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

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James Quincey: Yes. Thanks, Filippo. Look, the Red Tree entity that we stood up in the second quarter is more of a technicality than some new big step. It isn’t a change of strategy, and it’s not a vehicle to distribute in the US. It allows us a better platform to engage with the partners that we’re working with in the US in terms of coordinating and influencing the marketing and allows us a better separation of the alcohol versus the non-alcohol band. So it’s more an optimization of the model and how we want to execute things rather than a different thing. And then in terms of progress, look, it’s still a small part of the business. And as I talked about, I think it was CAGNY, that’s great, and there are lots of runs on the board.

Jack and Coke has got some really promising nice results, including in the US. Simply Spiked Peach is performing very nicely in the US. If you want to look for a really bright spot, you can hedge the Philippines and Jack and Coke and Lemon-Dou, which is an alcoholic lemon drink, got well over 30% share of the RTD category. All of this is very encouraging as we continue to take a measured approach to this and to kind of learn and apply our learnings. All of this needs to generate belief that it can be material for the Coke company, not just a nice business, and that we’re still in the process of driving towards. But certainly, so far, we’re pleased with what’s taken place and we are encouraged about the next steps that we have to take.

Operator: Our next question comes from Andrea Teixeira from JPMorgan. Please go ahead. Your line is open.

Andrea Teixeira: Thank you for squeezing me in. And James, on your volumes commentary, and I appreciate that on your four-year CAGR, I think if our math is correct, it’s 1.7% unit case for total company, which is obviously remarkable. That said, I think, EMEA was a bit softer in the quarter. I understand your commentary about Russia. And what is actually happening in EMEA ex-Russia? And how we should be thinking going forward? And related to that, since you commented that the US was very strong out of home, and Europe is a big percentage of Europe is out of home, on the comments about June, how we should be thinking not only about Europe, but the performance of on-premise against off-premise globally? Thank you.

James Quincey: Hang on, I’m trying to process all the questions. I think you’ve beaten that was, Dara? I think you’ve beaten, Dara. EMEA was a bit soft. Yes. I think on EMEA, we are — it was even though — so on EMEA, we’re expecting EMEA to be positive in the second half. And so there was a ramp effect from the withdrawal from Russia in the second quarter. But we — so Europe was in pretty good shape, actually, Europe ex-Russia. If you take the first half, Europe ex-Russia was positive. So we are feeling that now it’s dropped out of the base numbers in the second half that actually Europe and EMEA will be in good shape. Obviously, EMEA has got a couple of the hyperinflationary countries like Turkey, like Pakistan, so EMEA could get other effects.

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