Tuesday, November 17, 2009
Coca-Cola aims to double system revenue by 2020
Coca-Cola Co unveiled goals on Monday that call for the revenue generated by the company and its bottlers to double to roughly $200 billion by 2020, with profit margins increasing.
Coke also said it hopes to more than double the number of soft drink servings it sells to more than 3 billion per day by the end of 2020.
The world's largest soft drink maker discussed its targets for the next 10 years at a two-day investor meeting in Atlanta, its first such gathering in its hometown in more than a decade.
Chief Executive Muhtar Kent said the annual revenue growth rate implied by the 2020 goal is a little higher than the top end of Coke's standard long-term growth target, but he sought to assure investors and analysts that it is "definitely achievable."
"It's going to take a lot of work. It's going to take some fantastic marketing and a lot of synergies to be powered back into marketing," Kent said. "But we believe our system has the capacity to achieve that trajectory."
Kent said there were several worldwide trends that supported the accelerated growth in the medium- to long-term -- rising economic power of developing countries, increasing urbanization and a growing middle class.
For example, Chinese consumers drink an average of 8 servings of Coca-Cola per year, compared with 214 in the United States and 387 in Mexico.
In addition to its trademark cola brand, Coca-Cola has 12 other brands that currently generate over $1 billion in retail sales, including Sprite, Fanta, Dasani water, Powerade sports drink and Georgia coffee. By 2020, Coke said it should have about 30 brands with sales of $1 billion.
FOCUS ON MARKETING
Coke derives more than three-quarters of its revenue from international markets, and is therefore able to offset falling sales in the United States with strong growth in emerging markets like India, China and Brazil. The company said last week it was ramping up investment in Brazil.[ID:nN12295033]
Industrywide sales of carbonated soft drinks had been falling in the United States even before the recession slammed the brakes on consumer spending. Some consumers, taking heed of growing awareness of nutritional health, have opted for drinks such as bottled water, juice and tea.
Competition in the sagging U.S. market is about to heat up, since No. 2 soft drink maker PepsiCo Inc (PEP.N) recently agreed to buy Pepsi Bottling Group Inc (PBG.N) and PepsiAmericas Inc (PAS.N), its largest bottlers, in a bid to cut costs, after a decade of operating as separate companies.