KO - Earnings call 2 2023 | The Coca-Cola Company

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Operator

At this time, I'd like to welcome everyone to The Coca-Cola Company's Second Quarter 2023 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 Ms. I Vice Halpern, President and Relations. Investor of Head Robin Ms. now you begin. Halpern, may

Robin Halpern

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

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

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

we remarks, prepared will for call over Following [Operator the Instructions]. turn questions.

the James. turn over I'll to call Now

James Quincey

everyone. Thanks, year, the Robin, and good second quarter. momentum After a continued our we start in the to strong morning,

and of operating aligned combination environments. brands many allowing an win loved strong, is pervasive distribution different us to Our system in

first both guidance our resilience and results we are bottom business, raising Given the today. strong our our and half line top of line

full our provide we our portfolio. highlight on I'll throughout perspective the To categories, and our and our performance and environment. driving discussing across the of Then are give raised you leadership by including results current picture quarter guidance, I'll quality second start performance consumer how business

our then XXXX. revised will quarter long-term why results and for we're confident our And end Finally, for our John our in to on I'll deliver the ability touch by guidance discussing objectives.

were quarter, markets. second play In competing our forces the across macro at

record of On the from chain energy to prices the positive continued many eased, banking pull stability pressures back supply highs. diminished surrounding sector the and concerns side,

we of Despite some was continue However, delivered growth in to tensions in confluence global still inflation revenue this exist XX% this factors, elevated, markets. organic quarter. geopolitical and

improved underlying flat, the the with and delivered consistent strong, was sequentially in since volume have our start, first being gain it we volume XXXX, growth In broadly, June to Volume half of continue we we strongest after we headroom month significant and is our a and share. was that slower both believe industry grow value. our with More performance And XXXX. quarter. to

During share quarter, in away-from-home at-home value we gained both and channels. the

As inflation America inflationary labor In differently we our look is the impacting Europe, strong. business geographies. environment consumers the to and global Western beginning moderate, across North like towards markets second and remain and half, is developed markets

low. elasticities Our continue be to relatively

these However, is certain In moderate the we as categories. switch we to our from They're sale. sector, looking up year. have consumers for on seen and stocking pricing expected largely increasingly items in cycle prior brands on private to in place are label cost-conscious. the and Across initiatives willingness value pricing is some markets, to

many ever provide persistent more propositions, developing customers and incidence the Middle to inflation. and to Africa, premium East to be value with are which In through and markets than more accustomed consumer-centric America, important affordable to growth. partner It's Latin emerging consumers like deliver basket and and

intense markets inflation expanded. However, has with of the number

affordability our pre-pandemic indicators in to continue factors. economic affected revenue specific by to XX% leading top declined. markets market. local be win to take action we levels. annual confidence these and equally recovery growth are with Consumer are, consumer the always, has market Five leverage with of experiencing to currently helps XX the price our currency it's capabilities able pressures. slowed important local a premiumization, management over monitor few In and which quarter, in below the second as China, inflation markets to markets, inflation inflation. There balance offset In is to take And

In temperatures India, in cooler quarter. the by rain was business unfavorably unseasonable and impacted

a our market resilient. world growth to a intact. is wide spectrum In be shifting of consumer needs, business However, dynamics remains currency proving from outlook very the with devaluation inflation to to

We through different and remain growth. pull successfully operating many consumer-centric to to environments. levers manage we have on And focused

Our success is recipe unchanged. for

We strategy deliver growth marketing execution. our excellence and on strong and management in of combination through continue innovation, to a world-class revenue

bar portfolio. We across and are our raising leadership the increasing quality

Starting with Coca-Cola.

our are system. Z leveraging drinkers, gaining and efficiencies drive our to of share base scale We Gen growing our across

meals. was and than and which During consumers Coca-Cola value volume linking Recipe consumption to in for is the through A engaging XX to markets globally brought share by billboards. life experiences. recipe-focused Coca-Cola more great example leveraging by and media quarter, through we occasions local approximately chefs, activated using celebrates local experiences Magic, gained A consuming influencers supported was social and with and The was campaign XXX

local also Coke meals The to and relevance. campaign Coca-Cola strengthen allowed its

approximately in billion X in the XX% has to XX% year channel consumed For past years. #X away-from-home the X incidence over each instance, pizzas Italy, with Coca-Cola grown the with from meal pizza,

While price and drive the affordability continuing premiumization. brand ubiquitous, Coca-Cola we our both architecture and consumption to tailor are to occasions is pack

volume During digits increasing double quarter, per while trip grew the we price second liter. basket per incidence and by

