus half, -- view is as moderating, overall will I our we unit in second growth continue about, But the against our

And underpinning obviously, and leveraging the volume. that have, world we by to focus perhaps maintain more our RGM, have packaging to the keep course, and lower the around strategies affordability on the We involves an our some not as extent of on that consumers lower-income as of and support than to innovation. within marketing is price within to strategy volume. just our one a franchise, the pricing which, a the franchise -- But objectives, to in prefer consumers less

is of as to we momentum to happen. what's In we our how see to manage to But the again, revenue. the don't know level drive moderating can the of we're business. growth get business. but the end, going case confident in half play we're going the out, a view unit of scenarios to with continued to are mix this might There central So exactly obviously price second the overall lots

Operator

Dara from comes Morgan go Please Mohsenian question next ahead. from Stanley. Our

Your line is open.

Dara Mohsenian

guys. Hey, morning, good

world if year guess regionally here at the visible the XXXX. started the then just, it, clarification So higher you know of obviously that, detail you James, about around just line higher results delivering and can in, with starting expectations you're bit for do, the less top conceptually in I algorithm, results in despite you in just long-term And world you're little how going a can relative I XXXX delivered guidance QX I a you thinking us quantify a not on It's slip great but take to higher typically theory regionally? a give to secondly, business than us XXXX? externally. than you're on off follow-up than

guess year. far sounded good it like more I so start So a this

confidence I'd given your You have some to of a that, hear you vantage of lot visibility that confidence, of that's and what's the gives point there? Thanks. sort from what love but driving

James Quincey

Sure. a rather I'll We'll question two Dara. than reverse that take two of order, that count in questions. as halves

way me and been a volatility XXXX about is another of agree, tremendous how over because give you thinking of there's uncertainty or the amount good years. four on I play years might five there deal last this But uncertainty Let of out. a

growth over you'd at price/mix four compound to you five of know, around I years and unit or last, annual price. were on rate volume cases up or the look number, with think If and a I take that don't five and on four something two end

got you But say, So number. ride look a the on were and back good crazy in we wow, there. a we've could end,

I so And yes, look something unexpected is at XXXX, happen. to bound so

of have own ability results in circumstances turning growth. into deliver to able sorts adaptable to dollar But and we of that EPS winning our being influence expanded have is want, as our the locally which all our and the US business, face we we been

lot to a of manage confidence. And we the We know a lot what at to but going we've happen, generated and so to of of gives be us. momentum, able agility a that's flexibility don't through know lot going what's come what's do us to

so really future say source confidence rather the entirely. to being than of And holds that's the what able the know we

world, more starting avoid Europe in a consumer rest in softening, different It the much year. perhaps the economies is are recession, that's think various the pressure. greater the likely -- demand playing taking spike inflation. EMEA, continue spike the of clearly, technical the I and to to of And as The is impacts drove around through. look or short-term Europe a we some That's in into in conflict clearly, looks but pieces, like European itself going under

doing well. markets if other a resource the EMEA, And seller, looking you're in at you're

Obviously, under but been If earthquake, situation has pressure already. also the Turkey, you're the resource more pressure. with tragic you're under economy a buyer,

range. They've terms So big hampering in very And full are markets is growth. is Africa important a which a there the South us. energy, similarly, economic Africa, of got to the emerging problem in

So, more EMEA. in there's pressure

US to seems strong. landing. hard momentum moderating to The be business the doing be the top continues well. without in The a line, on got situation We've causing

expect moderate, to As consumption, the the be and continue to we see to to at but pressure beverages, yet, of continues economy the of good. least

Latin America, problems which there's is and high is Asia, on cycle some to flying. like the obviously, have the obviously, positive similarly, the And basis. -- been places a China there's Argentinas to continue of inflation business, to the economic doing out America very be reopening well. world. is of then India for But certainly going Latin the a

expect do ASEAN, as will also well and two we we that back well, for those come do large economies think Japan. up

both comes of zillion So question that then in will inflation. some moderation and growth the the a And down doing soft to the see see. we perfect number or being general acceleration process we of be continued dollar a really a landing, the to bringing always or markets, back continued of hard, but inflation context is well, going

Operator

comes question Please ahead. Bank next Our from Bryan from America. of go Spillane

is line Your open.

