As the largest soft drink company in the world, Coca Cola once again showed its “business resilience”.
Just now, the beverage giant released its latest quarterly results. This newly released financial report shows that in the second quarter of 2022, Coca Cola’s revenue was $11.325 billion, an increase of 12% year-on-year; The operating profit was $2.341 billion; The net profit is 1.900 billion US dollars; Earnings per share was $0.70, an increase of 4% year-on-year; Global single box sales increased by 8% year-on-year.
Among them, xiaoshidai noticed that in the Chinese market, on the one hand, Coca Cola’s overall sales volume in the second quarter was under certain pressure under the resurgence of the epidemic, but it was reported that “it has begun to improve since last month”.
On the other hand, under the impact of the epidemic, due to the stronger ability of large companies to resist risks, the Matthew effect seems to be more obvious – in the field of non-alcoholic ready to drink, this head beverage enterprise operating Coca Cola, Sprite, Fanta, Yiquan, meringue, Costa Costa and other brands in China “drank” more value shares.
“The performance of this quarter fully reflects the flexibility of our business, the strength of our streamlined brand portfolio, and the effective strategies we have adopted to achieve growth in the face of operational and macroeconomic challenges.” James Quincey, chairman and CEO of Coca Cola, said.
Xiaoshidai learned that at the just concluded performance meeting, he further talked about the business performance and recovery under the epidemic in China. Next, xiaoshidai will take you to pay attention to it for the first time.
“Drink” more shares
Let’s focus on the Chinese market first.
Coca Cola pointed out in its financial report that in the second quarter, the single case sales in the Asia Pacific market increased by 11% year-on-year, which was mainly driven by the strong growth in India and the Philippines, but partially offset by the pressure brought by the decline in consumer liquidity caused by the resurgence of the epidemic in China. In terms of categories, sales growth was led by soft drinks, fruit juices and fruit juice drinks.
“Under the influence of the closure and control of the epidemic, China’s business was under pressure, and its monthly sales fell in the second quarter. However, the Chinese team rose to the difficulties. With the relaxation of most of the closure and control measures, sales in June have begun to recover. In this case, we focus on core products and star SKUs, and further transfer resources to e-commerce and o2o to adapt to the trend of consumers shifting to home consumption during this period.” Zhan kunjie said at the performance meeting today.
It is worth noting that in the Asia Pacific non-alcoholic ready to drink (nartd) market in the second quarter, Coca Cola’s value share (Note: that is, the market share calculated by retail sales) increased, mainly due to the increase in the market share of China, Japan and Australia.
Zhan kunjie, chairman of the board of directors and CEO of Coca Cola Company (information picture)
Let’s take a look at the global performance.
According to the financial report reviewed by snack generation, by category, aerated soft drinks increased by 8%, including sugar free Coca Cola increased by 12%, and flavored soda increased by 11%. Nutritional drinks, fruit juice, milk drinks and plant-based drinks increased by 6%. Bottled water, sports drinks, coffee and tea drinks increased by 7%.
“Coca Cola company still recorded extensive growth in the epidemic, and the average organic income growth in five years is at the top of our long-term growth expectation (4%-6%).” Zhan kunjie said at the meeting, “we will, as always, adhere to our goals, implement our strategies, and create more value for stakeholders.”
Looking forward to the whole year of 2022, Coca Cola raised its performance guidelines.
Today, the company pointed out that the growth rate of organic revenue in 2022 is expected to be in the range of 12% to 13%, higher than the previously estimated range of 7% to 8%; The growth rate of neutral earnings per share (non GAAP) in comparable currencies was raised to the range of 14% to 15%, higher than the previously estimated range of 8% to 10%.
“By implementing the growth strategy, we performed strongly in the second quarter. The beverage industry continued to be full of vitality, and we were able to record growth in both revenue and sales. The performance in the first half of the year and the resilience of our business gave Coca Cola confidence to raise its annual growth guidance.” Zhan kunjie said at the performance meeting.
“In the second half of this year, through a strong product portfolio, revenue growth management and the executive power of Coca Cola system, we will continue to focus on improving the company’s revenue level. At the same time, we are also making targeted investments, including strengthening brand strength and R & D capabilities, and doing a good job in implementation, which will enable us to achieve long-term success.” He said.
Sugar free style, novelty and localization
Back to the Chinese market. According to the incomplete statistics of xiaoshidai, in the second quarter, the beverage giant, which continued to promote the strategy of whole category beverages, intensively released more than 10 new products. Interestingly, from the perspective of these new products, Coca Cola China’s product innovation can be roughly divided into three directions: “popular mainstream”, “trendy novelty hunting” and “regional characteristics”.
Coca Cola China launched a number of new products in the second quarter
It is not surprising that “sugar free” continues to be the most prominent theme in meeting public demand.
Xiaoshidai noticed that almost all of the more than ten new products launched by Coca Cola China in the second quarter are sugar free, including the sugar free Coca Cola new product “rhythm square”, fanda sugar free small flavor soda series (a total of four flavors of apple, peach, grape and watermelon), and bubble water brand xiaouniverse ah! One ha! The new sugar free red bayberry Baijiu, the sugar free Peach Oolong tea launched by the tea beverage brand sunshine, and the new Yulu green tea and Tieguanyin oolong two sugar free tea drinks in the chunchashe cold extraction series.
It is worth noting that in the increasingly competitive sugar free beverage track, Coca Cola, which has always been able to play, has also “rolled” a new meaning. Xiaoshidai introduced that the “rhythm box” mentioned above is Coca Cola’s first limited product inspired by the metauniverse. It was developed and launched by Coca Cola’s global creative platform “Coca Cola creations”. In May this year, it was listed in the Chinese market in two specifications: Modern cans and bottles.