Moving on to flavors. sparkling

FRESCA and drive strong Thums the developed same significant leadership We have further are markets. we across seeing developing to quality brands, headroom across of our which consumers Up. from include Fanta, time, staple and engagement Sprite, At

sponsorship locally brand Legacy and experience awareness we through collaborations our Happens personalized tours, Sprite, Heat a XXth prominent experiences In by celebrated platform. America, of and North granular driving global at connecting with are Hip-Hop's launch concert consumers Sprite the to passion relevant and artists. anniversary levels with Sprite exclusive Lymonade more With and points of

pop Korea, Grammy Gen global similarly program our Z locations. and Limelight local across a strong In China We Sprite using producer music generated for college stars the partnered Festival in WaterBomb with X,XXX Sprite drinkers results. South

the June, In of Sprite most new scan In XXXX packages Bottle brand. by adding heat. was jokes to resilient allowed greatest of to and India, the number beat and promotion receive in localized in households FMCG awarded brand a the Joke any consumers Kantar for WhatsApp through customized

water, sports, to Turning and coffee tea.

capabilities, our offer the segmenting markets are opportunities subcategories the We investments. prioritized and allocation our highest broader and that on resource return refreshed using

We innovation, by speed measuring our are time scaling consumer-centricity real and our edge results in accelerating the building to through successes. market

the Fuze Early Tea through another and build continue of tea limited Zero the vitaminwater excitement rollout example. double promising Sugar Turkey show We in grew of Tea digits for in Europe. expansion green to and is Mexico, velocities offerings summer across edition volume during quarter. Fuze results

quarter, stevia, share value which vitaminwater During America fruit with relaunched and of in gains. North monk the new generated we system zero sweetness a

hydration, sports in within of Flashlyte launch We BODYARMOR with drinks, are subsegment capitalizing I.V. a on FLASH consumer needs the U.S. rapid and the fast-growing Mexico. for in

results. both still during interest early, strong promising demonstrated While saw have and quarter consumer the initial

dairy the plant-based share quarters X Our line quarter. and consecutive juice, both double-digit beverages delivered top during of growth and have value-added and value volume gained

and start We consumers that Simply and experiential and under Simply the the of kicked its which continue trademark. off great drive innovate national with celebrated an mixes tasting to mixology, premiumization rollout. campaign summer the provides ready-to-drink mocktails,

Power drive exceptional a In strong Also, growth. another momentum. fairlife their state-of-the-art million announced Core the to had $XXX we as to production continued build fairlife nutrition plan help May, facility and wave investment a next quarter of both

across are ready-to-drink by encouraged beverages. what alcohol seeing we are we Finally,

to learnings. take through measured exploring We continue and approach a applying our

share of has Lemon-Dou Philippines, the strong promising Jack & the & results. Coke While still shown and Coke delivered Jack combination gains. early, In

choices further The Schweppes beverage transformation examples in start. that occasion. to illustrate our India gives The rollout by off And we how confidence Mojito every portfolio marketing good to coming continue is total deliver a life. also us for our to beverage can these consumers of is providing strength

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We continue toward progress partnerships. packaging to innovation of economy our vision a through and pursue circular for

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navigated directions take, predict trying of consumer-centricity objectives key other the our of U.S. year, raising and outlined guidance words, number which full drive February. could for top and the growth. to relentless momentum; winning on EPS flywheel; dollar we the the we to three, line successfully many business our remain elements focused We one, generating to long-term that supports two, year. and In raise investing of for in pursuing across instead delivering first through the locally excellence all our strategic things our globally half of decision the health And bar

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John Murphy

Thank James, good and morning, everyone. you,

We cases Unit Starting with business were our of flat. line. revenues quarter XX%. the momentum are pleased results. and with the second grew strong We our organic top

primarily to volume the cases said, operating the were was pricing actions hyperinflationary into new with for carryover second along positive last of of slower the year on base James XX% the of quarter X As start unit concentrate for quarter ahead quarter growth across the by a shipments. the Price/mix driven ended some a off from note. for point got sales driven timing by coming but pricing markets. including impact Concentrate segments,

impact quarter. the in margin underlying costs top as was the marketing for bottle offset This increase line as and margin points by approximately well XX operating operations, basis the strong up by by benefit expanded impact the year a XX prior driven expansion gross operating Comparable headwinds. investments bottling driven for primarily higher currency. basis of and partially refranchising an Comparable refranchising, was currency versus points approximately from the offset growth by partially of slight quarter and

