Coca Cola 2013 CAGNY Presentation


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Coca Cola 2013 CAGNY Presentation

  1. 1. Investing Together for aBetter Tomorrow CAGNY 2013 ● FEBRUARY 22, 2013
  2. 2. Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverage business environment and retail trends; our ability to realize a significant portion of the anticipated benefits of the acquisition of Coca-Cola Enterprises Inc.’s North American business (the “CCE Acquisition”); our increased level of indebtedness as a result of the CCE Acquisition; our pension expense increase as a result of the CCE Acquisition; continuing uncertainty in the credit and equity markets; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in or new indirect taxes; our ability to renew collective bargaining agreements on satisfactory terms and our and our bottling partners ability to avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in the cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or in other major markets; unfavorable economic and political conditions in international markets; litigation uncertainties; adverse weather conditions; product safety or quality issues or negative publicity that may damage our brand image and corporate reputation; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; our ability to achieve overall long-term goals; our ability to realize significant benefits from our productivity and reinvestment program; our ability to protect our information systems; additional impairment charges; our ability to successfully manage Company-owned or controlled bottling operations; the impact of climate change on our business; global or regional catastrophic events; and other risks discussed in our Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2011 and our subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements. Reconciliation to US GAAP Financial Information The following presentation may include certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Companys website at (in the “Investors" section) which reconciles our results as reported under General Accepted Accounting Principles and the non-GAAP financial measures included in the following presentation.2
  3. 3. Our 2020 Vision:Past, Present and Future
  4. 4. Delivering Against Our Long-Term Growth Targets. . . 3-Year CAGR 2010-2012 10% 10% 5% Volume Operating EPS* Income**Comparable Currency Neutral4
  5. 5. . . .Results in Our Strong Cash Flow Cash, It’s Still the Real Thing Cash Priorities • Reinvest in the Business $11.5B* • Pay Dividends $10.2B* – Consecutive Years of Annual $9.5B Dividend Increases – Increase in 2013 – Billion Paid 2010-2012 • Strategically Invest via Acquisitions and Partnerships • Repurchase Shares 2010 2011 2012 – Billion Net Share CASH FROM OPERATIONS Repurchases 2010-2012* Excluding pension contributions of $769 million in 2011 and $900 million in 20125
  6. 6. Investing Through a “Value Lens” Leads to Long-Term Profitable Growth. . . Economic Profit Growth Long-Term Growth Targets* High Target 10%+ CAGR Single Digit 6-8% 5-6% 3-4% Volume Net Revenue OI EPS *Comparable Currency Neutral6
  7. 7. . . .and Enables Us to Seize the Opportunity Middle-Class Personal Consumption NARTD Retail Growth Growth Value Growth* Million Trillion Billion 2012 2020 2012 2020 2012 2020 *NARTD excludes milk and bulk water7
  8. 8. Our Strategy Cannot Be a “One Size Fits All” Approach Developed Markets NARTD Retail Value Growth • Driving Profitable Growth $400 Billion (2013-2020) Through Innovation & Productivity Emerging Markets • Maximizing Volume • Investing for Accelerated Growth Developing Markets • Maximizing Value through Segmentation • Building Customer Loyalty8
  9. 9. Our Franchise System Continues to Evolve to Create Long-Term Profitable Growth Iberia • Merger of 7 Bottling Japan Partners • Merger of 4 Bottling Partners in Kanto Region*Brazil• Merger of 3 Bottling Philippines Partners* • Sold Controlling Interest to KO FEMSA * Pending regulatory and/or shareholder approval9
  10. 10. New Global Operating Structure Ahmet Bozer Steve Cahillane EVP & President EVP & President Coca-Cola International Coca-Cola Americas A Combined Years of System Experience Irial Finan EVP & President Bottling Investments10
  11. 11. Investing Together for a Better Tomorrow in Coca-Cola International11
