KO - Earnings call 4 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 Fourth 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 Investor Robin may Relations. like and Vice now now of Head Mrs. would introduce Halpern, Mrs. President begin. I Halpern, you

Robin Halpern

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

as financial accepted in to Investors certain that principles. be referred section financial posted non-GAAP our company We've measures generally information schedules of morning reported to results this under accounting reconcile the under website. These may

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

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

your we James. questions. Instructions] remarks, over the Now turn prepared will I call [Operator will Following to take

James Quincey

In good long while business positioning and our morning, Robin, Thanks, we everyone. goals near-term achieved also the our for XXXX, term.

X% share us guidance. confidence our can comparable winning gives scale which Our leveraging all-weather on our locally, deliver earnings globally are greater-than-expected strategy growth X% that headwinds. we per delivered and Today, currency XXXX despite we

talk consumer I'll how are discuss our landscape, strategy our guidance. This the and highlight XXXX effective capabilities morning, more making and finally, then enhanced agile a John will about our us and I'll And global organization. financial results

provide and invest packages year. positive in from for conflict. by attract of which we performance many markets, We across brands benefited growth, retain organic to quarter, and strong Throughout, continue and geopolitical growth more XX% the revenue volume inflation points included portfolio elevated continuing the a impacted trend drinkers. During right others tensions some delivered the of our were business of to our to we volume X by however, and

across on full of industry We effectively and for capitalizing a drove in these number navigating quarter markets. share headwinds delivered results our achieved gains value and tailwinds the the year. growth We by and

we Japan During Australia, demand Latin quarter, strong saw consumer across India, America, the Korea. South and

spending Europe, holding in environment consumer East, China, have behavior shifts business. cost In in in the aggregate in North conscious. well. had And And resulted an up consumer have uncertain. some remain Middle is the remains America, that impact on in tensions In Africa macro and consumers our

factor important evolving are markets. pressures, is our across offerings or architecture To of our capabilities highlight our tailor Another pack keep franchise, management in needs. consumers to leveraging the are which inflationary and most we revenue price consumers' meet moderating growth to to our stabilizing

Europe, inflation in share won affordability the inflation and North our consumer Throughout impact both XXXX, value. increased offerings regions. moderating, America is cumulative certain we of volume and segments and while are In is who pressuring seeking value

X% we volume and world are Latin fourth business. inflation household America, There and the few dynamic and experiencing during double-digit quarter, will grew basket John In increased impacting our this speak of is to incidence. the that later how hyperinflation. a penetration are despite pockets

gain then to want and did model advantage franchise an hyperinflationary operating However, mention I local the through to allows our us navigate term. over long that environments

organization TV-centric agility our is we of that and of part the our next scale marketing important intimacy, a transformation. improving flexibility. every recruit how continue local to generation and operate. model has prioritize a An of balances Across marketing our business, aspect to this from shifted focus To we on drinkers, digital-first

gone in less approximately Our than media digital XXXX of from has to total our mix XX% spend. XX%

TV and standardize data digital and this the integrate that ecosystem took stood up brings are social hubs by to operating In our together. ad. units, create previous connected global created network Studio model, and X, media, now We step it all a capabilities. our each of our operating we structure. months scale, physical change technology production in Creative, XXXX, In our capabilities disciplines, at to several

these and thousands relevant of real of are results that producing we're content contextually digital pieces Now time. in measuring

Studio X tangible is driving results.

For been scaled markets. real views uses portals this our example, campaign XX into The experiences, Z X.X Coke music Studio, magic billion million more to which in strong has digital for consumers' have music Pakistan packaging as top resulting and Gen XXX originated of than generated to year, in taps drinkers. access and which YouTube passion streams recruitment

$X Gen Consult engaging by billion. the Fast Sprite In tenth year. by U.S., valuable for the with the We up XXXX, XX world, now Kantar, the and brand top value Company. as differently innovative results. and was is according delivering companies were most X brand Coke the spots of augmented reality consumers We're brand in to #X drinkers. Coca-Cola prior is X from the beverage In Z virtual Morning named in named increased also

from of example and To packaging our driving innovation is grew is superior Our mid-single-digit that great. across Taste volume agenda equipment. and and multiyear increasing advantage taste drive portfolio. those our how our demand, beverage gains. share our across drinks superiority point. delivering competitive taste XXXX, Simply drives X% total taste put, products, people want selling reformulations the volume superiority with in bolder capabilities taste tap build unique to in and sparkling overall and insights success innovations. Coca-Cola XX continued sparkling elsewhere share XXXX, and continuing and markets, create we processing Fanta In we're flavors We're Sprite aroma applying markets tools, driving in growth to that successful more gains. AI Sugar launched ongoing to an Zero digital value value applying and We're in this volume to in learnings leading science. portfolio, technology into ingredient is

profiles, sparkling flavor categories. new expanding we're dialing Outside functional into up of adding benefits our portfolio, and

generated among broader volume In Its interest we've from dairy grew XXXX, to In core In without offer to customer across compromising gains. plan XXXX levels. Coffee, high and growth innovation have to rates Fuze profit led U.S., Tea Japan, Flashlyte the fairlife results Europe, ninth nutrition taste. promising of many Jack which in relaunched others. share in continued contributed and of Coke In seeing power Georgia gross value volume and approximately nearly also year compared We're XXXX, success fairlife's tripled & growth. Mexico, the our protein consecutive double-digit X%. XX% Philippines,

and customers. becoming points, and a value significant management demonstrated our revenue expansion right to Our for execution as opportunity in growth customers. ability deliver capabilities more inflationary growth by working and beverage our bottling consumers more price total to to transaction volume every advantages offering create packages we're capture the consumers right driving and and with We're distinct the category continue be available to to ongoing pressures. portfolio at despite relevant By partners