This together, million was year-over-year well of headwinds. operational $XXX second tax was currency payment performance approximately Putting all $X attributable as strong partially M&A-related XX% to up cash second by X% that and a underlying largely despite was year-to-date. EPS higher-than-expected Free transition flow working offset quarter quarter during $X.XX made billion the a benefits, comparable was payments. capital it as

net sheet debt leverage is Our and X.Xx our to of below X strong, is range our EBITDA of targeted X.Xx. balance

growth. long-term invest drive same, and Our capital allocation remain priorities to continue we to the

seeing James what are are mentioned, we we encouraged the marketplace. As in by

strategic we demonstrated line-led our faster our by as While our spin cost margin to offsetting gross of record headwinds track also sustain progressed have steady continue consistent growth, on top margins. generate flywheel agenda to we to

available levers top line spend our effectiveness drive improve long of have the We over growth efficiency to the numerous and term. and

guidance. in our visibility the quality us create to plans with continue to across to coupled strategy, XXXX all-weather good our Our deliver leadership on great give place we that raised have portfolio,

of comprised revenue is to price/mix. positive continuing to a growth considerations few volume which of X% led This includes in while are organic be to growth by X% mind. There keep

developed the aim in the markets emerging In with from through inflation. cycle pricing markets, we price take initiatives expect as year pricing developing moderate We market we prior local and to year. to

earnings currency share of comparable year in the X by X-point that drive frequently X- markets currency-neutral We positions, difficult we updating of elevated quarter. per net currency hedge be and on it headwind inflation our as share hedge the an Based the to current to X% growth now revenues earnings expect outlook calendar, To to intense exposure. headwind price/mix, X-point in our and is XXXX. our to oftentimes to comfortable currency Due X- comparable for is rates will offset XX%. additional our full day fourth extent impact approximate approximate reporting to there per to an are

rates. rolling cost XXXX. rates be in freight basket to compared favorable impact positions, Inflationary on rates of And expect to current we that pressures commodities said, are That are like beginning some ways, we'll sugar inflation that range sold juice on several of last in and favorable hedges remain the moderate hedge in to have our less we Based goods that and including comparable in off commodity are continue prevalent price year. elevated. some per case to mid-single-digit a

underlying updated is XX.X%. tax Our for now effective rate XXXX

updating we growth share are earnings comparable in, versus $X.XX in All XXXX. of X% to per X%

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

our the made exclude payments with flow long-term various related ongoing with our implied in second within cash would does to and our dispute associated U.S. the payments transition This conversion If guidance transactions, any income free include not tax M&A quarter IRS. be payments the you guidance. tax

raising emphasizes we do the ongoing year, tremendous culture As the of of to that we enter build we Thanks a bar in half how the the aspect continue second business. to every world, the ability employees for commitment long system on the of our stakeholders guidance our our to we XXXX term. deliver in and value for confident our over drive are around

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

Operator

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

Bryan Spillane

into I half the back macro thinking is James and the can maybe have talk question of environment today X% about operating guess, in the guess conditions look a just implied half the sales, looking year? at at which, guidance, the just a organic of to in bit about the you were the and you or versus year of year. little Maybe are John, of kind sales the what -- back how the I start we of just kind the the I X% the range as organic

these an in of year or a of bit a versus of organic the price volume, at of the relative terms what markets -- is the to the little the there's back in half And of hyperinflation more given year? start you thinking issue, where where again sales comp were driver is of countries more that kind

James Quincey

a unpack me and let Yes. that little try Well, bit.

had answer little headline where the above in pricing a is more we principally think short of more is little countries expected of inflation answer. that QX persistent. and around downhill XX% the of the part basket the a I beginning in and year, at That's the high, the there's than

the talked real the of the time. about on RGM, the X% equal price All look, upping roughly split obviously and version a the volume commercial that intent again, focus the on algorithm. the basis. good, CAGNY, bar the execution a strategy line-led is, the be marketing, And that upping longer in we're The bar strategies we've on over and And talked to with would consistently normal X% marketplace. answer delivering about we've strong historically executing top times, -- in growth on between that of

consistent in the of the so CAGR which running expecting half, what first year, be is you're And XXXX, the is half in end note, I second we trend, way in important was the last if on we're a seeing what is year. think versus back which the it similar to you half to the a to did with in volume like,

the growth whether prior similar very 'XX. the So And we second we're year or see sustained XXXX. in first out coming looking half, positive you're to for to volume half volume of growth a in comparing way to

to growing So going second a see impact Then strategic to we buckets want reasons. base business that we're appropriate half happen of of X is the consumer for in the all the going is right, revenue what's price/mix. to

to numbers bucket year. of The last going But the there X was that prior from logically, that is more of a Obviously, carryover pricing end first cost the inflation set of year. tend is by to is December.

