The paragraph is from Coca-Cola's Fourth Quarter and Full Year 2024 Earnings Results Conference Call. The operator introduces the purpose of the call and notes that media inquiries are not addressed during this session. Robin Halpern, the Vice President and Head of Investor Relations, introduces the key speakers, James Quincey, CEO, and John Murphy, CFO. Halpern mentions that financial schedules and non-GAAP reconciliations are available on their website. The call may include forward-looking statements. James Quincey then highlights the company's 2024 results, noting robust volume and organic revenue growth, margin expansion, and a 7% increase in comparable earnings per share, despite currency challenges and bottler refranchising impacts.

The paragraph describes the company's ongoing success and commitment to achieving its 2025 goals through a flexible strategy that adapts to challenges. They are confident in their long-term objectives due to strong momentum and industry growth opportunities across various segments. The company is leveraging its diverse beverage portfolio and local franchise expertise to capitalize on opportunities, resulting in increased market share and growth in categories like sparkling soft drinks, dairy, and tea. Despite a dynamic operating environment, consumer demand remains strong, particularly noted in the Asia Pacific region. The financial results and future guidance will be detailed by John later.

In the Asian and South Pacific region, Coca-Cola experienced volume growth during the quarter, driven by successful marketing campaigns and increased refillable options, which contributed significantly to South Pacific growth. In China, despite macroeconomic challenges, volumes increased with improved trends across Coca-Cola, Sprite, Fanta, and Minute Maid. The company plans to enhance execution by deploying more cold drink equipment and marketing campaigns in 2024. Japan and South Korea also saw volume growth through innovation and steady performance from Coca-Cola. In India, growth rebounded through innovative marketing linking Coca-Cola and Thums Up with music and movies, respectively. Maza became the company's 30th billion-dollar brand. Coca-Cola expanded its digital customer platforms significantly in India. In EMEA, European volumes declined, but the company still managed to grow revenue and profit.

The paragraph highlights Coca-Cola's strategies and performance in various regions for 2024. The company is engaging consumers with experiential marketing and aligning brands with new occasions, showing innovation success. Despite macroeconomic challenges, Coca-Cola achieved volume growth in Eurasia and the Middle East by emphasizing localized approaches. In Africa, pressure in North Africa and Nigeria led to a volume decline, but adjustments in pricing and investments in refillable options were made. Latin America saw growth in volume, revenue, and profit by linking Coca-Cola to meal occasions and increasing single-serve offerings. Over 90% of customers there utilize digital platforms for tailored experiences. North America experienced growth in transactions, volume, revenue, and profit during the quarter.

Coca-Cola and fairlife experienced growth in retail sales with successful initiatives like limited-time sparkling flavors and enhanced point-of-sale strategies. Consumer responses were positive, particularly in away-from-home channels, leading to increased distribution and benefits from product and channel mixes. The company is focused on global objectives while investing in capabilities and personalization through their network marketing model, integrating various consumer experiences. Notable campaigns, such as the Fanta Halloween activation with Warner Brothers, and innovative use of emerging technologies like generative AI for their Coca-Cola Christmas ad, demonstrate their commitment to bold creativity and scaling successes efficiently.

Over the past three years, Coca-Cola has seen significant growth in retail sales and brand recognition, thanks to its marketing transformation and focus on innovation. This includes both short-term and long-term product innovations, leading to successful launches such as Fuze Tea and Minute Maid Zero Sugar. In 2024, these innovations strongly contributed to revenue growth, and Coca-Cola plans to continue this momentum into 2025 by enhancing digital capabilities and commercial excellence. The company aims to increase outlet coverage and reduce stock shortages, recognizing significant potential in improving product placement and increasing basket incidence, which could significantly boost retail sales.

