Coca-Cola increased marketing spend to create brand value amid price hikes

Dive Brief:

  • The Coca-Cola Company saw net revenues grow 12% to $11.3 billion in Q2 2022, per its latest earnings report. The company’s new marketing model is focused on adding and retaining consumers through experiences that link consumption with passions like music and gaming, per an earnings call.

  • The Global Magic Weekends campaign, in partnership with more than 20 foodservice aggregators, helped drive 3.5x redemption levels for Coca-Cola combo meals compared to pre-campaign levels, chairman and CEO James Quincey said on the call. The company also launched digital-first brand campaigns for Smartwater and Vitaminwater that are delivering strong results, he added.

  • Despite economic pressures on consumer spending, continued recovery in away-from-home channels like travel and theme parks helped drive the company’s revenue growth. Coca-Cola increased consumer and customer-facing spending to create more value for brands even as prices increased, CFO John Murphy explained on the call.

Dive Insight:

Coca-Cola topped analyst expectations for its quarterly revenue due to pricing increases and growth in global sales volume, while also working to create value for brands and justify new price points with an increased investment in marketing. The company increased its full year organic revenue guidance as it expects to be able to weather continued economic pressures and a coming recession.

“We expect the consumer environment to be more challenging, and we are preparing accordingly, stepping up our investments, sharpening our resource allocation capabilities and tapping into data to better reach our consumers,” CEO Quincey said on the earnings call.

The company is leveraging strategic experimentation and scale to create global brand campaigns to expand its consumer base by connecting consumption to consumer passions. For example, the music-focused Coke Studio effort that first launched in Pakistan has now evolved into a digital-first, always-on music platform that spotlights breakthrough talent and leverages QR codes. Coca-Cola recently promoted Coke Summer Music events with an AR activation on Snapchat, while its Sprite brand previously launched a unified global music program.

Similarly, the Global Magic Weekends campaign, which engages consumers around gaming and music, is seeing promising results, both in redemption levels of Coca-Cola combo meals and a 50% lift in outlets with Coca-Cola Zero Sugar availability. Activating around culture continues to be an imperative for marketers — especially CPG ones — seeking to engage with younger consumers that are difficult to reach through traditional ad channels.

In kind, the company has already seen strong results with digital-first brand campaigns for its Smartwater and Vitaminwater brands. Smartwater used snackable video content on social platforms with celebrity influencer Zendaya, while Vitaminwater partnered with musician Lil Nas X on TikTok — efforts the company hopes will generate excitement for its brands and recruit younger drinkers.

Along with its water brands, Coca-Cola has seen promising early results from product innovations including Fanta Dragon Fruit Zero Sugar, Minute Maid Aguas Frescas and Coke Starlight — the first offering from its experimental Coca-Cola Creations platform. The company is also seeing its flavored alcohol beverage business grow as it gains direct-to-consumer market share; it now reaches more than 6 million consumers via digital channels.