Coca-Cola, Not Content with Results, Puts Emphasis on Diet Portfolio
The Coca-Cola Co. reported fourth quarter revenue of $5.26 billion, a 2% increase from $5.18 billion one year ago. For the full year, it reported only modest growth in revenue and unit case volume, prompting its CEO to say the company was not content with the results.
“We are not satisfied with our performance in 2004,” CEO Neville Isdell said in a statement. “By most measures, we did not perform to our potential or the expectations of our shareowners. On the whole, I believe 2004 will be remembered as the beginning of an important transition for The Coca-Cola Co. We are making the necessary course correction that will enable us to fulfill our enormous potential, accelerate growth and create value for shareowners over the long-term.”
Donald Knauss, the head of Coke’s North America unit, said in a conference call that the company plans to accelerate its marketing this year with a “major reemphasis” on the diet portfolio, including Diet Coke, to capitalize on health and wellness concerns. The plan calls for doubling spending in North America on those products, a Coke spokesperson said yesterday.
The company said last fall that it has planned for an additional $350 million to $400 million on marketing this year. The major push includes a shift away from local, promotional type ads to big-media plays that could reach consumers across an entire country or continent. The company said the strategy would not only create efficiencies by leveraging ads developed in one part of the world and using them in other markets but also ensure consistency of message and brand.
Knauss used the example of a white Christmas TV spot produced outside the U.S. that ran in many European markets and was then tweaked to run here in the U.S.
Earlier this month, Coke said it would begin selling Diet Coke sweetened with the sugar substitute Splenda this spring, with packaging that has a distinct label with the sweetener named. It will continue to sell traditional Diet Coke, which is sweetened with aspartame.
The company also reported a profit of $1.2 billion for the quarter, a 30% jump from last year. The quarter and year ended Dec. 31.
Unit case volume in North America decline 1% in the quarter reflecting poor performance in the retail division due to poor weather, higher retail pricing and lower than expected sales from the new mid-calorie cola product C2. For the full year, unit case volume was flat.
The company said when it reported its third quarter results last October that C2 has achieved positive results in terms of awareness, trial and repeat measures. High pricing when the product sold for 40% above Coke’s core brands hurt early summer sales.
Revenues for the year jumped 4% to $22 billion versus $21 billion. Selling, general and administrative expenses, which includes marketing and innovation activities, increased 9%.
