Sprite becomes a billion-dollar brand in India

The Coca-Cola Company reported strong third-quarter 2022 results as the company continued to build on the momentum from the year’s first half. “Our strong capabilities and consumer insights continue to help us win in the marketplace,” said James Quincey, chairman & chief executive officer, The Coca-Cola Company. “Our business is resilient amidst a dynamic operating and macroeconomic environment. We are investing in our strong portfolio of brands, which is a cornerstone of our ability to deliver long-term value for our stakeholders.” 

 Overall Highlights Quarterly Performance:

• Revenues - Net revenues grew 10% to $11.1 billion, and organic revenues (non-GAAP) grew 16%. Organic revenue (non-GAAP) performance was strong across operating segments and included a 12% growth in price/mix and a 4% growth in concentrate sales.

• Margin - Operating margin, which included items impacting comparability, was 27.9% versus 28.9% in the prior year, while comparable operating margin (non-GAAP) was 29.5% versus 30.0% in the prior year. Comparable operating margin (non-GAAP) compressed as strong topline growth was more than offset by the impact of the BODYARMOR acquisition, higher operating costs, an increase in marketing investments versus the prior year, and currency headwinds.

• Earnings per share - EPS grew 14% to $0.65, and comparable EPS (non-GAAP) grew 7% to $0.69. Comparable EPS (non-GAAP) performance included the impact of an 11-point currency headwind.

• Market share - The company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.

• Cash flow - Cash flow from operations was $8.1 billion year-to-date, a decline of $1.2 billion versus the prior year, as the strong business performance was more than offset by the impact of cycling the timing of working capital benefits in the prior year and higher 2021 annual incentives in the current year. Free cash flow (non-GAAP) was $7.3 billion, a decline of $1.2 billion versus the prior year.

 India-Specific Pointers:

• The Company drove 2.5 billion transactions in India at affordable price points through the expansion of returnable glass bottles and single-serve PET packages.

• Sprite has grown to become a billion-dollar brand in the market, driven by the success of locally adapted, occasion-based global marketing campaigns and screentime.

· Category-led performance:

• In India, the company continues to strengthen the first half of the year as it gains a share in sparklings offerings. Trademark Coke delivered strong growth through effective execution and occasion-based marketing.

• Sparkling soft drinks grew by 3%, driven by growth across all geographic operating segments, primarily led by India, Mexico, and China. Trademark Coca-Cola grew 3%, driven by growth across all geographic operating segments. Coca-Cola Zero Sugar grew 11%, driven by low double-digit growth across developed markets and high single-digit growth across developing and emerging markets. Sparkling flavors grew by 3%, led by Asia Pacific and Latin America.

• Nutrition, juice, dairy, and plant-based beverages were even, as growth led by Minute Maid Pulpy in China, Maaza in India, and fair life in the United States were offset by declines primarily in local brands in Eastern Europe.

Asia Pacific: Unit case volume grew 9%, driven by strong growth in India and China. Growth was led by sparkling soft drinks and hydration.

 Company Updates:

Leveraging strong revenue growth management capabilities to meet consumer needs - In an environment where consumer preferences are rapidly evolving, the company is focused on expanding its offerings to fit all consumers’ budgets. The Coca-Cola Value Bundle, launched in North America during the third quarter, is an example of how the company offers more choices to cost-conscious consumers. The bundle features an assortment of core sparkling brands at relevant and competitive price points. By utilizing end-to-end messaging across platforms, these offerings are retaining and recruiting more consumers while creating value for customers. Additionally, the company is balancing the mix between affordability and premiumization, while driving pricing actions in the marketplace in response to ongoing cost inflation.

Turning insights into global brand experiences - The company continues to engage and attract consumers through globally scaled marketing campaigns driven by consumer insights. The “What the Fanta” marketing and innovation platform is an example of how the company is executing with its globally networked marketing partner to identify and scale what resonates with consumers, from taste to brand experiences. Now launched in over 30 markets globally, the experience-driven platform is designed to spark adventure and intrigue through bold innovative flavors complemented by social media campaigns and multi-channel activations.

Strategically expanding in emerging categories - Since entering into the ready-to-drink (RTD) alcohol beverages category in 2018 with Lemon-Dou in Japan, the company has continued its test-and-learn approach with disciplined experiments around alcohol occasions globally. The company is leveraging brands with strong credentials, such as Topo Chico while adding to the existing portfolio of Schweppes premium adult cocktail mixers and tonics. This year, Simply Spiked LemonadeTM and FrescaTM Mixed were introduced in the United States through brand authorization agreements with Molson Coors Beverage Company and Constellation Brands respectively, and both offerings are seeing encouraging early results.

Increasing water security through collaboration and collective action - The company continues to focus on collaborating with businesses and nongovernmental organizations to create a more sustainable and better-shared future. During the quarter, at World Water Week 2022, the company focused on how corporate water stewardship can drive collective action to help address water challenges. Over the past two years, the company has stepped up investments in nature-based water solutions as an important part of its 2030 Water Security Strategy.