America, distribution and to packaging more across In evolving drive we're options North affordability points premiumization.

can increased On X.XX-liter supermarkets, in by PET bottles points the are during available XX distribution affordability stores convenience side, XXXX. now of our our XX-ounce and XX% in

We're also focused premiumization on expansion through the our mini-can of offerings.

mini club PET leveraging quarter, channels. we're and In cans drove but we same XX-pack price compelling package it needs. at and in Europe, the a is growth local XX% launched grocery adapting playbook our penetration in the household XXXX. to Spain, offered X.XX-liter point, it and During In increased volume

mix package mini we drove retail Britain offerings In incremental generate cans smaller as single-serve and Ireland, and Italy, to sales. positive premium Great

benefits know-how customers execute of the many needed system operating locally in and environments. win for with and scale to franchise different uniquely Our knowledge combines sharing the

influenced point example, of at sale. For approximately decisions purchasers' are XX% of

which opportunities. displays systems drove incremental Our in-store during and quarter, retail the up sales cross-selling stepped

together, $XX retail in than all This leader in our any our incremental in Putting the created in it other as customers company. we've creation. value sixth XXXX, for year row billion sales beverage more was a

and recognize our we to still capture progress, our there's faster. be with pleased further is we're system While galvanized to done work opportunities to vast move available, and much the

I happen the dedication hand that our employees. acknowledge to of over of want this Before I to could unwavering John, without none

execution we our listen XXXX, in. new we portfolio. look beverage of ready at I through opportunities, everyone will year continuing to turn CAGNY, to Tuesday respond more and as to so we to our And across strategy encourage sharing I next the to and expect total and forward remain challenges bring improve

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

John Murphy

we delivered In strong results. and Thank you, good fourth quarter the everyone. James, throughout morning, and XXXX,

XX%, each organic of our year X% in grew was we line was quarter, the revenue organic which quarter case During growth XXXX. and in revenues positive growth. Unit full with was

driven unit grew quarter. by sales point of Concentrate in X the day primarily additional cases, ahead X

mix markets; timing three, two, our price X was the by to X% I'll moment; hyperinflationary in of some quarter driven mostly of one, and in most Our pricing speak which a growth factors: is related. actions that across pricing XXXX just mix,

the we're an all realizing fourth line higher-than-expected investments. The to up offset partially points up the Comparable volume despite currency impact declined primarily refranchising, comparable for driven XX% by a effectiveness our quarter currency from the quarter. and headwinds. strong gross Putting and positive and line spend. by expanded top primarily quarter basis driven Argentina. in top points that today approximately was the year-over-year expansion underlying the XX $X.XX due operating demonstrates increase EPS environment slight Below comparable it other by bottler headwinds margin line, was Comparable operating together, basis offset of of income of the marketing in XXX partially growth approximately growth, marketing currency benefit for XX% headwinds. This margin was by

Before I results. markets quarter hyperinflationary discuss few moving our of a on, on to want fourth impact the

Argentina. a our than our this per inflation During our the In most remeasurements from results. underlying headwinds, while creates these in impact cosmetic and comparable have aggregate, outsized the currency other of quarter, of including material these They distortion balance price/mix they on X% In represent a of XX% an across of points more not, markets. markets to intensified our exceeded than results. quarter, inflation did volume, however, income less earnings fourth X total degree contributed to share and our sheet impact

to impractical suite either with tools, to it, including our revenue hyperinflationary In our we market it's of exposure. to And pace manage pricing use keep full markets, impossible actions inflation. hedge growth local or currency management

with a have these been have and focus we prevail our customers to consumers will work we long hand bottling term. and nurture them partners, in markets, in strong time and be relationships our local for be hand expect to long with a to the longer We to time and in ultimately come. to operating our continue We

overall It's volatility they our share. a mind earnings ability few So they while not important to we this impeded will they in to and per keep operated continue nature to have grow self-funding, experience of markets. are typically are in locally,

we model to allow forward, As deliver overall confident it within we our and objectives. move on business levers the our many will us are

$X.X year. and M&A-related billion, included payments. free prior was $XXX approximately million higher XXXX, flow tax approximately of cash the included year than $XXX million transition from payment flow approximately the in prior which million In was which cash increased free $XXX a XXXX

cash performance was and Our underlying capital strong growth free operational flow attributable to working benefits. largely

transition tax adjusted free within M&A-related would the our of you be If impact and payments, range exclude conversion ratio XX%. full of the target cash flow our to XX%

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

During bottler refranchising. by quarter, addition fourth shares from offsetting the employees, proceeds in exercise expected anticipation from in options of of additional we repurchased stock to the dilution