we that go QX. down so as step to going through and And is QX

So to down. bucket step going That's one, carryover.

that we've the in large relative countries, -- number far increases and are of price of year, year taken terms made leaving is in this a both much terms more inflation like timing, look of price year level normal of increases price what so two increases. Bucket this we've aside

So we... [Technical Difficulty]

Operator

gentlemen, Ladies experiencing technical are line. on Please and the stay difficulties. we

James Quincey

did my Operator, answer? cut When you I on when stop? the know do line

Operator

not, Unfortunately sir.

Barclays. Our from next Lauren Lieberman will from come question

James Quincey

apologies Apologies to to up I everyone I back logic, trickiness. something let I'm question. a in just just if Operator, technical going to I'm finish there's said, gap if me the up. just again. apologies. going was repeating back other And the for the and

X buckets. the year factors, talked about Pricing, to down is stepping of of prior which or half, obviously we year X quarter. the first by second piece pricing carryover, half bigger X The talking similar the of through is towards fourth the XXXX. the I volume you think the whether end

higher the that with rate pricing of the the normal the that's rest coming of pricing already level we through of in piece, see, place new The at year. continues second 'XX kind the PMO at inflation bucket and for would then same the Obviously, those around countries headwind. in that a consistent was the quarter more comes ForEx And which this is and And in third very more being earlier, then expected. X/X there a a of from on moment, the I second in half. as kind little said than obviously we had that happening of what's of little about previously inflationary it's back countries

the will are the that moderate and moderate uncertain. of balance of in likewise year We those half some in it's inflation ForEx, in rates the assuming although second very the

happens, top that's about the we'll but our think good half. So strategy the what of of to second growth to basically effect how the in composition have see line delivering

Operator

from Our Lauren next Lieberman question Barclays. comes from

Lauren Lieberman

like crackly you Great. hear Can my now. line's me That's okay? Because got okay.

James Quincey

Yes, we Lauren. got you,

Lauren Lieberman

Cool.

Costa and Okay. light profit actually coffee definitely this the on, pools about ask overall a I prepared identification in morning to U.K. not resource bit out key called the the release with in of little remarks in but in wanted mentioned model and allocation strength press and particular so of the

So we to says think numbers would the in come made out particular you've heard get are -- strategy kind different the specific to ] through different Costa is by allocation on overall I of called are or question in release adjustments that geography broad on or tweaks the that fitting by mobility, performance? about recovery bottlers. in with be to then If U.K. And differences [ category beginning as Should COVID thought because the process models? emphasis this we've on their they coffee how guess resource

James Quincey

Sure, Yes. Lauren.

to that, the way The including growth. far all Let more is terms of placements so Express of year. this do stages I it machines of reverse numerically in said in than recovery the QX, continued COVID and have think, expand through numbers me Having order. new

BXB business, been and still kind retail strong U.K. Express store The play of still are gaining more -- a much about growing, -- is the the So strong, recovery, has the share. business remains headroom numbers bit. on in the mobility to on a And and perhaps drive of how U.K. the plenty we completing forward, going growth and gained have little market. we're obviously, share focused see

China. would ready-to-drink more in you stores on But a Internationally into -- down it characterize a if the more break than different on buckets. bias of recovery and on The biased new. speaking, just I -- new Express couple of year-to-date ready-to-drink there's the bucket, we've -- in on complementing good to of And in a launches We Georgia Japan both Costa some pretty of Japan case start Japan progress good Georgia. with Costa. progress in made some good and growing made the actually year had

So strategy in the still kind that's and coffee good, market most of a coffee us. ready-to-drink important ready-to-drink for the full looking

find feet call U.S., expansion. of And in then I'd see at Express and the of getting BXB, the serving, so machines terms of in with the mix most some And which that kind its with in starting of is bottling out there the as providing geographic starting along front those program of the and beans, partners kind to are to a we're ones -- traction the the as too. Europe --

Operator

Our next question comes from Dara Mohsenian from Morgan Stanley.