Bryan Spillane

operator. Good morning. Thanks,

-- $XXX in related for being sitting you consensus I is for net little for a just net two talked guess terms think know Just -- up of give Can interest. flow interest year to million the I interest expense. cash you bit expense like and us more detail at a John. just I 'XX. in question about

should cash go a in we give could this kind be if it of into then normalize? you. knock on you 'XX. more in and Would down we 'XX, you that, year about within should you more So the kind 'XX, as free expense. where contained is little us this expect terms that interest flow, Thank drivers on going like forward? net we help then normalize And So to just, that of of talked expect

John Murphy

Bryan. Thanks,

buckets. is in Let second performance, world. the key the two underlying operations we'll capital One our for have of start strong have drivers we number we underlying are growth of question. significant support agenda stepping on around investments 'XX, -- top our to me The the a up

And million uptick $XXX to And M&A-related increase related million have the $XXX in so tax and transition that's approximately initiatives. 'XX. a an some then we in

XXXX, hundred be business especially continue transition million tax for year of needs, the transition plans. to in date second capital XXXX. the up last our for as growth business of a we'll XXXX. will in invest providing in it goes the the when that That comes So tax to couple The ends

So you on to gone the variance XXXX. XXXX do that's the math can in from

performance we the growth underlying the have, million we say, in the under support need agenda. to We'll transition invest continue. as expect We business to extra XXXX couple do And million to I'd in hundred tax. a of

and our yeah, with debt regard we've expect into by with go you sorry, couple year. highlighted, And And charges deleverage the I'm through going interest numbers, interest navigate can points expense then interest -- will uptick interest portfolio, as we to to interest, as driven a this but of of current specific -- we see an not in in XXXX primarily expense. we

Operator

Our Steve Deutsche Powers from go next Please Bank. ahead. question comes from

is open. Your line

Steve Powers

maybe James, to back line. morning. top going Yes. you. Hey, Thank the good

how the XXXX, you in For think on it see making premiumization where to those, both opportunity leaning, your growth you some look the to hand, territory. does on hand, competing positive been job investments? while, out that price/mix other both the premiumization efforts And and drive on the as you revenue affordability, value a simultaneous way, I efforts in side? net doing positive a you've a to and efforts optimize more extent along balancing the incremental ends volume in the as on or the at to you in there's is, then guess way the a and up question is side that and that ways, do one prioritize impact affordability I good side,

James Quincey

Absolutely, implementation dynamic And Steve. we engaged also see Thanks, enacted to our beyond frankly, which of whether and, We're returnables, affordability whether packaging opportunity to around different push both as to use world with packaging greater a price of of you markets, they in to they consumers the lower to at-home and to opportunities XXXX we points, right continue the the forward. of options, continue instead lower occasions, income going premiumization. emerging franchises see typically in leverage continuations be whilst Yeah. example, sorts given obviously going brand XXXX keep affordability to whether see then drives, of around use for with packaging larger RGM tend, returnables to pursuing be forward of it's for options. going into across go see, be drives we're the to lot X-liter economics to have capability

tend some And dilutive to of launch. to the of sleek mean our be Jack directly or we anytime within kind and premiumization, and things more they revenue, will given also smaller the out be an packaging see we whether will all margins, premium I ongoing be soon. accretive cans consumer running Coke It brand look be a those brands -- opportunities of into use runway put like the for to and the to that marketplace. for it to the directly don't that cans ongoing effort,

Operator

from Modi Nik ahead. comes Capital Markets. Our next Please question go RBC from

is line Your open.

Nik Modi

affordability wanted I just to packaging. I on everyone. morning -- up Good last Thanks. the all the question just regarding follow James,

how might Just have sizes retail? pack I you're based or it world, getting, of type with mean is on incremental replacing historical phasings lot kind a the are the that more these across work observations sensitivity? older it does

James Quincey

the The convenience both, we're obviously, we're or supermarkets, Obviously, about it stores convenience depends whether we replacement. talking stores And make is talking or Nik. can smaller mom-and-pops. more or about small it mom-and-pops, the it'd more It coolers incremental be racks. own a space, own in those the gain formats the phasings. smaller That does in big whether vaults on increase the be and floor our absolutely with our focus or beverage to coal category even

going just some the nothing wrong them at SKU to more And with I'm saying, and there's for the but But them some us, any take I'm SKUs. put given affordable replace mix not -- also to them works the looking these and, work because and layout in the of It's for to the such there going store the in options got total of for take with in and it make that the customer SKUs already premium better is off more customer going faster everyone works it support with for look, setup these the is to consumer, than in Otherwise, end, implementation. strategies that's because consumer. not works the rotate for because and ultimately, consumer. to going them, the it's for

customer, that versus yes, get a phasings, focusing answer the creates you the coke a cannibalized better for better incremental answer answer mix that for So, by system. them, creates on for better a ultimately, the a of consumer,

Operator

from Our go Goldman comes Sachs. Please from next question Herzog Bonnie ahead.

