Strategy

Coke brews up success with shift in marketing strategy, tech-enabled innovations

Company boosts brand value, sales growth through “innovation agenda.”
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· 3 min read

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This is the new Coke (not to be confused with the disastrous New Coke of 1985—we wish Coke Spiced better luck).

Executives at The Coca-Cola Co. said during its Q4 earnings call this week that a shift in its marketing strategy and the use of innovations like artificial intelligence have boosted brand value and, importantly, product sales.

“Across our business, we continue to prioritize agility and focus on improving every aspect of how we operate,” CEO James Quincey told analysts.

The beverage company shifted its marketing focus “from a TV-centric model to a digital-first organization that balances local intimacy, scale, and flexibility” to cater to younger consumers, Quincey said. Coca-Cola hyper-caffeinated its digital mix from less than 30% of its total media spend in 2019 up to 60% today. Before, Coke was spending months to create a TV ad, but now, it can create thousands of “contextually relevant” pieces of digital content, Quincey said of the strategic shift.

A campaign that encourages consumers to view online content through “digital portals” on Coke product packaging resulted in more than 1.2 billion YouTube views and 100 million music streams, “resulting in strong recruitment of Gen Z drinkers,” Quincey said.

The result? According to Kantar, the value of the Coke brand increased more than $8 billion last year, placing it among the 10 most valuable brands globally. Also, Morning Consult named Sprite among the most popular brands with Gen Z.

AI has good taste. Coke execs also detailed the company’s “innovation agenda” to build its “competitive advantage.” The strategy includes “digital tools, ingredient-processing technology and AI,” of all things, to “create bolder and more successful innovations,” Quincey said.

Quincey used Coke Zero as an example, claiming the product’s “superior taste” drove volume growth of 5% last year. The company also introduced reformulated Sprite and Fanta in 25 markets, which led to mid-single-digit volume growth.

Sparkling results. Coca-Cola had a strong fourth quarter, filling its glass with $10.8 billion of revenue versus an expected $10.7 billion, the Associated Press reported. Growth in markets including Germany and Mexico were able to offset the flat taste from lower US consumer demand, according to the AP report.

The company benefited partly from “hyperinflationary pricing,” CFO John Murphy said on the earnings call. Coca-Cola expects organic revenue growth between 6% and 7% in 2024, Murphy said.

“We anticipate hyperinflationary pricing will continue to play a role in 2024, but it will moderate throughout the year,” he added.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.