XXXX As James opportunities. mentioned, we new anticipate challenges will bring and

through proven many deliver all-weather can we However, strategy, operating in our we've different environments.

underlying XXXX on the of business. guidance builds our momentum Our

comparable We play moderate and in XX%. earnings but will X% expect organic year. throughout to pricing X% a revenue continue to of share anticipate will growth per We growth of the to hyperinflationary X% role XXXX, currency-neutral

revenues to make our company-owned but net the return headwind business. be and a to X-point have positive operations. Bottle our and to significant continue We expected to to refranchising on per refranchising a share, will a of X-point both impact earnings headwind is comparable margins X- bottling towards comparable profile progress

anticipated headwinds X-point and earnings currency in first we hedge comparable a full for rates share positions, Notably, hyperinflationary approximate are to the to current attributed X- markets net currency quarter. an headwind our X- to currency year of anticipate to much our an comparable on X-point XXXX. revenues Based to headwind impact and with per approximate meaningful XXXX

per Our to $X.XX All we of earnings is in underlying in, expected X% effective tax rate share XXXX to versus expect XX.X%. growth comparable X% be for XXXX.

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

M&A payments have versus ample of increase The billion tax of million underlying cash million, associated balance with transition $XXX both an return our various cash $XXX reinvest to million, operations Driven transactions approximately $XX.X includes approximately of an increase drive XXXX; items our payments $XXX of from we sheet current X approximately by growth million approximately versus $XXX capital and generation to to and of highlight: to business our strength, flow XXXX. flexibility shareowners. in

our of done of unwavering in India return, we of experienced portion expected our robust build increases. capital significant for priority XXXX. Related have capacity consecutive and fairlife capital XX which investment both A with grow our to growth increase dividend to we've is business, to for dividend years as an

flexible With employees shares we'll in repurchases, share exercise the we've from year. repurchased stock in respect to our Typically, dilution of be to options given any the approach. by offset

to Our business create capital to and stakeholders. allocation committed of health needed and right long-term our actions drive prioritizes agility, our policy value taking we're the for the

There considerations to for mind are some in XXXX. keep

impact quarter this of fourth had The impacted some will prior cycling of estimate of growth of quarter approximately It's from first be X on Middle growth point XXXX by of how fourth in during last. quarter concentrate unclear volume in volume We the the quarter markets the XXXX long the the will timing our the XXXX. conflict year. and shipments impact strongest ongoing East in

November XXXX, its the to intend move Service. our Tax We Court position. on defend dispute rendered U.S. forward to and Internal related vigorously our opinion the with supplemental In Revenue ongoing appeal

balance flexibility fund any have to the sheet appeal. We payment to related ample

quarter there reporting the calendar, be less in fourth the quarter. additional first days due in X X will and to Finally, our day

in So We're momentum on underlying refranchising to system on capabilities we our growth. summary, long-term the across pleased we're and markets. to our accomplished in with what progressing We're we're XXXX. building continue in reinvesting drive agenda, our our

with long-term deliver ready have that, XXXX can take great commitments. our to we questions. We guidance confidence we're operator, on And and

Operator

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

Lauren Lieberman

with I just high currency reasonable earnings just with on ended conversation and of higher go on for for do a mid-single-digit like growth And earnings went but for the initial that lot single-digit a X-point Because even point. John the want I 'XX, up 'XX growth a maybe to details starting step you know through feels back guide, guide to level headwind. this.

hyperinflation, But thinking to the consumer able kind like the the the that about you're come can East outlook of impact you mentioned how so just dollar-based growth how year? tensions, you cetera, et contextualize a Middle bit U.S. of John for backdrop, with through earnings are

James Quincey

of Yes, things. a couple

Firstly, growth refranchising in 'XX impact that called is the of the mid-single-digit after we've the out.

words, pre-structural really other that's X% in X%. So change, to

business Second, the that's represents what ultimately of created. strength is a in I been think 'XX underlying continuation momentum and the

and like. or growth 'XX years, kernel X all Yes, the the running downs. franchise and focus you within the way business our to we in the continuous What inflation up that is and end, keeping back end growth take captured as and franchise. volume that the consumers been people is you running If core on algorithm. plus of is and in of look But in through look at XXXX, top if you growing at distractions weekly a the the our consumer of there's amount

we on of have out countries, Managing majority now of that XX-plus the such cycle of or levels less that you of pricing inflation, of percent is but normalized distinct XXXX. that depending the now in the countries, cycle inflation managing kind the more coming of world, of are the where in

all-weather But in we And be core so really see percent in that what there taking and to volume of the set XX-plus surprises. some them we've will are our in is different you combination will the strategy new growth. experienced, a through the deliver countries, there bound guidance be this 'XX, with really manage headwinds of that business tailwinds and

And there's top Growth take in the the the growth obviously, and bottler points top is, said, and at earn appropriate markets that algorithm. John right of an the And the hyperinflation end devaluation. -- of inflationary by with base deliver and offset overlay groups weekly of that We'll the on the consumer of our on then bottling some investment the level plus. pricing we've the few and as there's a selling done. the the largely bottom to

in top algorithm. line X strong But and together. growing growth captured bottom those So things within a that is with the go

