The Coca-Cola Company (NYSE:KO) Q2 2023 Earnings Call Transcript

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But the design of the portfolio itself and the RGM strategies also is a component in creating sales that inherently have a little more gross margin. So we use all the levers to try and deliver. And so don’t take these segments over or under deliveries as a sign of something new and radical happen. They are features of our business model. And the big overall idea is top line growth with small increments of operating margin expansion.

Operator: Our next question comes from Rob Ottenstein from Evercore. Please go ahead. Your line is open.

Robert Ottenstein: Great. Thank you very much. James, I’d like to talk about the global system. Recently, there’s been a lot of interesting developments from some of the bottlers. You had CCH by Finlandia. You’ve had a lot of your bottlers, particularly in Latin America and elsewhere, talk about B2B platforms that they’re developing. And so my question is, how are you thinking about these developments? Are there new models, revenue, earnings sharing models? And how do you make sure that the bottlers stay focused on those products that drive the most value for The Coca-Cola Company? Thank you.

James Quincey: Sure. Let me start just by headlining actually, we’ve just come off. Last week, we had a global bottler meeting in Atlanta. I think it’s in 30-plus years since we had that meeting in Atlanta, but we had it in Atlanta last week with the majority of the biggest bottlers in the Coke system. And I think it was a very clear meeting on our collective will and ability and interest in investing in this business and our overall level of alignment on what’s important and what should we drive individually and what needs to be driven collectively. So actually, you guys all go around and talk to the bottlers as well, and I think you will get it reflected back from them that there is a very high degree, not just an alignment on what needs to be done, but enthusiasm on the opportunities ahead of us to drive the business, our collective business forward.

On some of the specifics, clearly, you’ve got in that basket, there are things that happen around the world that are local and a better set of dynamics that are important and relevant and not necessarily projectable around the world. And the case of CCH and the distribution, now the ownership of Finlandia, I think, is one of those. The B2B platforms, which are progressed very nicely in Latin America are a feature of the business in multiple other countries. We’ve been testing and exploring and developing individually and collectively B2B platforms with the principal objective of enhancing the system and most importantly, the bottlers’ relationships with the retailers. To the extent that we can complement, and here we’re largely talking the fragmented channel because the relationship with the modern trade is already set on electronic platforms anyway.

We’re talking about the fragmented trade, and the majority of the almost 30 million customers we visit as a system is to enhance that relationship, to make it no longer hostage to the visit of the Coke sales rep but to make it a 24/7 opportunity to enhance relationship, to order product, to ask for a service call, to get a new cooler, to put some umbrellas up or to add to an order that’s already about to be delivered. And that is certainly when we have evaluated how those customers where the B2B platforms are available how they’re doing versus where it’s not yet rolled out. There’s clearly an improvement, not just in the relationship however you want to measure it, but also in the sales. So there’s a lot going on in the system. And I think the last thought there is you should take it also as examples of the willingness of the system to experiment and try and be on the front edge of what drives value in the marketplace.

Operator: Our next question comes from Chris Carey from Wells Fargo Securities. Please go ahead. Your line is open.

Christopher Carey: Hi. Good morning.

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