BOCA RATON, FLA. — The Coca-Cola Co. may never reveal the flagship soft drink’s secret recipe, but executives of the Atlanta-based beverage giant shared another critical formula on Feb. 20 during a presentation at the Consumer Analyst Group of New York conference in Boca Raton.
“Broadly speaking, our revenue growth is led by three key drivers, one that is directly influenced by macro trends while the other two, we believe, are generally within our own control,” said Muhtar Kent, chairman and chief executive officer. “To put it simply, we participate in a growth industry with leading positions.”
The first factor is industry growth, specifically the non-alcoholic, ready-to-drink beverage industry, which Coca-Cola executives said is expected to swell at a compound annual growth rate of 5% through 2020.
“However, as you would expect, growth is not going to be in a straight line,” Mr. Kent said. “We have seen it run anywhere from 4%, as it has in the last couple of years, to nearly 6% in the past few years.
“It’s also important to note that industry value growth is not the same across markets, all markets and all categories.”
Value growth in emerging markets has slowed in recent years, as macroeconomic trends have pressured personal consumption expenditures. The deceleration in the industry, however, is not category-specific, and retail value for sparkling beverages has grown in emerging, developing and developed markets each year since 2010, according to the company.
“The point is, we see tremendous growth opportunity in both the sparkling and other still categories,” Mr. Kent said. “This is why we remain confident, as the industry moves back to more historical growth trends, both sparkling and still will benefit in similar ways. And we are fortunate, therefore, to compete in such a vibrant and dynamic industry.”
The second driver of Coca-Cola’s growth is share gains. The company said it has outperformed the global industry and gained global value share for 30 consecutive quarters.
“That strength ultimately comes down to three assets: It comes down to dynamic brands, it comes down to great marketing, and it comes down to superior execution across our entire system,” Mr. Kent said.
Twenty of Coca-Cola’s brands have broken the $1 billion barrier in annual sales, including, recently, Gold Peak, Fuze Tea and I Lohas.
“And we have strength in each of our markets, not just at a global level,” Mr. Kent said. “We have leadership positions in multiple categories in key markets, not just sparkling, enabling us to benefit from that multidimensional growth expected in our industry.”
The company continuously seeks opportunities to bolster its portfolio through innovations and investments, which recently have included partnerships with Keurig Green Mountain, Monster Beverage Co. and fairlife ultra-filtered milk. Coca-Cola also continues to strengthen its distribution system in key markets, with initiatives that recently have included the refranchising of company-owned bottling territories in North America, the creation of the largest Coca-Cola bottler in Africa, and a joint venture in Indonesia.
The third and final driver of revenue growth for Coca-Cola is price realization, with a focus on value-enhancing price/pack architecture.“It’s not just about growing our beverages; it is about growing beverage occasions, incremental beverage occasions sustainably,” Mr. Kent said. “The growth is there. We know we are positioned to capture it and, when we grow, we drive positive economic profit that will benefit our shareowners in the short-, medium-, and long-term.”