Operator

from Stanley. next Morgan from Our question comes Mohsenian Dara

Dara Mohsenian

a maybe quick follow-up just So there.

volume more and just to about on think a underlying pricing for detail growth between about ex markets, as balance volume the X% X% hyperinflationary us on you organic pricing? just you As guidance bit give versus we think that business, can sales maybe 'XX, the that

And long-term review Taking take can step and more you over perhaps how success last given algorithm delivering few at James, you term, and about of years. initiatives level just years? judge But years, And Hard perspective, top as a looking just the a back term line what think then, higher just that the put lot a look few last external the your you been the obviously the in in longer to an back there's volatility importantly, next of confidence out the algorithm you that of a you volatility. end long us sort the COVID. do the few gives for strategic place all in few with from out confidence of that years? of look

James Quincey

try Look, the Sure. adjust there. and various angles I'll

'XX and years. growth. of running Let through had -- and in been quarter, year. the volume it me way at we actually, little you fourth into the unpack 'XX, if of X% we've was that as the bit CAGR, take And And X% the end a a for 'XX growth a 'XX. X-year true volume X true was last And coming in

So the last last the volume the X been to start last in with the in there's strong quarter, volume, year, in underlying growth years.

But we then come When momentum that 'XX. building how at obviously, apart just let's pricing, because that's in and there's pandemic, the that's -- franchise. flows look we XXXX the inflation. true So the into how the building system, with on downs there. you along around and And focused that's and consumer break ups

-- at Yes, pointed 'XX, there deduction John of couple out, If points that's fourth related says there's it quarter-to-quarter it's the quarter a intra-year, to look X%. as timing. you

X. pricing is of the So because the the it off normal you the XX% and get other in half remaining take business the the in inflation countries hyperinflationary. the not hyperinflationary X of Of And a high. is X.X% X, so is that's

true got got the what There, and in algorithm X.X% X.X%, you X% the running of than X% the X on bang fourth once last have center the in bottling got the the true more So really, the top that's You've quarter? take fourth and in of kernel true XXXX. as price/mix, out you've It whole growth selling a company. that's core. years, bit long-term It's across really Actually, these got the was the volume, of of some the in line. quarter. distortions the you inflationary you it's X% of to whole something the

it about a X going going XX% quarter, to of to as 'XX. Think last we've price. go the see last running going balance volume and we're is we're there, growth So the growth. the to years. said, last see the normalized always In volume pricing year, for that and business, of We're

of growth. Our for that's algorithm overlay of aim Yes, is end of going long-term growth for in a top like be the an revenue out points get be the of called line hyperinflation, why couple what X the to that to there's of growth. net you on more that's line, the probably top about the in as and terms we top think XXXX we've

bottling really the it's growth that a you mix don't hitting to [ and embedded our that unpacks also selling X% X% gives the So is innovation, across we in the built feel sixth momentum And portfolio in us this strategies geographies But with execution, it of how the distortion bit the investing execution RGM on will bottlers it. in-store long-term if revenue comparable. Actually, has in year. the our with marketplace marketing, we ] the do confidence got we've continue partners, for momentum. the of hopefully, the the keep strong price kind global of got with in the hyperinflation the

Operator

Our next from Herzog Sachs. question Goldman comes from Bonnie

Bonnie Herzog

I a QX, you which then on color was bit I in better hoping than a for All your little right. takes expansion on more moderate expect expected. gross came on had margins. maybe sugar could the headwind? actually puts or of drivers how in question COGS And costs maybe year? a be key continue big will margins the Curious highlight inflation and this much you to to do higher

John Murphy

Bonnie. Thanks,

the up if pick and start me step both I of from James Let just off quarter and out left year. the where

been expansion expect line. sustain model, as look able X growth the a that. to gross If in to to drive some can continue to to that we're into embedded over margin pretty the our you last XXXX, we confident years, and so. resilient do go -- continue And be we've we able long-term There's

with key the for are of by impact items the world, XXXX, so non-commodity ingredients, we've speak, inflation various around to story. respect But and to were offset the indeed somewhat normal With XXXX, pricing of the and our higher actions the key that's some costs. had some commodity overall,

currency of think will impact take of In foreign to in about in to XXXX, those refranchising markets the headwinds. XXXX. I the into release layer account in mind the you the need throughout impact of talked we mechanical that that Keep

I that think levers have. we drive against to will then, the continue we that

I've past, growth highlighting, talked tools the with really we and take of this actions management the revenue we that. just in with can worth that many maybe start but suite that about

source continue line lot tremendous of to very drive in of chain. partners through a supply we supply across almost mostly We have the supply each chain. and comprises productivity resilient scale, what locally a item We the chain, our

to XXXX, into going I we it's worth think So margin just see expansion. expect reiterating,

growth effect model couple by relative we refranchising mechanical I some to that to talked of opportunity see cost about, the driven continuing inflation of expansion. years drive to Some plus those it more the continue with levers bottler per our and last normalized deploy to of long-term the

Operator

from Our America. Bank from Spillane next of question Bryan comes

Bryan Spillane

also just on-premise observations some I some a And the faster call, channels. shift, in on earnings about than think, the low-income more consumers. should like say, of were little talked growing about on think little about you maybe to last -- There or like bit a commentary, bit America. I North I right, drill take-home foodservice I'd or James, channel maybe

there. just of state kind things of maybe So

there And the you some John, in description clarify, I release, also just adjustment. think sort if the of can mention press was in price/mix, around