Dara Mohsenian

So Bryan's just I on question. half to follow up wanted back

given half. the June factors environment Or the I'm necessarily engendering to around second this sounds a you and line? other mention call more just in did trying Is post it internally volatility? the the June start the top obviously, performance, to there that strength conceptually, is confidence additional on that. like volume continuing and stronger there? you're are April then asking in call. inflationary mentioned the volume prudence, I'm And weaker not reason consumer Is that You QX understand just guiding

of your change that QX? as QX? just full organic you the some we guidance that some for organic half at sales question, range the growth in from Did maybe think that full growth part it of all And upside expectations Was upside raise? year as guidance about year back sales was within

James Quincey

solid the in the softly. started end anticipated we second quarter, in kind in -- get was month might of of June had of growth. call, and those a good quarter, as normalized the question question. towards the you had Look, the things Dara, think April I the But one previous clearly, for then prize

think of concentrate the given some months rains way will because it easier month. think and But bad to take developed April any half the months. in Look, is happened always have I to some some to about bad the good that countries price first happen going you're increases in and on whole India. always

to what I bad first the I a second in the in XXXX. June back compare middling what confidence rate combination half, we're the is in its XXXX a good, growth the of just growth if expecting question and is sort the of half half, us January similar whether months, to to is, think year of gives of with or you rate saying what

think But in think we've pricing we think through be got so We substantive run don't through the We this in to a set that pricing momentum markets, up the the we taken And foresee the be needed in there. 'XX. to is in downhill. new well the going second half. developed is

quarter, it the uncertainty is And called on second up, why Bryan more the in so in answer We full these confident out which for year, going obviously, flow other we're a as I first through. guess really through. flow around the up, good clearly versus taking concentrated marketplaces. few -- obviously our there's inflationary quarter. that of is some We consensus. outlook A Guidance there's had better I some with factor a feel that

that's calls, of that think any there's the nature by ups the Otherwise, relative or to timing sit where our we've factors take on as distracted flow-through final previous And multi-quarter or and average in EPS. can about. And you or kind on something quarter. about supply the get always too a good in in sales, Obviously, think think the always given to to we downs the business of some talked way thinking given volume relative performance I of to it's QX. pricing we even the chain I

have will feel half. to always great but some think plan There strategy and we confident the we be takes, going execute up. a a In we great the puts we're of year. the about the for rest second and So guidance,

Operator

Bonnie Our Sachs. Goldman next question Herzog from comes from

Bonnie Herzog

these margins, All more that right. Asia on a are bit still just couple a some which little I And the And region. quarter. you touched James, these in your pressures, you the key some op could about how pressured year the we color but to this of operating facing of through were again think guess result, I headwinds have of Pacific then any of And on implemented initiatives margins as a pressures? markets had then, trending remainder might share should hoping mitigate your in a the you question on region?

James Quincey

Sure.

is noting on a Asia It happened depressed at level. that I excellent Asia that has As what demand have was it when of the business of some of for worth were the those margin Pacific, there basis QX. are was businesses strong a that a China X that unit in some China in a QX by of there. -- specific operating and there structural timing is significant kind what the margin. India. of specifically which that good mean And just Pacific And some at happened that seen atypical very -- juice an we piece factors a region business kind we headwind relates Asia sort and obviously to the is big There that the destocking Japan, And to in were Pacific. a is there's operating set in in things

been extended kind period and sell Japan. nature compensate of have negative the China, But fast-growing how the And fast Southeast relative then -- of markets, a for an of set some Pacific in points and i.e., In to to of Asian China lower up that's emerging they than reporting And geographic and Japan, the mix India, of Asia effect emerging they cases you developing make mix feature grow they given segment. time. to have to Asia effect their words, other a profile, a create X-point-something concentrates the India price to Pacific that are countries.

always headwind there. structural is slightly of kind that So

Obviously, our offset execution through marketing, headwind. to strategies, we our RGM way objective and is our and the try invest that

look certain you when XXXX. it -- time, whilst and if up a the stability you'll fluctuates So back see example, of at versus kind margin had down, that for over the look, XXXX you has

a the I over-rotate not some also point quarter I likely close saying grow all own to time that margin issues. operating the is its so But this where to don't region structural in of the of seen on case out Pacific, And because mix X effect. by given Asia the would is of

income X that equation. segment levers we total end that top bit at total each little for when company level, the of puzzle to of expansion within we so revenue hit at to of, overall seen using operating in of at But a piece it aggregate as of manage a the X of we've margin with about, is that the part the portfolio, it obviously looking role the the our enterprise. And strategy understand as talked the

