Coca Cola, a global beverage giant, believes that the “dark moment” brought about by the new outbreak should now be over.
Just now, the company’s financial report for the second quarter of 2020 was “fresh” and announced its latest progress in response to the epidemic. Snack generation noted that Coca Cola pointed out in the financial report that the Chinese market was in the current quarter
“In this rapidly changing environment, we continue to adjust and accelerate the implementation of the strategy. I’m proud of the staff of the Coca Cola system. We believe that the most challenging second quarter of the year has passed. Next, we have more to do in order to drive the implementation of a consumer centric full category strategy. “
Said James quinkey, chairman and chief executive of Coca Cola.
As of July 20, Beijing time, of the 23 analysts tracked by Bloomberg, 18 gave Coca Cola a “buy” rating and five gave a “hold” rating, with an average target price of $52.86. After the financial report was released, Coca Cola rose more than 3% in the opening session.
Let’s take a look.
“The hardest time is over”
First, focus on the performance of the Chinese market.
Although Coca Cola did not disclose the performance data of China market separately, xiaoshidai noted that in its financial report, single box sales in Asia Pacific region decreased by 18%, which was mainly due to the strict closure and isolation measures taken by the Indian market due to the epidemic, but the decline was “partially offset by the good performance of the Chinese market”.
Coca Cola’s revenue in the Asia Pacific region fell 11% in the second quarter due to the adverse impact of the epidemic and exchange rate. Driven by soft drinks, the company’s market share by sales increased in the Asia Pacific region’s non-alcoholic ready to drink market.
Some products of Coca Cola in China
Let’s look at global performance.
In the second quarter, Coca Cola’s net income was $7.2 billion, with earnings per share of $0.41. “The decline in income is mainly due to the pressure on non home consumption channels, which account for about half of the company’s total revenue.” Coca Cola said.
According to the financial report, since the last quarter’s earnings report in April, Coca Cola’s global single box sales have improved to a median decline level.
(global) performance improvement is driven by improved sales trends in non home consumption channels and continued growth in home channel sales. ” Coca Cola said the improvement in the trend of going out in the second quarter was closely related to the relaxation of home isolation measures and expected the trend to continue in the second half of 2020.
Coca Cola believes that the second quarter will be the “most affected quarter” of the whole year, which is consistent with Zhan kunjie’s earlier statement. However, the company also stressed that the final impact on the full year 2020 performance is not clear, given the uncertainties that follow from the outbreak and closure of the quarantine measures.
“Despite the high degree of uncertainty, the company is committed to becoming stronger, to win share and consumers, to maintain a strong financial position in the system, to enhance the reputation among shareholders, and to position the organization to win in the new reality.” Coca Cola said.
In order to achieve these goals, Coca Cola said it was speeding up relevant strategies.
This includes focusing investment on specific growth portfolios, prioritizing brands that consumers best reach and share. The company also said it would streamline new product plans and promote local testing in a rigorous way to further strengthen its “leader Challenger Explorer” product framework for its regional or global scale innovation.
This means that, from existing brand operation to new product research and development, Coca Cola will be more inclined to “use resources on the edge”.
However, Zhan kunjie also said in the Q & a session of the performance meeting that there will still be small brands in Coca Cola’s product portfolio. “If there are no smaller brands in the portfolio, it could be a sign of weakness.” “What we want to see is that the brand is growing steadily in a stronger direction and becoming a real ‘leader’ brand,” he said
Coca Cola went on to support the development of its product portfolio through new marketing methods, “and the effectiveness and efficiency of marketing investment will gradually change.”. In addition, the company said it would lead the Coca Cola system to improve the efficiency of the entire system to support these investments, and would invest in developing relevant new capabilities to cater to changing consumer behavior.
“The epidemic is a catalyst to accelerate the implementation of our strategy, and our organization is moving faster into the future.” Speaking at a performance meeting with Wall Street analysts tonight, Mr. Zhan said Coca Cola did face tremendous pressure in the second quarter, but its performance was still encouraging.
“In fact, in most parts of the world, the most difficult period has passed, but there is still a lot of work to be done. We are embracing change to enable our business to seize new opportunities. ” “Coca Cola is ready to accelerate its transformation and growth drive in the next few years,” he said
More ammunition in the Armory
Back to the Chinese market. In fact, in the second quarter of the summer sales season, Coca Cola, which has gradually recovered from the epidemic, has prepared more “ammunition” for the Chinese market. In terms of product expansion, the beverage giant, which is transforming towards “full category”, has made a lot of new attempts.
For example, it is the first time to open up a new channel with new brands and new products. In May this year, Coca Cola tmall’s flagship store launched a new product “zunxuan 28 waking up”. This is a brand new brand launched by the company in the category of plant drinks. At the same time, the product is sold nationwide through online channels of social e-commerce, which is the first time Coca Cola has set foot in social e-commerce in China.
Coca Cola’s new plant beverage product “zunxuan 28 wakes up”
In the second quarter, Coca Cola also introduced a new fruit juice category. According to the snack agent, innocent, a British online red juice brand invested by Coca Cola, officially entered the Chinese market in June this year. Unlike the juice squeezed out, it is directly “beaten” and ready to drink. This is the first “fresh raw fruit” ready to drink product on the Chinese market, which means innocent is trying to open up a new category in China.
According to the yingminte data obtained by snack agents, Coca Cola’s market share in China’s juice market has been ranked first in terms of sales volume from 2017 to 2018, accounting for 11.5% and 11.3% respectively, which is more than twice that of Master Kang (4% in 2018). With the addition of innocent, Coca Cola China has another “chip” in the juice market.