I wasn't color more And that's do if accrual could you a up if lagged first just shipments sure make quarter, quarter? related on just So promotions in as sounds that there, you that so like lot us little can or give would bit to also the the I well. an helpful. in just there's might be we know guys if in, a have fill that concentrate but

John Murphy

Yes.

me over particularly. Let unusual into take to is deductions that refer area, back the the to year. to you in for That related. end through timing-related it's fourth the and will then James timing it next flow items I'll And pass in the The mix beginning. not have quarter

James Quincey

Consumer, think the developed strongly markets. in to up clearly, actually, with the of has North spending some pretty other it held -- landscape Yes. has because compared not things One, consumer one power go consumer let X me in aggregate here. America, to to aggregate, in U.S.

size both them more at-home was multipack. could that -- perhaps with of individual the effect. went affordability important come to pack population pack we with the from very inflationary of What spending squeeze the has has real power that focused been under is affordability, are and you income, a the -- much size from And there, there, channels. there's and certain And out on understand less some really section disposable we some there focused argue from purchases, of pressure

and still the Simply, seen power, segments of hand, of some plenty purchasing strong On we've of like premium point, of consumers have money, plenty a there's Core those other of ones. the growth price segment higher some Power, fairlife, that for

terms on both the been in those. to address we've points, price categories So there's and of in going landscape clearly multiple and things of ends working

of was channels, to slightly rebound relates Clearly, been to there consumption 'XX, through a were a away-from-home COVID, has seen it I the think down we've then but kind they they slight from at-home 'XX, In There time. shift away out in renormalization. they to over the in of as And away-from-home the at-home. outpace volume big and channels. 'XX, In ahead in at-home. a continue historic

the COVID, were that slightly at-home. various situation. to the kind If in of say more I normal previous it of what you look they at channels, landing away-from-home that's would was ahead more

the kind need I that of So strong segments the focus some was and to what different sort dynamics. the on channel renormalization consumer would say, of of of

Operator

Powers Our from next Steve question comes Deutsche Bank. from

Stephen Robert Powers

to could. one, have Two but quick. is one questions, if supposed I'm I I know

you -- could maybe Just on but called on X% a the X% on X% next for John, to the currency headwinds X% the you out to for clarify EPS. if revenue year headwind

you the operating profit could, to given much asset going bottom in line versus up headwind Just if that is of show incremental et line below how monetary revaluation, cetera?

'XX. in And and the that betterment priorities perspective, financial progress 'XX then in talked system the you all but of guess steps the that of just thinking of in We question overall about your forward a from importance is system the James, I going terms just love about and made I broader refranchising activity the system the perspective. guess you made I'd on evolution impacts of in 'XX, the

James Quincey

and Okay. you Should I at start John? second, go then this time

John Murphy

Sure.

James Quincey

And true, absolutely -- the ambition right way make right focused but is in to still remains I our partners. we as world's Look, with going to our sure do so effort. the refranchise do refranchising it be to Sure. phrase, John's smallest the the pace, like on have It at we we're been the bottler.

bottlers stepped level we of every the refranchise bottling a very we I companies one exception, performance, of without it creating years. put performance. combination or up into refranchising can we think partner be vision with number the the we process last the the categorically joint upped straight of undertaken the whether pleased with have Almost new and have we forward, the investment say business take right plan over a hands of time or a evolved to that bottlers, we're have

that company that bottlers And the the the commitment a innovation, revenue to And and commitment the it does to is the and their drive get which to helped marketing, to capacities marketplace. best, answer previous the and management the about with invest of in overall what has I the performance execution our think growth talked I of questions. working capabilities sign is branding, the build unwavering power the in in

refranchising. in bottling right would we algorithm really stronger -- the with as chapter eye like into have finish the I much future. very of of top system our the our continue of momentum But far prize play. the to only pieces So partners, There's time the together penultimate the a think the the we're on creating left, on right we to a really, at couple the with partners

John Murphy

Steve, case just currency, currency overall. make on there questions let comments are in on me And other there a of Great. out couple

highlight I to First we be that it's making that exclude few And it to we've few to reinforces guidance that all, those it distortion would flat point close if that of on of sort just the hyperinflationary given, the 'XX markets those we're think markets. important were have.

your regard income too -- many as with I the secondly, the line then that There's there's below year. just Today, we that And many. question, in operating specific particularly go not do just to through breakdown. have and too takes, puts

detail. don't predict have a remeasurement on items got I calculation the don't that sheet to ability and I with You've great the to a balance do have monthly -- that's just

impact, So the overall I focus just is think, the on. to keep one that in mind

to be continue to tendency And the create to highlighted. year In Xx. normal these distortion continue the latest forward. hyperinflationary stays markets we through to that the sure case everybody is make that X.X will developments. guidance But multiplier provide to that have we'll of as that would a years, We we've go abreast going assume the