Operator

comes question Deutsche from Powers Bank. from next Our Steve

Stephen Robert Powers

broader were line the to talking pick I James, in what Actually, want the to about I but want up just quarter, expectations, flow obviously In external was first total through exceptionally squeeze and expected, context. on, more strong the North America, you in top company X topics, to relative than was bit history. margin leverage regions a SG&A the think where we relative like I But strong. saw margin to was especially in

just the top of in half. managing expansion then terms also there think cost is timing? we maybe opportunities longer term? be that of of algo, maybe quarter is the matter growth of broadly, just curious But continued balance more the in a back you line-led think versus about I'm context as about how more Or what about the line thinking should efficiency top in to margin your more we So see

back I a I could, I also, quarter I asked question dynamics. last John, on just below-the-line to to loop if want

below-the-line You about so talking the on. interest came into expense year deleverage, and

especially quarter, with this lower again the that rate. seen haven't We tax

has if factored the changed So the if raise? that in that just full and curious year I'm to in year guidance full

John Murphy

And our me overseas equity fairly we In straightforward. and piece both first. from that the year, be was had start cases income ahead benefited year. from X either those of cash, as we of earned in the the the of let we what of strong. when expect second at quarter, the Steve, the guided interest on from don't half second assumed take higher It's we I which to

think modest, do have your year the of second not in of bit I year. of the little half for we'll but in the So a consideration the significant variable a deleverage second half

James Quincey

just Yes. in number Back on Obviously, America, are North Again, results talked margin margin. the of question. line side a second in the margin kind America strong on bit of in at-home element for we in in in timing away-from-home Pacific. very factors as North a of North the fluid American the was marketplace. the much the came the way, the is structure rate including, -- the bit of the growth there U.K. in case [ what flip faster like ] top to of a it example, and quarter a about a North than Asia flatter America, that Costa the the

And versus should way, the play in of COVID. as, recovery seen be a obviously, accretive. completing That that's more margin the

cetera, theme the the reopening et of completion parks, So of cafes, cetera. et restaurants,

other a flatters of like, BODYARMOR impact And term. short cetera. so if integration, number income that, operating that things timings you There's that in mix, the et the channel of

to importantly any quarter. way most the firstly, overall going to not think the and by I is, margin X over-rotate forward on think about company segment for

accrue we not and actually number of items that are what the quarter. expenses on that a happened in the of basis curve, sales Remember just items deduction there

take a at why quarters is I'm And on that timing let's in that's very and feature. a to So row relative history. X look strong

see going top in Pacific then line company the the sticking what growth whether which is more that, our drive overall, to us or the to North you're to leverage look margin, the do to the bit operating Asia from they or efficient is you or importantly, a strategy, when get And for which in be and increments moderate there. strategies we and resources, allocate of so not modest whether effective of to by operating are marketing or we just that little deliver expenses America

a strategies But of in little RGM itself also inherently the is margin. more gross creating a the design the that and portfolio sales have component

to and try deliver. levers the So we all use

over new they is our radical And line these small expansion. take are, features increments idea deliveries operating If model top happening. so don't sign big or something of and with the are business under of as and growth they of segments margin overall a

Operator

Evercore. Ottenstein from comes next from question Our Rob

Robert Ottenstein

James, Recently, of about a the interesting I'd lot the there's like developments system. some been from bottlers. talk of global to

had You CCH buy Finlandia.

You've bottlers, lot developing. your of that had talk in a platforms and they're about elsewhere BXB Latin particularly America

products And Are And that are so about revenue, focused sharing the for the models, sure drive my that Company? thinking question is, you on these there most earnings do Coca-Cola you developments? models? how make The those value bottlers stay how new

James Quincey

Sure.

actually, me Atlanta. start Let headlining we we've a come last just by bottler global meeting in just off -- week, had

and important of on meeting alignment on clear ability and but that with week needs we since the collective of investing I what's collectively. it's I years interest in our last system. Atlanta, it majority we XX-plus driven the in been meeting very individually biggest was bottlers to and drive a Atlanta and and had this think Coke And overall what in business will had we be think our what should the in level it in

happen back So on opportunities be guys degree, business, them it us On but all to and actually, the a go very needs well, that things forward. necessarily enthusiasm the is the of ahead on, drive of just that the high will ownership one alignment now in reflected bottlers you those. of around you world. are of are that done, from think, get there you've the collective as projectable CCH business distribution and the the case are on around and I not and relevant some think clearly, the and what to of important of all that an not Finlandia, obey And the a I our is world talk to specifics, got basket, set there dynamics around that and local

developing have are bottlers' retailers. The importantly, individually We've nicely testing with exploring principal and and BXB collectively countries. of progressed business BXB platforms, the the the been very with platforms of Latin in feature the America, and objective most relationships the system which multiple enhancing and a other in