Innocent fresh fruit
According to incomplete statistics, Coca Cola launched more than ten new products in the Chinese market in the second quarter alone.
In addition to the above beverage, the main flavor of the beverage is the beverage with the flavor of peach juice and lemon juice.
It is worth noting that Costa coffee, which was acquired by Coca Cola earlier, has also made a lot of new moves. After launching two ready to drink products in the Chinese market for the first time in March this year, it added a new style of Jinfei latte in June and continued to increase the size of instant coffee. In the same month, Costa and onecup, a brand of capsule drinks machine, jointly launched the “pure extract” American series.
Costa coffee COSCO Coffee Co branded capsule coffee “pure” American Series
Soon, Coca Cola China will even start selling fresh milk.
Coca Cola China and Mengniu have confirmed to the food agency that they have set up a joint venture to produce and sell low-temperature milk products in China. At the end of April this year, the plan to set up a joint venture between the two sides has been given a “green light” by China’s regulatory authorities. According to public information, Coca Cola has not sold any low-temperature milk products in the mainland market so far.
Although Coca Cola China said that “there are no more details about the specific brands and products involved in the cooperation”, it had previously pointed out to small food agents that the newly established joint venture would make full use of the advantages of both investors in dairy product research and development, dairy processing technology, brand influence and distribution channels, so as to bring a “new brand of low-temperature milk” to Chinese consumers ”。
Increase investment in production capacity
While enriching its product line, Coca Cola, which focuses on the Chinese market, is also increasing its capacity investment.
Xiaoshidai noted that in May this year, COFCO Coca Cola officially launched a fully automated pop-up beverage production line in Sichuan, which is known as “the fastest and fully automated production line in the world’s beverage industry”. It can produce 120000 cans of pop-up drinks per hour, with an annual output of 260000 tons and an output value of 1.3 billion yuan. At the same time, it is also the only automatic production line in the global Coca Cola system that can realize a variety of different packaging specifications at the same time.
COFCO Coca Cola starts the full automation production line of pop-up beverage in Sichuan
Next, Coca Cola bottling companies in China will have a number of new production lines put into production.
Xiaoshidai learned from Coca Cola that in the second half of 2020, Swire will have six new production lines put into operation in China, with a total investment of 250 million yuan and an additional annual capacity of more than 1.7 billion yuan. Among them, on July 10, two new production lines of Guangdong Taigu Coca Cola Huizhou plant were officially put into operation; last year, the company’s output value was 655 million yuan. After adding new production lines, the annual output value of this year is expected to reach 762 million yuan.
It is revealed that Swire Coca Cola China also plans to add a plastic bottle production line in Hubei Province, which is expected to be put into production in May 2021.
Zhengzhou Taigu Coca Cola expansion project
In addition, xiaoshidai introduced that at the end of March this year, Zhengzhou Taigu Coca Cola officially signed the contract for capacity expansion and reconstruction of intelligent green factory, which is expected to be completed and put into operation within two years, and the annual production capacity will reach 2.3 billion yuan after completion.
Digital speed up
Like many other brands, this year’s epidemic has accelerated Coca Cola’s digital innovation, especially in e-commerce, o2o and live broadcasting. However, the snack generation noticed that some of the ways Coca Cola plays are a little special.
For example, for catering channels seriously affected by the epidemic, in May this year, Coca Cola China opened brand halls in meituan, multipoint and other online platforms including o2o delivery, and jointly launched “group purchase package” and other preferential activities jointly with several merchants, so as to promote the rapid recovery and growth of catering channel business.
Today, Coca Cola China and meituan review also announced that they have reached a strategic cooperation to jointly explore a new digital business model. It is understood that the two sides will focus on the marketing of “to the store + home” dining scene, explore new cooperation modes such as flash shopping new retail, cross-border marketing of wine and tourism scenes, and establish Coca Cola merchant alliance. If you are interested, please refer to our post today.
Coca Cola Brand Pavilion on meituan platform
In terms of e-commerce, the company also had a good performance in the second quarter. According to Coca Cola, this year’s “618” Shopping Festival, Coca Cola’s sales ranked first in Jingdong’s non-alcoholic ready to drink beverage category, with a total turnover of 13 million yuan on the day of 618. During the period from May 20 to June 18, the total transaction volume exceeded 80 million yuan, an increase of 34% over the same period last year.
At the same time, due to the impact of the epidemic, Coca Cola’s Chinese bottling partners are increasing the number of live e-commerce.
For example, on the day of the 618 Shopping Festival, CEO Qing Lijun of COFCO Coca Cola launched the “live show” and personally launched six Amway products. Xiaoshidai learned from Coca Cola today that COFCO launched brand live broadcasting in 19 markets during the epidemic period, and the number of online viewers exceeded 31 million.
What’s interesting is that while giving consumers a live broadcast of “bringing goods”, Coca Cola also gives the customers a live “lesson”. Snack food noticed that in order to help small and medium-sized catering businesses recover as soon as possible in the post epidemic period, Coca-Cola is providing management and operation experience for restaurant owners through official account and live broadcast.
At the just concluded performance meeting, Zhan kunjie noted that Coca Cola China was “active and enterprising” in seizing channel opportunities with the concept of taking consumers as the center.
He also said that Coca Cola continued to deepen its partnership with third parties as consumers turned to delivery services and cooking at home. “For example, working with large delivery delivery platforms to introduce products to 4500 restaurant menus, accelerate the development of B2B platforms and simplify the value chain of modern channels.” Zhan said.
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