But it’s only a small fraction. If that’s a sort of leading to a question about pricing. And is there some ongoing likelihood of big upside from kind of channel mix, the short answer is, no. If I were to take a proxy of immediate consumption packages in future comps and consumption packages, because channel mix becomes very different as you get to different parts of the world, particularly the emerging markets. Then they became much more — the kind of the immediate consumption came much more into balance versus the future consumption in 2023 relative to 2022. And that’s not too surprising as we stopped also [indiscernible] affordability having been a strategy in 2023. So that’s a roundabout way of saying, we’re not expecting big mix effects from channel in 2024.
Operator: Our next question comes from Andrea Teixeira from JPMorgan. Please go ahead, your line is open.
Andrea Teixeira: Thank you. And good morning, everyone. So James, can you comment a little bit about the U.S., I understand obviously U.S. is not — in terms of the volumes, it’s about 20%, but within our — your outlook for 2024, you quoted in the fourth quarter that water sports coffee were more negative or decelerating. And how about — what is of that is like mostly self-inflicted vis-a-vis what you’re actually facing in terms of market share and how much you expect that to be lingering into the first half of 2024? And just a clarification to your comment now in terms of like to shifting to on-premise in back to your comments on price mix. Out of the 9% that you got, if my math is correct, you’ve got about 2% or 3% benefit from mix in 2023. Should we expect that to decelerate or with your efforts to do more mini cans and take that more broadly? Is that still going to be the projected contribution for 2024? Thank you.
James Quincey: Sure. Okay. The comments on the 2% in the fourth quarter, that was related not to channel mix. But to the right — the way that deductions happens, so this is not — this is often just an accounting treatment between the quarters within the year. So it’s not mix as you would think about it in terms of package mix or channel mix of category mix. This is related to kind of the big difference between gross and net revenue. And so, I — it’s a distraction in the short-term. So I would move past backlog. And if you like — to me, ignore that bit, focus instead on the underlying impact in 2023 of the non-hyperinflationary pricing, which was the kind of 3.5% which is very — which ran through 2023 and is inherent in what we are saying roughly speaking for 2024.
So we’re expecting, right and mix whether these channel category geography package, the sort of things we were saying, which in 2023 is what we’re expecting in 2024. And again, those are all largely normalized in 2023, so by influence, they’re all largely normalized in 2024 as well. So you kind of see a stability across channels packages, et cetera, et cetera. As it relates more specifically to the U.S., yes, we did some de-prioritization of some of the bulk water categories. And some of the advanced hydration was the normalization or re-stabilization of the sports drinks category. I mean, I don’t think there’s a — an obvious or useful split between self-inflicted or proactive decisions versus things that were competitive, that’s hard to tease apart.
Clearly from a performance point of view, when we think about it in the U.S., yes, there’s a fractional softening of the volume through the year, which I think goes back to the comment I made about the different consumer segments. But if you step back and think about what was the overall impact of our marketing innovation RGM and execution with the bottlers, the answer is, we want volume share in 2023, and we want value share in 2023. So yes, there’s work to be done in the water category and advance hydration then to a much lesser extent in tea. But the overall picture is strong growth in sparkling particularly, Coke and Sprite, good on smart water, good on vitamin water, good on Topo Chico. Very good on fairlife. Good overall win on both dimensions.
And that’s the platform we’ll be looking to drive in 2024.
Andrea Teixeira: Thank you.
Operator: Our next question comes from Bill Chappell from Truist. Please go ahead, your line is open.
Bill Chappell: Yes. Good morning.
James Quincey: Hey, Bill.
Bill Chappell: Just a question on kind of the Chinese — China consumer and both kind of how it’s progressed or how he or she has progressed over the past few months versus your expectations or just in general and kind of what you see kind of spending power and just getting back to normal consumption as we move into 2024.
James Quincey: Sure. Let me put it out. 2023 started very strongly in China, we had invested very heavily behind Chinese New Year. And we had a very — actually we had a very strong first quarter last year in China. And then, which is kind of still the back end of the re-openings, and while we grew volumes for the restaurant for the total of the year 2023 and revenues, it did soften for the last three quarters of the year in China. And I think what we’re going to see is a kind of a reverse of that in 2024. We’ve invested strongly again in Chinese New Year. This year, we won’t know the result for another few weeks net-net. But we’re kind of expecting it to be a little slower in the first quarter, especially given what we are cycling from last year.