The paragraph discusses the company's strategies to drive sales and growth by enhancing marketing campaigns, increasing point-of-sale displays, and expanding cold drink equipment, with nearly 600,000 new coolers added in 2024. It highlights the importance of revenue growth management, focusing on product availability, affordability, and premiumization to improve sales and market share. Looking forward to 2025, the company acknowledges both opportunities and challenges in a dynamic environment, emphasizing its strong brand portfolio, distribution system, and employee dedication. The company plans to share more details at the upcoming CAGNY event.

John Murphy reported strong fourth quarter results, highlighting a 7% growth in comparable earnings per share for 2024, building on a 6% average growth over the past five years. Organic revenues increased by 14% with unit case growth at 2%, consistent with previous trends. Concentrate sales outpaced unit cases due to extra days in the quarter and shipment timing, while price/mix growth of 9% was driven by normal pricing actions and inflationary pricing in certain markets. Excluding intense inflationary pricing, organic revenue growth exceeded expectations. Comparable gross and operating margins improved, with refranchising aiding gross margins but currency issues impacting operating margins. Despite challenges from currency and refranchising, comparable EPS grew 12% year-over-year. In 2024, adjusted free cash flow conversion was 93%, aligning with long-term objectives. Looking ahead, the company plans to balance volume and pricing, with less reliance on inflationary pricing, and expects refranchising to slightly affect net revenues and earnings in 2025.

The paragraph discusses the company's financial expectations and strategies for 2025. It plans to invest in brand marketing and productivity, expecting higher expenses than the previous year but views them as manageable. The company anticipates currency headwinds affecting net revenues and earnings per share, and expects its effective tax rate to rise due to new global tax regulations. Projected earnings per share growth is 2% to 3%, with free cash flow expected at $9.5 billion after capital investments. The guidance includes a $1.2 billion transition tax payment, the last related to the 2017 Tax Cuts and Jobs Act, and notes that previous working capital benefits will reverse in 2025. Investments will focus on increasing fair life capacity and expanding in India and Africa.

The paragraph discusses the company's progress in acquisitions and divestitures, highlighting successful scaling of acquired brands and significant proceeds from refranchising bottling investments. It notes improvements in return on invested capital and a consistent focus on dividend growth supported by free cash flow. The company has a strategy for share repurchases and capital allocation, aiming for business longevity and stakeholder value. Looking ahead, the impact of refranchising in the Philippines and expected productivity gains in 2025 are noted, along with calendar changes affecting quarterly results. Overall, the company is executing its strategy effectively to achieve growth and expansion.

The paragraph discusses the global consumer environment, highlighting that overall, it is stable with good economic growth worldwide, including both developed and emerging markets. In developed markets, lower-income segments in the U.S. and Western Europe are facing disposable income pressure, but other consumer segments are maintaining or increasing spending, with stronger spending in North America compared to Western Europe. Emerging markets show some volatility but also demonstrate strong consumer demand, with notable improvements in India, China, and the Middle East, while Latin America remains resilient, though Africa is slightly softer.

The paragraph discusses a forecast for 5% organic revenue growth in 2025, emphasizing that this growth will likely be driven more by pricing than volume. The company intends to balance between volume and price growth, aiming for a 2-3% increase in each, though 2025 is expected to lean more towards price. Dara Mohsenian inquires about handling pricing, considering the economic pressures such as inflation and foreign exchange, and notes that low-end consumers feel stressed in some markets. James Quincey acknowledges these factors and confirms the intention to focus on pricing strategies while still ensuring some volume growth.

The paragraph discusses expectations for price and volume trends in the market for 2024 and 2025. It suggests a stronger emphasis on price rather than volume, but indicates solid volume momentum overall. The anticipated price/mix for 2024 is around 10%, with half of this from high-inflation countries, which are expected to have less impact by 2025. Without the contribution from these high-inflation areas, the price/mix for 2024 is about 5%. As inflation decreases, pricing is expected to moderate in 2025. The company aims for reasonable pricing relative to inflation and market conditions, supported by actions in marketing, innovation, and commercial execution. The operators and analysts discuss how to view organic sales growth for 2025, considering the changes seen in the fourth quarter, particularly how pricing in emerging markets might change during the year. They also seek context for a 5% to 6% organic sales growth compared to industry growth.

