The Coca-Cola Company will pursue expanded profit margins by reaping the rewards of its marketing transformation programme, not cutting budgets, its CEO says.
The Coca-Cola Company is “not backing off” investing in marketing to drive long-term growth for its brands, with the business committed to making its spend more “efficient” to drive profitability.
Speaking to investors today (11 February) during Coca-Cola’s 2024 fiscal year results, CEO James Quincey was asked about the company’s 2025 outlook, which suggested it would be expanding its margin of profitability this year.
Quincey confirmed that some of this increased profitability would come from marketing spend, but that this would not be achieved by cutting budgets.
“It is important to say that we are not backing off our bias to invest for growth,” he said. “This is not less marketing; this is more productive spend.”
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Increased margins are likely to come from what he called a “culmination” of years of work transforming the company’s marketing function to make it more efficient as well as more effective. He highlighted Coca-Cola’s decision to use generative AI to create a new version of its ‘Holidays Are Coming’ Christmas ad last year as an example of how the marketing function is spending more efficiently.
He claimed the business’s “network marketing model” is bringing “tangible results”, allowing the business to connect with consumers in more personalised ways. He gave the example of Fanta’s partnership with Beetlejuice, which saw consumers able to access personalised experiences by scanning the pack.
The campaign contributed to market share gains in flavoured sparkling beverages in the fourth quarter, he said.
‘Just getting started’
Coca-Cola’s CEO acknowledged that 2025 is likely to bring “challenges” as well as “opportunities”. In many markets, consumer sentiment remains rocky.
The business managed to grow volume sales both in the fourth quarter and in its full year (by 2% and 1%, respectively), but it saw volume declines in Europe specifically.
Quincey said the US and European lower-income consumer is seeing pressure on their disposable income, but that, overall, the environment is fairly stable. He expressed confidence in the company’s ability to drive growth in 2025.
“This is about leaning into growth,” he asserted, speaking about its commitment to continue investing in its brands, albeit in a more efficient way.
Driving mental and physical availability continues to be key to the company’s plans for growth.
In the European region, Quincey highlighted the company’s “experiential” marketing on its festive ‘The World Needs More Santas’ campaign, which saw consumers able to interact with a generative AI Santa as well as its lead advert. He also highlighted the business’s ongoing efforts to “link [its] brands to new occasions”, such as connecting Sprite to spicy foods.
We’re operating with a mindset that we’re only just getting started.
James Quincey, Coca-Cola
As well as partnerships and campaigns to link its brands to consumption occasions and what the company terms “passion points”, excellence in commercial execution continues to be key to the business’s growth.
“Ensuring product availability is one of our system’s greatest strengths, yet we still have tremendous opportunity,” Quincey said.
He highlighted the importance of point-of-sale marketing to drive basket penetration and make the company’s brands visible throughout stores.
While the company is one of the biggest consumer goods businesses in the world, the Coca-Cola Company’s leadership sees plenty of headroom for growth through innovation, commercial execution, and marketing excellence.
“We’re operating with a mindset that we’re only just getting started,” Quincey told investors.