Your line is open.

Bonnie Herzog

be the plans Good whether reinvestments Thank balance you. will you it have you for us Also, about provide spend everyone. this plans I I last year accelerate? to to morning, have this more much guess, how for and hoping could ultimately flexibility you your Do a marketing how are on also thinking for stepped to versus maybe color up little that was understand, then frame your momentum. trying year. I'm year? you

same letting You're while your business time, Thanks. flow strength the of the certainly at to the some line. with in seeing bottom reinvesting,

James Quincey

going inappropriate act a Yes, allocation to invest to let clearly That's in XXXX either of starting money specific we've the to in bias demonstrated line. sure. that in driving growth towards growth. We're quickly for level, pandemic, we see or it to early else go or countries at point. we that, the ability we the of And redirect sort have any overall demonstrated the bottom the some to somewhere if as our XXXX, and years to, have as is

of to allocation. largely of So in this an way, we're resource going going support with to an achieved business in the we to the bits are We appropriate dynamic our our feel, mentioned, the growing the XXXX all John we very But in to level CapEx agile we depending the to going to marketing. in be have use increase we're the hand as field that's we're increase from of data get where going the all because manage on same CapEx to circumstances. needs Yes, business flow.

the we what answers year in other the that answer will talked -- don't the the hold. to questions know We

speeds growth-orientated, view it's moderation face that be and balances, but in fast of different. a of the and world and central different accommodates price volume it's have of towards we and adaptable the around We will growth, pressures bias the different anything inflation, that a

Operator

Please ahead. comes from question next Our Credit from Suisse. Kaumil go Gajrawala

open. line is Your

Kaumil Gajrawala

increases morning, good and really more Hey, everybody. back you're retailers Can seeing across seeing touch you on on articles CPG. pushing what briefly We're maybe all of retail on from the more price environment?

give sense just you your a us what seeing could you're of categories? maybe If in

James Quincey

has marketing, the pay is of through own mechanical each delivering our the, through towards. RGM, region with strategy sustain up Sure. down in But value because down appreciate value brands earn of idea We kind me driving us that the I need commoditized one pricing see let costs can work, pricing each are of packaging through the mean, in the It's and need as we where the execution country and by consumers place. global to the through kind to our think prices start is business first, not a they input flow price. the that for our different or that we to the way. our which to the right that pricing dynamic just such pursue, a they major central that the break innovation,

the to consumers, flows down ultimately to that And the has it And work because then customers. it the work customers. has then for for

we and the share, our consumers to can year. we I earned share for we've a more growth we other Yes, that with 'Look, was other more we gain to than retailers category, think to is we partners So and the system grow than any in going growth and of year beverage we revenue be going disproportionate think understand the business.' be faster you relative added we're we believe to for price for last demonstrated Europe, to what, to category can we lead -- customer lead say, growth your beverage we're more the because revenue rate where can but led example, Then go categories,' competitive which deliver consumers. last your in the right Europe

on platform year. given the for packaging is which conversations around then in and fold any we the that pricing And

for course, have is growth want we the consumer-centric of pressure and the also in end, yes, believe, marketplace. there's the to in that we too. they drives So because keep customers an But approach the consumers

Operator

Wells Chris from Please next Our from question ahead. comes Fargo Carey Securities. go

is open. Your line

Chris Carey

Hi. morning. Good

package So constraints thereafter. clearly, with equation years recoveries and within past variability channel sharp price/mix the mobility big and had your the in several overall mix have

on that Just you year talking a wondering for what I in about line price-driven next be volume – a year, James and in commentary John's a underlying still guess, whether or price/mix, have another I'm and what's channel will from – what's still normalized, taking about factor, talking those Said just normalized think recoveries more not kind will package growing be forward going mix we're there's way, right? really is offensive base. items of

do on the thoughts channel so grow? relative And that to back what think do contribution from mix? and to you or in you're have Thanks. you package which XXXX, any from to channel And package mix price – normalized base on from is a then