And then for the year to improve, but not too hot or not too cold, if I can use that analogy. So yes, there’s a little weakness in the economic system. But we expect things to get — we get [tends] (ph) directionally to get better through the year and we’re going to keep investing behind not just keep key moments in the year like Chinese New Year but restoring more momentum to sparkling and really focusing on RGM and execution opportunities.
Operator: Our next question comes from Kaumil Gajrawala from Jefferies. Please go ahead, your line is open.
Kaumil Gajrawala: Hey, everybody. Good morning. When we met in December, we talked a little bit about 2023, there is a bunch of testing and learning on innovation and 2024 will be about scaling some of them. Both of you mentioned fairlife core power, it’s a big brand now. Can you maybe just talk about the scaling of that capacity expansion. And then maybe what other brands we should be considering in that same context? Thank you.
James Quincey: Yes. Sure. I mean, firstly, we’re going to continue to experiment and find lots of new things hopefully in 2024, but it’s certainly true as say that fairlife has been on a roll. And we have been driving that. I think you should have noted a double digit volume growth for as many years I can remember plus faster double digits in revenue. Clearly, as we scale that we needed to put that more capacity. We have recently announced and begun the process of building a mega plant up in upstate New York. And so, capacity tight in the fairlife business and core power is also firing on all cylinders. We’ll certainly talk about some of these at CAGNY when we’ll kind of lay out some of the back story. I think it’s like fairlife and particularly core power and how these brands and products have done a great job in driving from experimentation to scaling, the challenging and, for example, in the case of core power to leading.
Operator: Our next question comes from Peter Grom from UBS. Please go ahead, your line is open.
Peter Grom: Thanks, operator. And good morning, everyone. So, James, I was hoping to pick up on your commentary in response to Bryan and Andrea’s question on the U.S. Maybe, first, the performance in the quarter play out as you expected, you mentioned softening in the market in your response to Andrea. But was that in-line with how you thought growth would evolve or was it a bit weaker than you would have anticipated? And then looking ahead to 2024, I appreciate the commentary on expecting balanced growth at the total company level, but do you expect that balance to incur in North America as well? Thanks.
James Quincey: Yes. Look, I mean, I think it was at a macro level foreseeable that the market would get tied-up through the course of 2023 as inflation run ahead of wage growth. And so, therefore, yes, it wasn’t surprising that would tightness, particularly for certain — for certain consumer segments. I think all things in due proportion. I mean, the growth in North America in the fourth quarter was basically the same as the growth in the full year, it’s only very fractional differences. So, I think these are not big changes in trends. But yes, I think there was a little softening through the — through 2023. And I think we’ll see that kind of a bidding reverse as 2024 starts off as consumers and you can see it in the confidence indicators, the consumers, they’re starting to feel like the money coming in is starting to contain and get ahead of the inflation.
So I think we’ll see that improve through the year, again, all in due proportion, they’re not going to be big shifts in the volume growth rate in the U.S. business. In aggregate, we would expect to get more from price relative to volume for the U.S. business. So the balance that I talk about between price and volume applies on a global basis clearly that’s been made up of geographic portfolio mix, so places like the U.S., we’d expect to see stable or slightly increasing volume with decent pricing, all the way over to place like India, where clearly we’re getting much more volume than price and having to invest significantly in capacity. And those two — take those two examples, so that’s true of the global portfolio, blend it all together and that’s where the balance comes from.
Operator: Our next question comes from Charlie Higgs from Redburn Atlantic. Please go ahead, your line is open.
Charlie Higgs: Yeah. Hi, James, John, hope you both are well. I got a question on sparkling, please, where I mean, 2% volume growth in the quarter and the year very strong. I think in the 20 quarters since 2019, it’s actually averaged 3% in those 20 quarters. So definitely testing our ex-growth. I was just wondering what your perspective is on the category going forward, maybe with the consumer weakening. And if you can just touch on the launch of Coca-Cola space, so [indiscernible] talked about that yet. I mean, what gives you the confidence of launching this as a permanent launch rather than that a limited edition Coke Creations launch and here’s the target consumers are going have to Gen Z, is it adds to held for Coke with meals strategy. Just any color on that be useful, please.