  12. 12. Coca-Cola International Overview Large, Dynamic Consumer Base • Europe: Positioned Population of ~6.1 Billion to Capture Profitable 37% of Population Under 21 Growth • Pacific: Developed and Emerging Markets Growing Solid Presence Together 350+ Brands • Eurasia & Africa: ~120 Bottling Partners Delivering Results 50% of Total Company Volume Over the Short and Long Term12
  13. 13. Europe Group Positioned to Capture Profitable Growth
  14. 14. Europe: Future Growth Opportunities Despite Headwinds Europe’s NARTD IndustryIndustry Retail Value Europe Group • ~900 Per Capita • 176 Per Capita Consumption Consumption (~3x Global Average) Billion (~2x Global Average) • Largest NARTD Retail • Top 3 Sparkling Brands Value Pool • Opportunity for Volume and Value Share Gains 2012 202014
  15. 15. Growth Opportunities Exist Across Europe • Immediate • Price/Pack Consumption Innovation Channels • Winning with Our Customers• Strengthening • Market the Category and Our Still Grow Core Brands Portfolio15
  16. 16. Germany: Sustainable Growth Momentum3-Year Volume CAGR • Household Penetration2010-2012 • Refillable PET • Teen • Integrated Bottler Recruitment System16
  17. 17. Investing in Our Core Brands17
  18. 18. Pacific Group Developed and Emerging Markets Growing Together
  19. 19. A Tale of Two Worlds Developed • KO Per Capita 2012 Volume Growth Rates Consumption 176 China +4% • GDP Per Capita ~$35K Japan +2% India +16% Thailand +22% Philippines +5% Emerging • KO Per Capita Consumption 31 • GDP Per Capita ~$6K Australia +3%19
  20. 20. Japan: Continuing to Drive Profitable Growth Vending Innovation • System to Invest $120M in 2013 2010 2011 2012 • Three Consecutive Years of Record Formation High Sales Volume of CCEJ* • #1 Share in Sparkling, Coffee and Sports Drinks • #2 Share in Non-Sugar Tea and Water * Coca-Cola East Japan20
  21. 21. China: Well Positioned to Capture Growth OpportunitiesNARTD Industry Volume Growth Our Brands • 3 Billion-Dollar Brands • Coca-Cola and Minute Maid GDP Per Capita Voted Most Favorite Brands +$2,600 • Sprite is China’s Largest Sparkling Brand • Fanta Exceeded 100 Million Cases Urbanization 2012 2020 +110 MM Our System • Strong Franchise ModelMiddle Class • System Investments+300 MM $4 Billion (2012-2014) • Rated No. 1 Beverage Supplier for Customers* * 2012 Kantar Rating21
  22. 22. India: Strong Growth in a Competitive Environment 2012 vs 2009 NARTD Performance Volume Share Value Share • 3 of Top 5 Sparkling Brands • Maaza – India’s #1 Juice Drink 2010 2011 201222
  23. 23. Eurasia & Africa Group Delivering Results Over the Short and Long Term23
  24. 24. Our Opportunities Are Shaped By Three Forces Growing Leadership NARTD 2012 vs 2009 Volume Value Share Share 2010 2011 2012 Economic Outlook/ Natural Resources 2020 DemographicPer CapitaOpportunity • 66% of World’s Trends Oil Reserves • 75 Million• 1.9B Population Additional• 52 Per Capita Urban Residents Consumption Excluding India and SW Asia BU24
  25. 25. A Solid Foundation to Capture the Opportunity Industry Volume Industry Retail Value 2012 2020 2012 2020 #1 Sparkling #2 Water #2 Sports Drinks #1 Juice & #2 Tea Juice Drinks25
  26. 26. Our Investments Continue to Strengthen Our Foundation Africa Middle East Russia The Next Frontier Brand Portfolio Integrated Marketing • Emerging Economic • Vibrant Juice Category • 20% Growth in Brand Powerhouse • Investment in Aujan Coca-Cola in 2012 • Invest in Retailers’ Skill − RANI is #1 Juice • Sochi 2014 Olympics Development Brand in the and Olympic Torch Middle East Relay26
  27. 27. Sochi 2014 Olympics27
  28. 28. Investing Together for a Better Tomorrow in Coca-Cola Americas28
  29. 29. Coca-Cola Americas Overview Large, Dynamic Consumer Base Population of ~950 Million • North America: Best 34% of Population Under 21 Brand, Sales & Customer Service System • Latin America: Drive Sustainable Growth Solid Presence 225+ Brands ~130 Bottling Partners 50% of Total Company Volume29
  30. 30. North America Group Best Brand, Sales & Customer Service System
  31. 31. North America: Executing Our Consistent Strategy to Win in this Profitable Market Our Strategy ● Build Strong Brands ● Translate Brand Value into Customer Value ● Invest in Capabilities to Sustain & Repeat Our Market ● Expanding Population ● Favorable Demographics ● Vibrant NARTD Business31
