THE POWER OF QUALITY LEADERSHIP. Alfredo Rivera President, Latin America

Transcription

1 THE POWER OF QUALITY LEADERSHIP Alfredo Rivera President, Latin America

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-related concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in our beverage products or packaging materials; an inability to be successful in our innovation activities; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging and developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States and throughout the world; increased cost, disruption of supply or shortage of energy or fuels; increased 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; significant additional labeling or warning requirements or limitations on the marketing or sale of our products; an inability to protect our information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic conditions in the United States; unfavorable economic and political conditions in international markets; litigation or legal proceedings; failure to adequately protect, or disputes relating to, trademarks, formulae and other intellectual property rights; adverse weather conditions; climate change; damage to our brand image and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; an inability to achieve our overall long-term growth objectives; deterioration of global credit market conditions; default by or failure of one or more of our counterparty financial institutions; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer pension plan withdrawal liabilities in the future; an inability to successfully integrate and manage our Company-owned or -controlled bottling operations; an inability to successfully manage our refranchising activities; failure to realize the economic benefits from or an inability to successfully manage the possible negative consequences of our productivity initiatives; failure to realize a significant portion of the anticipated benefits of our strategic relationship with Monster; inability to attract or retain a highly skilled workforce; global or regional catastrophic events, including terrorist acts, cyber-strikes and radiological attacks; 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, 2016, 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.

3 LATIN AMERICA GROUP Overview Business Units & Key Bottlers 39 markets primarily developing and emerging 500+ million consumers $90B in industry retail value KO value share ~48% KO revenue $4B Portfolio (retail value mix) Value Share Position Sparkling Soft Drinks #1 Energy* #2 Juice, Dairy & Plant #1 Hydration #3 Tea & Coffee #1 8% 1% 0.2% 7% 84% Business Unit Volume Mix Mexico 45% Brazil 22% Latin Center 14% South Latin 19% All numbers 2016 Percentages may not add to 100% due to rounding *Energy brands are owned by Monster Beverage Corporation, in which TCCC has a minority investment. 1

4 WE ARE FACING A CHANGING CONTEXT Economic Stabilization: End of commodity super-cycle & hyper-inflation/devaluation Price to restore growth through revenue management Budgetary Constraints: Generalized tax threats Evolving the portfolio Political Transition: Increased stability Invest ahead of demand for long term Business: Latin American consolidation and rise of Latinas Leverage Pan-Latam opportunity 2

5 WE HAVE BUILT SOLID POSITIONS BUT STILL HAVE ROOM TO GROW Latin America Industry Retail Value Growth ( ) $ Billions CAGR KO Value Share 2016 Gain vs 2010 Sparkling Soft Drinks $14 ~6% >50%, +3% Juice, Dairy & Plant $7 7-8% ~20%, +3% Hydration $6 8-9% ~20%, +4% Energy $ % ~5%*, -4% Tea & Coffee $1 8-9% ~35%, +23% *Energy brands are owned by Monster Beverage Corporation, in which TCCC has a minority investment. We expect the industry to grow ~$30B by 2020 at a ~7% CAGR 3

6 QUALITY LEADERSHIP IS THE FOUNDATION FOR GROWTH Quality leadership enables growth in: Leader categories, by allowing for more risk taking to adapt faster to changes in context Challenger and Explorer categories, by providing the resources to: Seed, expand and win Shorten the learning curve through re-application of best practices 4

7 IN MEXICO, WE LEVERAGED OUR LEADERSHIP TO LEARN, INNOVATE AND ADAPT OUR PORTFOLIO Context Our Actions Results New tax We tested and learned Stronger portfolio and revenue growth acceleration 1 peso per liter tax on sugar beverages Innovative marketing Revenue management Execution discipline Reformulation Sparkling Value Share NARTD Value Share Revenue Growth +2 pts* +1 pt* 13% ** * 2016 v 2013 ** CAGR currency neutral system revenue growth 5

8 IN CHILE, WE APPLIED THE LEARNING FROM MEXICO AND TESTED A HOLISTIC PLAYBOOK Context Our Actions Results New tax, tv ad ban and label 18% Excise tax on sugar beverages TV advertising ban during day time for full-sugar beverages Labelling We applied Mexico learning and Innovative marketing Revenue management Execution discipline Our results are encouraging as we are recruiting more consumers Weekly consumption* Sugar -% Improvement 2016 vs pts* -9 % Reformulation Coca-Cola Zero mix +5 pts* Engaged on regulation with stakeholders Sparkling System revenue growth 2x *Percent of core consumer target that drank Coca-Cola Zero in previous 4 weeks 6

9 System Marketing, Sales & Distribution IN LATIN AMERICA WE ARE APPLYING OUR LEARNING FROM MEXICO AND CHILE TO EXPAND QUALITY LEADERSHIP EXPAND THE PORTFOLIO Industry Value Growth (Billions) Reduce sugar in portfolio Develop small packages Sparkling Soft Drinks $14 EXECUTE RELENTLESSLY Price to grow Win at the Point Of Sale ENGAGE DIALOGUE Be part of the solution Juice, Dairy & Plant Hydration Energy Tea & Coffee $7 $6 $1 $1 7

10 QUALITY LEADERSHIP IS THE FOUNDATION FOR GROWTH Quality leadership enables growth in: Leader categories, by allowing for more risk taking to adapt faster to changes in context Challenger and Explorer categories, by providing the resources to: Seed, expand and win Shorten the learning curve through re-application of best practices 8

11 IN MEXICO, WE LEVERAGED OUR LEADERSHIP TO WIN WITH CHALLENGERS AND EXPLORERS 2006 Market Position: # 6* Mexico s Business Roadmap 2016 Market Position: # 1 JUICE JUICE DRINKS Create a Vision Adjust Operating Model Build or Acquire Capabilities TEA HYDRATION ENERGY DAIRY System Marketing, Sales & Distribution * Excluding sparkling soft drinks Volume Grew 2.6x and System Operating Income 5.7x 9

12 IN 10 YEARS, WE TRANSFORMED OUR CHALLENGERS AND EXPLORERS IN MEXICO Acquisition: Know How, Capabilities, Critical Mass, Resources From Juices and Nectars to Mega Brand Portfolio +31pts Value share gained Category Development Consistent investment to create quality leadership Product Superiority (Hot-fill / ION4) +39pts Value share gained Consolidate and Create a Masterbrand Leverage Masterbrand Invest in light-weight packaging capability +650bps OI Margin (vs 2011) 10

13 IN LATIN AMERICA, WE ARE APPLYING WHAT WE LEARNED IN MEXICO TO WIN IN CHALLENGERS AND EXPLORERS 2016 Market Position* Business Roadmap LEADERSHIP #2 #2 #3 #1 Create a Vision Profitably Scale Challengers and Explorers to Leaders Create New Operating Model Evolve model from concentrate to fit-for-purpose Increase manufacturing & RTM versatility Build or Acquire Capabilities Broaden price-packaging offering Expand into new categories Industry Value Growth (Billions) Sparkling Soft Drinks Juice, Dairy & Plant Hydration $7 $6 $14 Import/Export winning brands Energy $1 #1 #2 Killing zombies System Marketing, Sales & Distribution Tea & Coffee $1 * Excluding sparkling soft drinks Clear destination and aligned strategies 11

14 QUALITY LEADERSHIP IS THE FOUNDATION FOR GROWTH Risk taking to test, learn and apply Investing in Explorers and Challengers Executing with discipline to profitably expand Beverages for Life 12