In the paragraph, John Murphy and James Quincey discuss the industry's growth expectations. John mentions that they are not providing extensive commentary within the current quarter, but note there are two fewer days and some inflationary pressures expected to moderate through the year. He also notes that Q2 might be a challenging period. James adds that they aim to gain market share and expect industry growth to normalize to around 4% to 5%, with their growth rate at 5% to 6%. They anticipate a return to normal growth patterns as inflation moderates, positioning themselves as long-term leaders in the industry. Additionally, there is a lighthearted note about the hold music being appreciated.

In the paragraph, Stephen Robert Powers and James Quincey discuss the outlook for 2025, highlighting anticipated margin and profitability improvements despite FX pressures and a higher tax rate. Quincey explains this growth results from years of strategic efforts, particularly in marketing and SG&A, aiming for both efficiency and effectiveness. An example includes the use of generative AI in marketing, leading to quicker and cheaper ad production. He emphasizes that the company's strategy focuses on investing in growth, not reducing marketing but making it more productive, and continuing to drive franchise growth through various commercial strategies while adapting to global changes as needed.

In the paragraph, John Murphy discusses their financial guidance, specifically focusing on gross margin expectations. He notes that while they anticipate some expansion, various factors, including currency fluctuations and commodity pressures, might offset this. The company expects commodities like juice and coffee to see low single-digit pressures and plans to use typical strategies to address these. Overall, they predict modest gross margin expansion for guidance purposes. Additionally, James Quincey comments on the global trade environment, mentioning that while their supply chain is mostly localized, they are attentive to the impacts of tariffs on materials like aluminum and steel and any changes in commodity prices due to tariffs or other factors like weather. They aim to mitigate these impacts effectively.

The paragraph discusses strategies the company uses to manage supply chain and pricing challenges. They have hedging programs and adapt to changes in ingredient prices and imports to maintain productivity and efficiency. While they are a global business, operations are primarily local, which helps manage costs. They recognize supply chain continuity as an ongoing challenge but emphasize their ability to sustain gross margins by being agile and flexible. Despite potential variations, especially in agriculture, the company is focused on ensuring consistent supply through a well-managed procurement network.

The paragraph discusses the potential impact of regulatory changes and GLP-1 drugs on a domestic portfolio, specifically in the beverage industry. James Quincey acknowledges the uncertainty of future regulatory changes and emphasizes Coca-Cola's proactive scenario planning to adapt as needed. Regarding GLP-1 drugs, he notes anecdotal evidence of their impact on food and beverage consumption but indicates that it's not significantly affecting the nonalcoholic beverage industry. Coca-Cola's sales in North America have shown sustained growth, and the company remains flexible, focusing on a diverse and high-quality beverage portfolio to adapt to any future challenges.

In the paragraph, Kaumil Gajrawala from Jefferies asks John Murphy about how the company plans to allocate cash and capital in the future after making substantial cash payments, touching on possible buybacks and M&A activities. John Murphy responds by saying there won't be a significant shift in their focus on supporting the business and maintaining dividends, noting that it's too early to detail plans for 2026. However, he acknowledges that with certain financial obligations like the transition tax behind them, the company will have more flexibility to consider M&A and share repurchases. He also emphasizes maintaining a healthy balance sheet and prepares for potential opportunities. Finally, the operator moves on to the next question from Rob Ottenstein of Evercore ISI about Walmart's modern soda shelves.

The paragraph discusses the evolving beverage industry and Coca-Cola's strategic approach to it. James Quincey emphasizes the importance of innovation and the industry’s growth potential, referencing Walmart's confidence in modern soda offerings. He highlights Coca-Cola's capability to compete in areas of strong consumer demand and mentions the company's successful track record in developing billion-dollar brands through organic growth and strategic acquisitions. Additionally, there's a mention of the impact of agricultural and industrial commodities, specifically aluminum, on costs, with a brief discussion on how the company plans to address potential inflation from aluminum price changes.

