Coca-Cola Co. leverages ‘disciplined’ innovation, increases marketing to build on strong Q2 results

The company raised its annual organic revenue target to a projected 12-14% and adjusted earnings per share to 12-15% versus a prior forecast of a high single digits increase for both after net revenues in the quarter grew 42% to $10.1bn and organic revenues grew 37%.

“We are encouraged by our results and raising our top line, bottom line and cash flow guidance even as we are accelerating investments in the future. At the same time, we also recognize the trajectory may be dynamic and because of that, we must remain flexible to respond to changes in the environment,”​ James Quincey, chairman and CEO of The Coca-Cola Co., told analysts during the company’s second quarter earnings call July 21.

He explained that much of Coca-Cola’s revenue growth in Q2 was attributed to the ongoing recovery of the away-from-home business in markets where the threat of COVID-19 is easing with increased vaccinations. However, he added, the recovery is “asynchronistic,” and Coca-Cola is exploring other ways to drive sales, including innovation and stepped up brand building and marketing.

‘We’re certainly starting to see more experimentations … and more discipline’

A year after a 27% drop in year-over-year sales​ prompted Coca-Cola to cut a number of “zombie brands” and declare that it would focus on “fewer but bigger and stronger” innovations, the company’s disciplined approach to scaling “big bets” and innovating through “loved and scaled brands” is paying off.

Quincey explained that when it comes  to innovation, “we’re never satisfied as a kind of philosophical starting point, but we’re certainly starting to see more experiments happen out there and more discipline” ​ in identifying and stopping innovations that aren’t working and investing in those that “have legs to be taken to the next place.”

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