almost or but about enhance enhance an To the relationship longer be relationship, get already to we the modern Coke electronic put no to a anyway. the to here a talking sales it to order on is to talking fragmented that about the to a XX/X can of cooler, of to We're fragmented platforms make rep that's And opportunity trade system to delivered. it hostage some because we're visit add already ask new order product, largely customers as service the extent that a to make with the umbrellas is to the to relationship, channel to set XX we call, majority trade. up for and compliment, the million the visit a

how out. want the have And that an those in when versus not we the also available, There's yet BXB -- it, sales. platforms in improvement, certainly but the relationship rolled to are is where clearly just you how not they're doing evaluated where it's however measure customers

also in on thought on and to try drives experiment I what a in of And marketplace. of the last take there and be the think willingness the should there's the as value edge is So lot going the it you the system. examples front of system

Operator

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

Christopher Carey

these You be that you for perhaps the made this, on geographically markets. developments seeing label specifically that in where and the in looking be category some and markets, Can happening comment respond certain ahead? a sorts playbook you're expand deploying switching to these you'll actions on by of just private to you'd

the playbook markets inflationary bit to some potential developments a have your are levers. going how of forward. able a of some more bit think to any these quite in whether about these where you ingredients these you context a that And I'm ask to of, risk inflation on price in and be hear seem of see different lot And to a clearly, your just that still do responding against I with thoughts happening being and Obviously, you curious to specifically.

James Quincey

Sure.

extent Europe, a the feature U.S. So switching firstly principally in to in also private label some and then is

on brands a it. two, brands highly B Latin define view, U.S. America effect; label, any related brands, the specifically to to strength number or in number you one, of specific see on in in But to depending it's, effect. might you you how price very category. include that's were a And If some private our and want European of that the also

affordable terms to to what something rather and whether adapt be inflationary of U.S. RGM whether the in than opportunity, and more happening refillables, strategy. in is, that packs, continue do that top need when strategy it become and strategy see remains an beverages, affordable water Yes, in tested of of and you juices soft in keep less we applied, but get our featuring course, the consumption or -- for affordability, we and continuing marketing to drinks certainly in we a executing in it of So America, to anchor colas. is The an but small in that relevant evolve example, packs be to learned and need make strategies number on years of Latin the terms a and the premiumization marketplace to Europe well for now has environments, in consumers brands has on been

out that's we playbook in in do we both are an And marketplaces. marketplaces things and affordability and we a both And have that executing have those can more to rolling in anchor premiumization.

a through, is that, or and inflation it of sugar to coming gets, local where to -- The follow you're do some markets. more it the of likely As inflation. way, the most price in obviously, we corn a it affects markets the in the juice the COGS inflation. different relates syrup, you're going be for and of whether inflation is higher set inflation just And

is goes markets. risk risk of the appears is on so volume group not select as But actually for it not the side. The following really up. this a And there

more the for the year, manageable we but good, it's of if the back the we we If inflation, manageable. were in of So think that to bucket half would err in inflation it think it's be were less to err a towards things.

the relates pricing long-term to it packaging we kind from inflation, they to relationships of hedging smooth a input makes company have much they it point some -- don't that and long-term avoid providers most relative very then as total of those view. costs, manageable And but allow with programs, more which us it to and of

Operator

Our comes Filippo next question Falorni from Citi. from

Filippo Falorni

more will you the talk Beverages color to specifically you're with experimenting, your like Can or great. in areas other of about subcategories Tree particularly you're the bit know be subsidiary? innovation, And new expand but just within strategy any looking terms plans where guys alcohol I on a broadly, future any Red alcohol?

James Quincey

and it's It in alcohol second Red band. the engage a to more distribute vehicle that in us isn't than working we're Look, and up is to change with with that some big in technicality better Filippo. U.S. Tree platform terms not allows Thanks, allows Yes. of separation a entity quarter It us in a stood U.S. step. a the the the coordinating a the new of non-alcohol and the better partners versus the strategy, we the in of influencing marketing

an model things and the thing. more it's a different we want to optimization than So how of rather execute

progress, Spiked there Peach the great, in nicely runs nice got about, some it's really it results, CAGNY, talked Jack And I the and look, of a I And in then terms Simply on that's U.S. has are in think U.S. & very still board. the lots including performing of business. of as small part the is was promising Coke

Philippines XX% head got of to If the category. you drink, really alcoholic Jack a RTD to want well & look and is bright Lemon-Dou, over and an can for Coke spot, the you which share lemon

