04/23/2025
$KO Q1 2023 Earnings Call Transcript Summary
Dara Mohsenian welcomes Henrique Braun from Coca-Cola to a conference and introduces him as the President of International Development. Henrique Braun oversees seven operating units spanning Latin America, Asia Pacific, Africa, Eurasia, and the Middle East, which make up a large portion of the company's growth algorithm. He has 27 years of experience with Coca-Cola and is excited about the growth opportunities in these regions.
The growth stage of international development in territories is important for the soft drink and NRTD industry. There are great opportunities for growth and the market is volatile but has potential for best practices. The demographics of these territories make it a perfect market for recruiting young adult consumers. This plays a role in achieving the long-term growth algorithm for Coca-Cola. The main objectives of the new role include accelerating growth, improving capabilities, and shifting capabilities across the market.
Henrique Braun discusses the importance of revenue growth management capabilities in the current global environment and the efforts to build these capabilities across different markets. He also highlights the focus on network development with bottlers and the alignment of strategic priorities. Looking ahead to 2024, the company plans to continue building momentum in markets such as Latin America and India, which have different stages of development and business speed.
The speaker discusses the different stages of development in various markets, such as Japan, India, and Africa, and the company's focus on building capabilities in these regions for sustainable growth. They also mention their transformation process over the past five to six years, including pruning the number of brands from 400 to 200 for increased scalability.
The company has been focusing on leveraging their marketing plans to drive global scale for their brands, particularly in regions like India where brands like Thums Up are performing well. This has allowed them to have a more focused and effective approach to investing in building their brands globally. They have also accelerated their revenue growth management capabilities to adapt and win in different markets. The company measures success by the number of weekly consumers they are able to recruit and retain, which has been a key metric in their success.
The company's footprint in the industry is growing and they see potential for further growth by expanding into new categories. The speaker, Henrique Braun, discusses how their revenue growth management capabilities have been developed in Latin America and how they have navigated through COVID and inflation. They have faced challenges in markets with hyperinflation, such as Argentina and Turkey, but also see opportunities for growth in Africa.
The company needs to develop a strategy to take advantage of inflationary markets by using their RGM capabilities to offer the right packages and portfolio mix. This will allow them to play in different channels and cater to both premium and affordable segments of consumers. In markets with moderate inflation, a balanced equation of volume, pricing, and mix is established, and the company can explore different channels to maintain a balanced health equation. An example of this is seen in Mexico, where the company launched new packages and pricing to connect with consumers and increase transactions, both in the HORECA channel and for home consumption.
Technology and AI have greatly enabled the growth of the market and have helped generate data insights from consumer, customer, and enterprise connections. Examples include the use of first-party data from vending machines and eB2B platforms to inform RGM algorithms and pivot packaging configurations. This has allowed for greater agility and success in the marketplace.
Henrique Braun, the CEO of RGM, discusses the potential for RGM to continue to grow and iterate in both developed and developing markets. He mentions India as an example of a market where RGM has been successful in accelerating growth through data and portfolio expansion. The interviewer then asks about Latin America and Braun explains that the region has seen strong growth in markets like Mexico and Brazil, and discusses the key drivers of this growth and the strategies for sustaining it in the changing consumer environment.
The success of Coca-Cola in Mexico is due to years of partnership with local bottlers and a streamlined organization structure. This has allowed for better decision-making and tapping into synergies for growth in still beverages. Despite historical volatility in the region, the company is well-positioned to continue its momentum due to investments and learnings from previous years.
Henrique Braun discusses the strategy for Coca-Cola in Latin America, emphasizing the importance of aligning with bottlers, investing in strong brands, and having flexibility to adapt to changing market conditions. He also mentions the volatility of the international market and the need to be prepared for the unknown. In regards to China, he notes that the economic recovery has been slower than expected and that the company's playbook has changed in response. He also mentions his previous experience in China and how it compares to the current situation in India.
The company is adapting to the new normal post-COVID in China and sees long-term potential in the country. They are prioritizing their core categories, such as sparkling drinks, juice, and premium coffee and tea, while not focusing on less promising categories in the near term. They have learned to pivot quickly and have a clear focus on where to play and how to play with their partners. The two local bottlers in China are important partners who understand the market and operate with a local mindset. The company expects a challenging environment in the short-term but will continue to focus on what they can control.
The speaker discusses the success of Coca-Cola in Japan, attributing it to the company's focus on a diverse portfolio of beverages and their innovation in the market. Despite challenges such as a deflationary economy, Coca-Cola was able to increase prices and see strong growth in the country.
The speaker discusses the growth mindset of the company and how it has allowed them to take risks and pivot quickly in markets like Japan. They attribute their success in Japan to their strong fundamentals, RGM capabilities, and alignment with bottlers. They also mention their investments in India to drive long-term growth, despite the challenges of the market.
Henrique Braun, a leader at Coca-Cola for almost 30 years, discusses the company's growth in India and its potential for the future. He emphasizes the importance of investing in the right capabilities and building a strong foundation in emerging markets. He also reflects on the strength and opportunities of the organization, noting that the company is constantly striving to improve and adapt to changing markets.
The past five years have seen a major transformation under James' leadership, with a focus on becoming a total beverage company and being consumer-centric. This has led to the expansion into new categories such as coffee and alcohol. The organization has also been restructured for success, with a more networked approach and a focus on leveraging the global footprint for growth. The strong relationship with bottlers has also contributed to the success of the transformation.
The company is able to successfully lift and shift their products to new markets thanks to the willingness of their bottlers to communicate and learn from each other. As the company expands internationally, they are able to leverage their global connections more efficiently. The company is confident in their ability to continue thriving, despite the challenges they may face, as they have been in business for 137 years. The speaker thanks the interviewer and audience for their time.
This summary was generated with AI and may contain some inaccuracies.