The company once introduced that the appearance prototype of this meta universe concept product was first born on a new island, pixel point, jointly created by Coca Cola and E-sports organization PWR in the game fortress night. Consumers can start the AR game experience of metauniverse by scanning the code of Coca Cola’s “rhythm box” can.
In addition to the obvious and insightful trend of “sugar free” beverage consumption, Coca Cola China has also launched a number of new drinks with popular flavors, covering sugar free and sugary categories. For example, due to the popularity of peach flavor, the flagship brand Coca Cola launched peach flavor in the second quarter, while meringue combined the two hot spots of soda and fruit juice, and launched a series of bubble drinks without candy juice. There are two popular flavors, grape and peach.
In addition to these “no mistakes” flavors, Coca Cola China is also testing some “strange” flavors.
For example, snack generation noticed that in the second quarter, Fanta introduced the “Macadamia and croissant flavor” soda from overseas markets, which is quite strange to Chinese consumers. “This product is Fanta’s global creative series. This series focuses on exploring novel and unique tastes and experiences to connect more young groups. This series launched Sweet Jasmine peach flavor in the Chinese market in 2020, and sugar free Macadamia fruit and sour horn flavor again this year.” Coca Cola China told xiaoshidai today.
In addition, Coca Cola China is also exploring some local flavors and launching new products with strong “Chinese style”. For example, inspired by the food culture in Guangdong, the company launched the juice source Guangdong guava compound juice drink in the second quarter, and launched a “Health workshop” Prunella herbal tea in the flagship store of Coca Cola tmall.
Thanks to its constantly optimized product portfolio, Coca Cola China performed well during this year’s “618” e-commerce Festival. On the jd.com platform, the sales volume of Coca Cola jd.com’s self operated flagship store increased by 18%, ranking first in the non-alcoholic ready to drink beverage category (nartd). Among them, the new product “rhythm square” of Coca Cola lechuang platform ranked first in the list of low sugar beverage new products during JD 618. On Alibaba’s new retail platform, the total sales volume of Coca Cola flagship store and tmall supermarket increased by 36.5% over the same period last year.
Large capacity investment
In order to meet the growing market demand, Coca Cola China has joined hands with two major bottling partners COFCO Coca Cola and Swire Coca Cola to continue to increase the supply chain. Since the second quarter, many new plants or production lines have been officially put into operation; In the future, the two bottling partners have more investment plans.
Xiaoshidai once introduced that earlier this month, COFCO Coca Cola Guizhou plant was put into operation, which is the 20th plant of COFCO Coca Cola and the 46th plant of Coca Cola China system. The total investment of Guizhou plant in the first phase is about 270 million yuan, and about 42000 square meters of modern plants and auxiliary facilities are newly built, with an annual production capacity of about 170000 tons. In the future, Guizhou plant will also carry out phase II construction of the project, and eventually build a modern plant of about 60000 square meters.
COFCO Coca Cola Guizhou plant was officially put into operation in the second quarter
In addition, in June this year, COFCO Coca Cola Huazhong Beverage Co., Ltd. put into operation its first sterile fruit drink production line, with an estimated annual output value of 500 million yuan. With a total investment of 100million yuan, the production line uses the world’s advanced aseptic cold filling production equipment, which is mainly used to produce a variety of fruit juice drinks, including meringue fruit orange and meringue fruit milk.
COFCO Coca Cola Huazhong Beverage Co., Ltd. put into operation its first sterile fruit drink production line
Swire Cola is also investing a lot of “real money” in capacity expansion.
Xiaoshidai noticed that in July this year, Guangdong Swire Coca Cola Huizhou factory ushered in a new PET production line. The investment of this production line is nearly 100 million yuan, which will help Huizhou factory to achieve an annual production capacity of one million tons after it is put into operation. Jiangxi Swire Coca Cola’s first pop pop production line was also officially put into operation in July. It uses 5g networking technology to monitor the production status in real time, and can realize the production of a variety of different packaging specifications at the same time. The production speed can reach 66000 cans per hour.
Jiangxi Swire Coca Cola new production line put into operation
It is reported that since this year, Swire Cola has successively invested five production lines in Hefei, Huizhou, Jiangxi, Hainan and Hangzhou, and two bottle embryo lines in Hefei and Yunnan, with a total investment of about 450million yuan. At present, the expansion and new plant projects of Swire Cola in Henan Province and Guangdong Province are being promoted. Swire Coca Cola once revealed to xiaoshidai that the planned investment in the next five years will reach 5.5 billion yuan, including the construction of 20 production lines.
In order to further improve the efficiency of the supply chain, the beverage giant has also ushered in a major adjustment in its supply chain in China.
Xiaoshidai introduced that on July 15, Coca Cola company and its Chinese bottling partners – Swire Coca Cola Co., Ltd. and COFCO Coca Cola Beverage Co., Ltd. reached an agreement to split and merge the production and operation of the non aerated beverage business of the former Coca Cola bottling manufacturer production Holding Co., Ltd. into Swire Coca Cola Co., Ltd. and COFCO Coca Cola Beverage Co., Ltd. through equity transfer.
This means that after the establishment of the “dual bottlers” model in 2017, Coca Cola has made major adjustments to China’s bottling system again. Since the split company is responsible for the overall production of Coca Cola’s gas free products in China, this will also change the production mode of many gas free beverages such as meringue, Chun teahouse and Costa, and give Swire and COFCO more “synergy”.
“As an important part of Coca Cola’s whole category beverage strategy, the non aerated beverage business is an important engine to promote the development of China’s business.” Coca Cola China has pointed out that this equity change will realize the localized production of non aerated beverage business, optimize production management efficiency, improve the synergy efficiency of the supply chain, and help speed up production deployment and new product launch.
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