All of learnings. and as to of measured encouraging we and this our kind is learn take very continue this to approach a to apply

process But that taken needs company, steps that we're not still in driving we have the with we're place, belief the business, next towards. it that far, we just of for Coke this pleased the certainly, of be so can take. to material about All are and a and what's encouraged nice to generate

Operator

from Andrea from next question Teixeira JPMorgan. comes Our

Andrea Teixeira

I happening ex think be should EMEA the And EMEA softer understand commentary we was in in forward? thinking going your X.X% Russia. quarter. about remarkable. which commentary, math your is Russia? I our appreciate how And for a And bit said, think actually I total that X-year and James, obviously CAGR, if correct, I company, unit is volumes is it's case on what That your on

a be thinking to out related of the Europe, of but percentage you about since against Europe is only not that the about big of commented that, home, globally? June, very on-premise and off-premise strong -- home, was And we U.S. Europe performance of comments out should how the is on

James Quincey

process all the trying questions. I'm to

beaten, you've think Dara. that I was

I Dara. beaten bit Yes. softer. a was think you've EMEA

EMEA, half. second on are think to EMEA we I expecting in we're was -- so EMEA, -- positive even the though be on it

But there Europe we a second Russia. Russia from effect Europe so ex from so -- And was in actually, quarter. the good ramp pretty withdrawal the in shape, was

you Europe the Russia positive. half, take first If was ex

will numbers now the that the of actually base Europe half good in feeling out that and EMEA in are shape. we be dropped second it's So

out couple is a Russia. of the But first which like hyperinflationary got Pakistan, you is the and where Europe get a is, Turkey if has EMEA the had concentrate other EMEA half actually, impact, Obviously, you volume so countries which Russia Europe, in take effects. like biggest could if positive

those I deep the of the want go hole, Zimbabwe and down and into Pakistan and Turkey as the feeling to that is And And trade-off a couple particularly we're good think as countries, question well. go so really rabbit half. about Europe we pricing volume in second between for the

U.S. the on away-from-home half. the in the which just of about the Yes. was basically our was question, which versus at-home. next part strength first It Now wasn't June, the

end You've And to think we're it recovery. out-of-home the back seeing I is the about the the in way the of that's seen growing ahead at-home and of the think recovery away-from-home. the

point Europe, transactions are from faster tends to in ahead than smaller which of packages fact, globally, mathematical growing in view. of were Similarly, bigger a volume, packages imply

new we a a little a consumption, well. bit I see post-COVID. a large as of package should small trend, or more consumption the renormalization on-premise there's which kind don't as So consumption as this last package the But feature, helps than secular of more little global more

Operator

Peter come from will UBS. from Grom final question Our today

Peter Grom

these I following just curious evolving would consumers down be follow-ups. response question, Chris' you shift like how quick North developed particularly to seek to? doesn't that's just on to in some wanted given but affordability. expect sound just X Andrea's a changes expect, alluded markets, just the promotional you any be And mix just It from on just improving One, channel as environment, sure. value strength then you maybe up around in James, that question away-from-home So trade more America? see Do and particularly of the in your you

James Quincey

We see and the U.S. environment promotional pretty rational. pricing as

be prior U.S., a a levels place to set promo to strategies very balance years are basically, in more in the our similar includes first have promotion of We premiumization, little affordability not which affordability and have volume up. as think a step the the of plays premiumization to able second try strategies did U.S. and we And to in But balance the and and the continue regular quarter. than value quarter we we that share to right in and gain as

value So volume we of the and us mix roughly think we the strategy push affordability And -- continue and our for right mix the got promo because going of right works the the environment play. we've to is share. to think gain premiumization obviously, we're price. and We And rational.

inflationary feature then that. a or mix do in don't or principal think kind the markets it's we'll of developing think the we think And what see I I channel -- renormalization is recessionary post-COVID. question,

margin -- on were and shift kind the with discussion to big is mix. another renormalization major years channel had of of of price/mix largely now mix played of I feature ago, years be ages we expect been the saying, think seen way to it's just That quarters we've seems structure, has how what in the the and lockdowns. channels out, an a channel come. about don't which We prior impact a over talked in

Operator

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

James Quincey

you, operator. Thank Yes.

to quickly just summarize. So

I Second quarter have the the demonstrate results, momentum we marketplace. think, in

deliver maintaining in while navigating for joining our us interest, markets to are of in our flexibility in 'XX global longer-term the morning. company our your on dynamics and confident and your objectives. a and investment local level. We're We for Thanks set broad guidance our this driving a scale at ability

Operator

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

disconnect. now You may

The Coca-Cola Company (KO) 26 Jul 232023 Q2 Earnings call transcript