Operator

question next Evercore Rob ISI. Ottenstein from comes Our from

Robert Ottenstein

roughly delivered other the you strong out rankings I noise, X% the in of kind top last X case James, companies, at of puts made over that you've which that's and growth, you think So, very line clearly you great. the a if top years, really ex staples your

and of of In terms both both enhance and a given value bottom variables? And creation of part that in to line, looking 'XX terms buybacks continuation should assuming shown macro overall various back do shareholders of the what think it in that derisk stock can now interest the the you perhaps line and a share greater bottom buying that, the forward, you've terms you've given for algorithm forward? X.X, delevered going of we to as in of then

James Quincey

Okay.

of coming in tailwinds. will the there'll happen mean, cannot And at end we number say still be X top I the last is, an argument years, years faced the I algorithm. derisking, the I would So the I is, holds. really but what think future think delivered headwinds I about think Things extraordinary the I in you of the what the tell and all-weather look,

momentum and you capabilities what the the operate, that through we've in top we've actually, you if look and and deliver see at look at scale of at within we share that But the gaining our long-term compelling at builds to managed steam system, performance end at the up I the share and look the can of if and the built forward. on to revenue, think work ahead the it's it very momentum. you a industry, drive also on And way

call from for EPS X system. mid-single-digit Obviously, EPS the of down as the the bottling dollar And feeds disposal bottom XXXX includes U.S. the points of that line. into

So that's on kind an X% of X%. already to basis, ongoing

to leverage think just what bottom in talking about, a coming tax the time. And it the on relates can actually couple about to as see I the metric we've somewhere of the calls out and will John line over put from new years the compelling becomes curiously, up cash, are tax, of drive relates it the I in website, non-GAAP was number some that top a next transition that of items transactions. think the which to kind discrete as ecosystem line that to in M&A over you of a compound we continue dollars,

you but into pay tax you sell flow, goes cash one the money into account enough. curiously bottler, you the disappears free get a If the

high of and So free if that The adjusted there's for do discrete very are that a odd likely that see is But items years. you flow. cash on set whole you the few flowing cash to into next the free earnings that make the out, strip look basis flow remains cash so. conversion

So increase to repurchases. normal have and said, cash would consider in continue business clearly, potential our and in substantive we world, additional on to -- as will a to we the a invest dividend, John share continue

the case the is considerations impending you IRS our tax The wrinkle the like, of and if in appeal. cream,

we our And so the sheet. go as we like strong years, few for next forward balance

the of We are appeal second mindful the the half. likelihood launching of in

the John cash these continue long-term very which will But fourth as shares the particularly think quarter. balance nonoperating updated. to strong. couple flows, the all We're used that be some have buy things We talked of generation we everyone about, to to in cash next perspective going I incoming the in we'll is years, keep

John, yes, go on.

John Murphy

point. additional one Just

in kind In unwavering view to lessons talked dividend we've individual more your one think that the we have over I addition to prepared of couple be of components. is to normal of of that to the dynamic the last to script, about the the years be relative commitment

know, going you those XXXX We've right of CapEx at our capacity. up to to Xx the into continue in that it's debt as We need to XXXX, goal to parts our X.X. the we XXXX. for we the need X.Xx, taken foundations growth think is business need do and be we're because that's for right So thing build that what to

X examples. Just

opportunity start but in coming to of year, And this considered think I bottler to the we year. approach of with we go continue forward. so. will an so enter the the had -- coming do back was as we as necessarily there we first, that something demonstrate that year, share take not the that the half at And continue we proceeds repurchases in to we again, The was

Operator

comes question Carey next from Fargo. from Our Chris Wells

Christopher Carey

a but see response of question, channel. Bryan's obviously, if There's could pricing that frame to you maybe power we've to a lot global of heard away-from-home you I in a in little lot bit on there's pricing. touched about, wanted I been the it channel? know

You're region distribution talking between to continued think in granular maybe that the elevated us whether QX you're occurring was channel more levels what normalization back and normal a has you strengths bit a on away-from-home. perspective a about of from can But I seeing more some just give by and at-home into year. this

James Quincey

Chris. it sense see commentary extent, the headline in reopening, I that America away-from-home 'XX, think give kind Look, in the to it North everywhere some I and But to at-home. COVID, big is you go. was I'll overall, between the of some renormalized. closedowns, Yes. applies think else clearly in Sure, applies the extent, there again. -- the a about that And in swings 'XX,

of You slightly saw channels. that in the aggregate U.S. where ahead the in away-from-home the at-home were channels

Europe, see only slightly, in You also see it's in the EMEA segment, but the at-home marginal. that or you

structural pricing away-from-home, break the be of of it no. there upside to of that's of but going about you kind big likelihood answer I a it's sort ongoing sort leading the a mean small -- channel continuing kind there's when short is the and is that's only down, mix, of a growth If And of question fraction. a some to if from

packages that's future the 'XX And start very were affordability became to a to the to in I relative and surprising consumption the If take a to consumption think came as we XXXX. much particularly the consumption of becomes been future comps balance versus not and also of mix proxy of about having kind immediate immediate the packages, in because parts -- consumption more strategy more 'XX. into markets, you as too then world, different different get channel emerging much they

we're big of So in 'XX. saying expecting channel that's roundabout not way effects a mix from