  32. 32. We Are Building Strong Brands…and Delivering Strong Results 2012 Full Year Favorite Brand vs Primary Competitor Volume Value Share Share 2.0x 2.9x 5.9x 6.3x 2.0x 1.6x 4.0x Sparkling Still Sports Drinks Tea Juice/ Juice Drinks Energy NARTDSource: USA B-CUBED, 12MMT Dec 12 (Ages 13-64)32
  33. 33. We Are Creating Value Across Categories Sparkling Beverages Still Beverages 2012 Immediate Consumption Trends1 Juice & Juice Drinks3 34% +10 Value Share Percent Change 31% Point 29% Value The Coca-Cola Company +5.9% Swing Share 26% Swing Primary Competitor +4.8% +1.1% 2009 2010 2011 2012 Future Consumption Pricing2 Sports Drinks4 79% 73% $4.94 +11 $4.74 Point Value $4.55 Share $4.32 16% 21% Swing 2009 2010 2011 2012 2009 2010 2011 2012 1 3 Nielsen Total US, All Measured Channels, Chilled Juice & Juice Drinks (Simply/MM vs Trop/Dole) Nielsen Total US, Convenience Retail, Immediate Consumption Packages 2 Nielsen Total US, Supers >$2MM, EQ Price, Future Consumption Packages, Per Equivalent Case 4 Nielsen Total US, All Measured Channels, Sports Drinks (Powerade vs Gatorade)33
  34. 34. We Are Investing in Capabilities to Sustain and Repeat CUSTOMER GROWTH STRATEGIES 1 2 3 4 5 Provide Drive Leverage Deliver Advance “One Voice” Revenue Category Best-in-Class To Our Shopper Growth Advisory Customer Customers Marketing Management Capabilities Service34
  35. 35. North America System Objective: Design & Implement the Most Effective Business System MAKE IT BEST MAKE IT BETTER MAKE IT WORK35 35
  36. 36. We Are Investing in System Capabilities Product Supply & ● Eliminated Waste ● Standardizing Best Customer Care ● Improved Customer Service Practices ● Identified Further Across CCR Synergies ● Optimize Processes ● Building Common & Systems Information ● Optimized CCR Legacy ● Enhance System Operations Foundation AcrossTechnology Systems System CapabilitiesHuman Resources & ● Standardized Benefits ● Accelerating System-Capability Building Across CCR wide Capability ● Activated HR Strategies Investments36
  37. 37. We Are Promoting the Category and Our Brands37
  38. 38. Latin America Group Driving Sustainable Growth
  39. 39. We Are Delivering Sustainable and Balanced Growth 3-Year Volume CAGR 2010-2012 6% 7% 5% 5% 3% Latin Latin Mexico Brazil South America Center Latin Group39
  40. 40. We Are Investing in Brand Coca-Cola Consumer Favorite Growing Relevance Brand Leadership Strong Consumer Engagement 4% + Recruitment Volume Growth + Continuous 3-Year CAGR 2010-2012 Investment 2.1 pts 20x vs Key Competitor* Share Change** * Source: Millward Brown (Average of Latin America) 2010-2012 ** Source: Nielsen40
  41. 41. We Are Investing in Our Leading Brands Portfolio Category Brands 2020 Vision Juice & Juice Drinks • Icon of Well-being for Still Beverages Sports Drinks • Category Leader Coffee • Leader in On-Premise Coffee Solutions Value- • Establish KO as a Player Added Dairy41
  42. 42. We Are Investing in System Capabilities Investing Ahead Strengthening Our Price & Pack Architecture of Demand • Refillables & New IC Entry Packs• System investment • Revenue Growth Best Practices commitments • Cooler Placement − Mexico USD$5B (2010-2014) − Brazil R$14B (2012-2016) Optimizing Commercial Advantages − Chile USD$1.3B (2012-2016) • Innovative Still Beverage Business Models • Route-to-Market Technology • Consumer Direct Pilots Growing in a Sustainable Way • Recycling Plants • Community Development Programs • PlantBottle and Lightweighting42
  43. 43. We Are Investing Together for a Better Tomorrow43
  44. 44. We Are Capturing the Opportunity Leading the Gaining Market Share Industry 2012 vs 2009 6%YOY Increase Volume Value 4% Share Share 2% Global NARTD 0% Sparkling 2010 2011 2012 Still KO Volume NARTD Industry Volume* Personal Consumption * NARTD excludes milk and bulk water44
  45. 45. Our Journey to 2020 Past Present Future • Added $30+ Billion to • Coca-Cola Continues • On Our Way to Brands in Market Capitalization to be World’s Most Doubling System • Sparkling Added 12+ Valuable Brand* Revenues by 2020 Billion Incremental • Growing World’s • Continue Creating Countries Transactions Greatest Beverage Sustainable Value Brand Portfolio While Making a Lasting Difference * Per Interbrand’s 2012 Best Global Brands Report45
  46. 46. Investing Together for aBetter Tomorrow CAGNY 2013 ● FEBRUARY 22, 2013