James Quincey

like other dropped of largely and And just of XXXX levels. you some any country, outlets recovered countries. that are normalized, take couple China, I marketplace. a has now in only if firstly, is number clearly, out away-from-home largely the there Yes, like reopening, something are the exceptions US, So have say, of channel a which given when mix there

half, a to than last for going there's terms, to a channel in channel being driver some to I is positive of the relative come. time being the other not – major there's forward. of pandemic piece bit price/mix that mix tail But happen the or we can going a perhaps may or overnight in the happen think effect headline put mix not channel first the on the channel of little a So a line and recovery recovery of

a that can one's Yes, both keeping has the years package one's each affordability as valuable consumers been looking in to continue a taken offset factor, premiumization and strategy but accretive, dilutive, two to dual previous franchise somewhat strategies to will and forward. pursue mix for need we with this Clearly, they're opportunities, be pandemic, in it the as of other, prior

or XXXX as to in So to pricing, is us, SG&A, we and rate to I the increases predominantly, increases inflation commodities XXXX from begins specifically as moderation think inflation cycle what general whether rate or it ongoing price of see in in you're going in both moderate. and be

Operator

HSBC. Please question next ahead. Our Laboy go from comes from Carlos

open. is line Your

Carlos Laboy

parts have and this already of investments DSD adaptable Do view, trade kicking the The fully is morning, drive traditional Latin in capabilities for new where with performance systems and financial promise bottling Good cooperation keep they ROIC growth? think, exploit your system to firm. the bottlers framework this other world stepped-up into you your Yes. stepped-up of CapEx, maybe everyone. in to American the the can model, higher guiding

James Quincey

Yeah.

degree bottling and Let Latin given we're in places. better me the going be, marketplace, out the have framework take of we more relationship we model of our a alignment the off gets in that called, whatever in the geography. number us partners, parts. rolling towards in America, that the we're in intensify investing those And the can any in to opportunities other the capture to The clearly, features long-term

the to to America The same exactly particular years. of focus drive US together is to continue Europe opportunities the going Clearly, really work world. example. nature Latin differs of closer overall on replicated number we the absolutely, to the future the those nature or even see concept investments, to the a But performance So continue investment necessarily not longer a marketplace. that the or Japan, in Latin the of of opportunity -- in as tighter not drive America. for features the structure opportunities trade around opportunities capture has into are the term

top in still all marketplace line system the the there are opportunities trade a I as both from America. because into to customers long think, got with view there we great And collectively Latin along we've investing other the from on plenty and very a into in But of of go and focused time, improving of Latin the a returns. business traditional point America, for the

on opportunities American bottlers, continue the -- Latin that assets. a the lot returns the a bottlers drive or around to and we the as improve collectively, to world will see we that you'll us find find bottling see of -- top to ahead think of I lot So are line everyone

Operator

from Teixeira go Our next ahead. question Andrea comes JPMorgan. from Please

Your line is open.

Andrea Teixeira

the XXXX? you. volumes pricing in mix any how Thank as in from operator, growth X% the carryover is obviously, that you, additional into we think of? but for China price/mix is what will there, it, aware are organic planning what yet? any you be morning. are trade guidance, should about to embedding dynamics and we moderate, X% good benefit James, you is What You said the -- Thank sales or is XXXX? not And the

James Quincey

Yeah.

we're normalized, planning Europe. reopening China for So more become to ala certainly and the US

the clearly, time we there's recovery in will and so as But through the will normal in go then XXXX through XXXX in more And the see we to XXXX. first of the the some China terms as we half growth year come carryover, numbers a from a particularly level or pricing in carryover, in And be on of XXXX. China. taking volume

countries is inflation XX%. well taking I the different. where over is we having there world very mean, said will are pricing, Now be

taken So is multiple obvious an a year. pricing example. Argentina is times

in in more the XXXX be world likely it's the trend more cycles price towards reflect back there we'll both developed standard the of across pricing, markets, but So will to increases in to, inflation will answer, costs. as earn there the XXXX. right pricing, need I talked to in Obviously, be we that the in import and SG&A but continuing previous about pricing

Operator

comes from question Please Rob from Ottenstein next go Evercore. Our ahead.

open. line is Your

Rob Ottenstein

you a year. Great. Thank very congratulations terrific and much on

made significant the last organizational have product changes, years, and your team portfolio. changes over to the you So changes, few James, cultural

and other look helpful any you on longer-term you. the to answer, drive over for initiatives think to that at the where so things strong that perhaps next be Costa, continued or growth As looking new are discuss? set weaved up into you're key you on what Thank and initiatives would to that on BODYARMOR are XXXX, decade