Operator

Andrea Our from comes next JPMorgan. from question Teixeira

Andrea Teixeira

like more what a lingering half is sports quarter XX%. outlook terms volumes, in quoted of for -- market And -- first facing or comment be the to how much you we of just broadly, how negative correct, with you're self-inflicted, projected mostly from that to terms efforts decelerating. comments and what is And share? expect about got, XXXX? got in actually is is the to expect that benefit my fourth you Or were do is price to James, your in vis-a-vis, to of if of in about to terms the that that about mix into like in of on-premise the or -- take mix. X% into of Should 'XX? And Out be back about the clarification that can water now you've the contribution the still X% you U.S.? more But mini more coffee your I little bit decelerate? not comment U.S. within XXXX, cans that going shift understand, XXXX. a your obviously, that you math and X% it's your for on

James Quincey

Sure.

happen. channel the X% mix, in the to fourth the not the on comments that The but quarter, to Okay. related that deductions rate that was -- way

often year. the not is -- quarters just accounting between an this within this treatment So is the

mix kind as mix not net difference to between big of mix. or in So related revenue. mix think about This you terms channel of or it's would category and the it package gross is

distraction it's in term. the so a And short

move that would I So one. past

focus which which the like, And if the which roughly XXXX through ignore was on inherent ran pricing, the me, you that to XXXX. speaking, instead X.X%, underlying is for of saying, in -- we're kind bit, nonhyperinflationary in what and is impact very of XXXX

is what rate mix things those So we're we're in it's in channel package, which saying, normalized category, are all largely sort the 'XX. and And were 'XX whether geography, expecting expecting we again, of in 'XX.

normalized in well. So 'XX largely as all they're by inference,

cetera, channels, et of So you see kind across packages, a et cetera. stability

specifically did deprioritization categories. more to we of the some bulk of the relates some it water As yes, U.S.,

in the the advanced point volume I think we versus and what different view, XXXX. proactive a of But the segments. and decisions bottlers, competitive, normalization a fractional or that tease the restabilization our hydration the it I the and the back we through goes if of volume share obvious overall think impact the think won there's won consumer in was don't or about we some an to the about from And the comment or which of execution I mean split marketing, category. performance that's think I useful value of between things answer were step to was U.S., RGM when XXXX, hard was made share yes, you apart. Clearly, softening about drinks in sports the innovation, is year, with back there of self-inflicted

picture water, to But vitamin on on particularly on very XXXX. sparkling, good yes, done Topo looking we'll there's and in Coke be overall the much good to the to strong dimensions. water, in extent, Chico, drive fairlife, So win smart good work hydration lesser overall And water in the on good that's platform advanced a and good on Sprite, both in category is growth and tea. be

Operator

from from comes Truist. Bill Chappell question next Our

William Chappell

Just as versus or of how of the spending Chinese kind of your few over or and back a how and he consumption you to past has what we question kind it's progressed progressed in normal months kind just see general kind just China the move power getting and she of on consumer -- or 'XX. expectations both into

James Quincey

Sure.

put And in -- of me still see the And heavily a grew which actually, and of is had invested the we China. I year did And had -- in year had it behind it We volumes we in Let X very strong kind China. first Chinese think last quarter last very of Year. to for strongly for we very what of reopening. then 'XX. New soften 'XX And -- is end started a revenues, rest the 'XX we're quarters the reverse going of the in total back and of while China. for the the year that kind

improve. can use the year, and cycling results Year first and But We net-net. know to the another cold, New quarter, kind given especially if expecting too we're year little to slower I year. few weeks, it hot the won't not this too be But that in analogy. of for what strongly again we're invested a We've from last not in for Chinese then

focusing get So directionally restoring to yes, key investing the there's system, a we year little get and year. moments through to weakness get things but keep in the in opportunities. execution more tend not sparkling going -- New economic Year, and on Chinese And to we're really momentum expect just but behind the -- better we like RGM to

Operator

question from from Next Kaumil comes Gajrawala Jefferies.

Kaumil Gajrawala

'XX on be we about a learning them. in a of December, little and about some scaling there we XXXX, will it's Power, mentioned brand and capacity When about should that context? now. big other brands talked Both Core bunch fairlife, just in scaling testing you and was innovation met of of what then considering be that talk expansion, of same you maybe the maybe a we Can bit

James Quincey

that But Yes, sure. been and certainly that. driving you going true, lots it's to we hopefully have on find new continue of I as to mean, and fairlife roll, firstly, has experiment in we're a XXXX. say, been things,

many in remember think growth had faster plus it's as volume can I digits revenue. I years double near for double-digit

Clearly, as we capacity. we've scaled to needed down more that, put

have announced the process We mega begun of and New plant upstate a building recently York. up in

we'll in kind the these capacity fairlife the business talk some is of and also is at CAGNY back all so Power when of about tight story, Core some And firing certainly We'll and on lay of cylinders. to fairlife, out and a to like products from and particularly scaling to these brands example, leading. challenging Core how Power driving case have and Power, great of Core things done in for experimentation the job in

Operator

Our next Grom Peter question comes UBS. from from

Peter Grom

response to play on in softening a line up you how than first, was as I anticipated? question to Andrea, quarter weaker the performance in was U.S. evolve? the your You pick bit Or Bryan that with expected? mentioned growth you Andrea's to have it in thought in on commentary So was but would and did Maybe out response in market hoping your the you James, would

the balanced do appreciate expect But the at well? expecting 'XX, I to North looking America as in occur growth company to level. ahead commentary total then on And you balance that

