The continued decline in customer spending and the challenging macro-economic environment hurt Coca-Cola's (KO, Financial) performance in the third quarter. The company is worried about the deterioration in key markets due to a soft economic environment. Management is expecting weakness in the coming quarters. As a result, it is now focusing on some defensive strategies that can help the company to maintain its position in the market. It is focusing on various aspects to improve its profitability.
Coca-Cola's moves
Coca-Cola is especially focusing on consumer marketing and other commercial strategies. Coca-Cola is worried about the soft performance in Japan and Europe. It is now making some impressive moves to uplift the performance of these markets. However, Coca-Cola is seeing good progress in the pricing due to the incremental investment in the marketplace where they mostly operate. In addition, there are some other strategies such as incremental media investments that are also supporting its growth strategy. Coca-Cola has also undertaken aggressive marketing programs such as Share a Coke are helping the company as they are contributing in the growth strategy of the company. Also, there are some disciplined pricing strategies which are expected to support the company’s efforts for a turn back in future.
In regions such as India, Sub-Sahara Africa and Middle East its incremental investments are paying-off for it which is evident by a solid improvement in the top line in these areas. Seeing this momentum, Coca-Cola is planning to invest in these brands further in these regions further see better financial performance in the coming quarters. It is pleased to be on track for the strategies which it posted in the previously released outlook. Coca-Cola is confident of improving its performance and capture the non-alcoholic beverage growth.
More catalysts
Coca-Cola is also working closely with Keurig Green Mountain (GMCR) and is seeing good contribution by this. it is also investing further in this initiative as to align itself with the changing consumer trends. Coca-Cola will also be supporting this by taking further necessary steps, expecting them to strengthen its long term position in the market, helping it to gain market share in the coming days. Moreover, Coca-Cola is also streamlining and simplifying its operating model to enhance its focus on the local markets to drive its growth further.
Despite soft revenue performance in the recently reported quarter, Coca-Cola is mainly focusing on strengthening its long-term prospects. It has revised its long-term incentive metrics. It is also driving efficiencies by undertaking aggressive expanding its productivity program. The catchiest point of this initiative is that Coca-Cola is planning to expand the program to 1 billion in savings by 2016 which is expected to attract many long-term investors as the company is expected to improve its market share in the coming quarters.
Moving on to America, Coca-Cola is restructuring its global supply chain. It is further optimizing its manufacturing footprint by investing significantly in technology to further streamline its operations. It is also taking different accounting techniques to further make its accounts better. It has undertaken a zero-based budgeting with an objective to reduce costs, improving margins. This margin expansion will be further supported by aggressive marketing programs and innovations.
Conclusion
To be still profitable in this weak market, Coca-Cola has undertaken geographic segmentation and has pin-pointed some potential markets which can contribute well to its portfolio. It is now focusing on pricing and volume to keep a stable position in these markets, making it a smart investment.