James Quincey addresses concerns about how inflation might impact affordability and volume durability, particularly in the North American market. He explains that the company's strategy involves adapting their packaging options based on relative input costs. If costs increase for one type of packaging, like aluminum cans, they can shift focus to alternatives like PET bottles. This adaptability, combined with hedging strategies and sourcing optimizations, allows the company to mitigate the effects of inflation and maintain their business model. Quincey is confident that these strategies will enable the company to continue performing well in terms of volume through 2025.

Andrea Teixeira from JPMorgan asks about the company's strategy in Mexico regarding potential volume deceleration and the impact of a strong dollar on business. She also inquires about the impressive innovation in North America, particularly the 12% growth in price mix, questioning if it's driven by Fairlife or away-from-home recovery, and whether this trend will continue. James Quincey, in response, explains that about half of the North American pricing growth is due to mix, which will moderate by 2025. While Fairlife will continue to grow, its expansion will also moderate as they await the completion of a New York factory necessary for ongoing growth. Overall, there will be more normalization of U.S. price/mix in 2025.

The paragraph discusses the success of the beverage industry in Mexico, highlighting its diverse portfolio that offers products at various price points across multiple categories. This has been achieved through consistent execution of strategies in marketing, innovation, and pricing. The mention of the peso indicates an anticipation of foreign exchange headwinds for 2025, with less impact from inflation in intense markets and more from normal emerging markets like Mexico. The latter part of the paragraph involves a question from Peter Grom of UBS, addressing concerns that organic growth might be more price-driven than volume-driven, and inquiring whether volume growth might not meet the usual 2-3% expected growth, despite showing positive momentum by the year's end.

The paragraph discusses the company's outlook and plans for 2024 and beyond. James Quincey addresses potential concerns, acknowledging some uncertainties but expressing confidence in maintaining growth, with a projected revenue increase of 5% to 6%. There's mention of a tougher cycling quarter in the year but an overall positive momentum. Charlie Higgs from Redburn Atlantic asks about the company's performance in India, which had a successful 2024. He notes that 40% of the business was refranchised to a local partner, and John Murphy explains that this refranchising aligns with their global strategy. The selected partner is expected to contribute capital, capability, and ambition to accelerate business growth.

The paragraph discusses the refranchising efforts in the Indian market and the involvement of the Jubilant group to enhance market execution. It highlights the competitive environment in India and indicates that updates on the refranchising program will be provided in the future. Additionally, during a Q&A session, Bill Chappell from Truist Securities inquires about the pricing strategy in high inflation environments. James Quincey clarifies that despite some inflation moderation, particularly in countries like Argentina, the company will continue to pass through input costs where necessary and not reduce pricing efforts.

In the paragraph, the discussion revolves around inflation and its impact on input costs, particularly in countries like Argentina, some African countries, and Turkey, where inflation has notably decreased. However, if input costs rise, businesses may have to pass these costs onto consumers despite affordability strategies. The conversation then shifts to the impact of aluminum tariffs on packaging costs. James Quincey explains that while a 25% increase in aluminum prices is significant, it won't drastically affect the overall cost structure of the U.S. business. Packaging costs are a small part of the total costs, and measures like supply chain adjustments and potential packaging shifts can manage the issue effectively.

In the paragraph, the speaker discusses the Asia Pacific market's performance in Q4, highlighting that varying results in developed markets like Japan and Australia compared to emerging markets like Bangladesh and Indonesia significantly impact the overall mix. The speaker emphasizes that analyzing the price mix in the region requires a multi-quarter perspective due to these fluctuations. The speaker concludes by expressing confidence in the company's market position, commitment to improving operations, and readiness to meet 2025 goals, while also thanking stakeholders and inviting further discussion at the upcoming CAGNY conference.

The operator concludes the conference call, thanks the participants, and instructs them to disconnect.

This summary was generated with AI and may contain some inaccuracies.