James Quincey

of course ran was it tighter XXXX Look, think mean, would of macro the get inflation level I at a I wage Yes. market foreseeable the that ahead growth. through as

that segments. And wasn't for tightness, consumer certain so it surprising, therefore, yes, particularly

as due proportion. things fourth mean in the year, the quarter was fractional same think I the full there's very in growth growth the differences. in America only in North I basically the all

coming it big are think and in see starting ahead XXXX. -- was as and money the to they're the there softening these bit But think trends. consumers contain think in inflation. off, we'll 'XX of see is consumers, starts starting you like in I the to can kind changes feel indicators, And get in reverse I yes, I the confidence So through that as a not a of little

the due shifts There U.S. improve think to in Again, the be proportion. rate I business. the through growth in that big all we'll So year. in going volume see are not

In U.S. to business. more get for relative aggregate, the expect from to would volume price we

volume So then the up and balance basis. global on made that between applies portfolio about that's Clearly, I a talk geographic price mix. of

it portfolio. comes significantly pricing, like and and So those true take way capacity. see getting price expect with slightly Blend the or from. where X the all the more together, having decent to that's that's places but we're the of increasing all X balance much over U.S. clearly, than places to where invest to stable in those India And examples, -- global like volume We'd volume

Operator

Charlie Our Atlantic. from question Redburn next from comes Higgs

Charlie Higgs

in I the quarters category not going a in those growth. the I strong. forward, actually got I wondering X% your volume where XX growth question X% perspective since averaged weakening? the on quarters, quarter think so definitely maybe And I've what And it's sparkling, the 'XX very please, in was XXXX, with ex mean, is just year, consumer and on the

consumer? going can launch on color than launch? what a mean Spiced? launch there we've And with of Is I Coke permanent Just confidence just Coca-Cola of be if launching a this limited Zs? that target talked gives out Gen any the you don't the you touch that I Is Coke-with-meals think useful, to as about on just it rather So is Who the strategy? of help yet. please. it would Creations edition

James Quincey

deploying say, but sense? reconsideration. reengage is Sugar good it's with of Z not number consumers, aimed It's to worked been Spiced, or a connectivity Coke exactly, Coke Coke Yes. overall Coke. like really Coke a driving that years I has strategy the even really mean engagement, whether trademark, increasing Zero Does and you broader of that, make Creations, consumers Original driving part Gen that as we've for with a Coke whole the or water at Diet bit

drive bring to to operated focus on has growth to has the years. by of or X the the the too, the increasing X the and The over the of And Fanta allowed which overall onto Coke whether into Sprite, growth drive RGM teams QX even the organizationally and splitting global marketing, more and Fanta last more organization has across innovation, us Sprite in worked and within an execution some Coke there, and out and in Creations XXXX, clarity you the allowed through actually, it's approach strategy business. Spiced also them us to as sub focus say,

remains sometimes people that optic the the to XX U.S. look the category think I years. of say that everyone invite -- I just through know you people And -- the would optics last I look over well, the at sparkling at robust the at optics would or about but to of see the a And you of the the revenue category winners. and actually, sparkling growth. both volume course, of the over not in we we're are that And scale, leaders there, just terms globally share time. global category

able will do we be So for if from to the we we benefit drive things see, brands, and growth. right disproportionately the forward category our that

Operator

Laboy come Our last from question today Carlos HSBC. will from

Carlos Alberto Laboy

well? robust seen We've digital really market on investment or the comment step-up this us for this? And American digital a where state But else Latin bottlers X the on you do capabilities? a area digital X like you comment you last years. global as independent over capabilities Can in can see or in CapEx U.S. of development the

James Quincey

what? On U.S.

Carlos Alberto Laboy

the On bottling digital U.S. regarding system investments.

James Quincey

go, to want You John?

John Murphy

Like sharing the think curve. ahead I is in are across world. it's I say the to the one the tailwinds, that Sure. increasingly which to we that in levels is believe, Lat Carlos, referred underlying us system investment of degree Am our you and opportunities fair to to invest ahead overall pretty the have consistent willing of the

happening that's global system. across I think So the

sustaining to the role One many indeed the a operate. of subsets degree course, in of which that, digital is pivotal we playing building advantage to wherever of forms is its and

we'll system in of within percentage invest that appetite willingness also ahead is And and the at of have highest that, particularly very through to of level. more think you'll hear CAGNY I a week. next digital safe CapEx revenue think the high are remember. that And up We the I the conversation threaded levels say, tee a to I there. But at can curve, as

James Quincey

Great. Thanks everyone. very much,

of proud we're in summarize, accomplished XXXX. what we to Just

We across more total in Thank agility us of company morning. look and all aspect week beverage We're your at you. marketplace. the our improving your for next with and joining to Thank maintaining do winning in investment discussing you we every CAGNY. this I forward to how be are business you portfolio. John interest, going and our

Operator

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

disconnect. now may You

The Coca-Cola Company (KO) 13 Feb 242023 Q4 Earnings call transcript