James Quincey

Great. Yes. Rob. of certainly, the CAGNY And Thanks, and unpack more CAGNY at presentation the little a this we conversation. will

do I in full this justice won't question session. So the I'm to sure

a total company marketplace, the of to In in aspiration terms overnight. the of beverage happen being everywhere. we initiatives an have going not That's

establish country total category, the need talked next to so about, in a quality we aspiration. we've to make journey as way our combinations set in of country in And leadership category on the positions, combinations, disciplined to positions, leadership progress preferably different

remains a coffee There's a got there's path, can money It's essential very system execute growing. that that, find BODYARMOR, there we the ones a off ones vision. there. the Costa, same. timing was just are start two out, ourselves the And need for against unfortunate within If It's I Coke of can huge the with, take are the is to vision. getting We've thesis races where and pandemic. there it. in are If market. away. And we to The still tremendous called we lots reality to flying to you a growth the before demonstrate it opportunity behind the

we water. all for experimentation, holds now because, put the COVID years initial despite vision despite despite three on the strategic get the and need essentially, all the cost it that In in the years. in learning, that, to hold We for coming all haven't ramped terms, advanced up steps, demonstrate strategic against big terms, execution the

going would Coke founders I we that forward plan incorporated complementary BODYARMOR there's in move than path prepared of sale business XXXX grown into frankly, short-term. kind I into for or -- good disruption the we year. have some think the and whilst on And some a good the great obviously BODYARMOR, have liked. a company in a We reset job. that has XXXX of will been than we and system, that as we expected level -- expect a way we more in in often But was would think disruption last always by we the Powerade. there to But quickly

looking of launch the encouraging settles. in looking The stand never some we're by the -- really, I very traction execute Coke up at continued It end do on culture continuing see particularly interested year work Early against of which US never Mexico of Other whilst initiatives the March. and interesting think, internal But at And initiatives, be ahead ends. organization, will of very launched. all in of degree alcohol end ever will and of it we've it's the data well. was that the the the Jack last launched to experiments, will about be to expectations. and backed nothing in already up

The North getting coming is The results starting model into promise. We the and a to and is good America in together. show made marketing harm. starting organization running is organization up change but year, coming and few the tweaks to

up seeing years. of our So, the things I question we've a launched the to really it's in through game coming think,

Operator

today ahead. Please, come Charlie Redburn. from Our last Higgs question will go from

line is open. Your

Charlie Higgs

just My like on John. had I just little year. you’re bit still the Is James, expand affordable where it it's point Hi, driven is hope it on India, record looks more price by Could being a maybe both a question you well. final India? strategy? just

is just the long-term on Are growth your sustainable you adding give actually then, distribution color on you that means, Thanks. long us maybe this view over maybe volume term? some And India. could James,

James Quincey

year a and off had India a last year is strong to cracking this year. Yes. start

at backdrop base in overall terms, GDP the Indian development. which of historically, level our the and is, tended industry highest has consumer per that to its the is head, beverage think, economy I -- to approaching, firstly, the a Indian level this accelerate

the beverage very to encouraged a India develop are fantastic And in beverage and so, industry we by opportunity. potential

potential nascent very the India, and industry build a is the many in I over huge of mean, decades. ultimately, development to there's industry

the so, actually question points, it's although they affordable entry driven, price that's not being And a everything. by growing. of Really, are just

the the on It's growing It's of in all in packages. growing number of depth It's dimensions. growing different growing in distribution. terms It's brands. of

think, And line, a is be all potential huge India. straight won't, It in a long in so, I likelihood, India. there's but potential there huge in

of the opportunity the have of of in the India set of markets, very exemplifies market. it XX% world's ASEAN a-third development actually really of way, in the themselves of is Eurasia, they -- Africa, to emerging population. developed a parts the a India, is of long-term And whole beverage parts And industry what

or X commercial the the in which X commercial beverage, in in the only They think of X of whereas developed beverages, ones. -- for XX pay XX in is about XX I

the off. of the keep typifies take industry So think market set long-term potential it's And India beverage growing. to to I a is that

Operator

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

James Quincey

Thank you, operator.

in have partners. So with momentum the in strategies We're our to embedded our summarize, we strong in winning marketplace, sustainability bottling alignment business. our and

revenue for and long-term pursuing building, execution stakeholders. our growth Thank Thank drive value to excellence consumers and brand are We our you. us and in this management company morning. you investment add joining innovation, interest, your retain for in and for your

Operator

conference today's concludes Thank this call. for you participating. Gentlemen,

may disconnect. You now

The Coca-Cola Company (KO) 14 Feb 232022 Q4 Earnings call transcript