Coca-Cola plans to invest as much as $650 million from annual cost savings into its future marketing efforts, the company said on Feb. 7.
During a fourth-quarter earnings call, Coca-Cola CEO Muhtar Kent said the company plans to cut between $550 million and $650 million in annual costs by the end of 2015 as part of a “four-year productivity and reinvestment program.” Much of this, he said, will then be reinvested into longer-term marketing and brand building.
“We remain relentless in our efforts to become more efficient, leaner and adaptive to changing market conditions, while at the same time building a continuous improvement in cost management culture in keeping with our 2020 vision,” said Kent during the call.
The “2020 vision” refers to Coke’s aim to double its business by the year 2020. Though Kent did not outline the specifics of what type of campaigns or in which channels the additional marketing dollars would be spent, he emphasized that it would be aimed at strengthening the brand over the long term.
Kerry Tressler, spokesperson for Coca-Cola, said that reaching the 2020 goal, “will require us to maximize our return on investment in paid, earned, owned and shared media.”
To do that, she said Coke has adopted a “liquid and linked” approach to engaging consumers. “Liquid” refers to the changing media landscape and multiple channels through which to engage consumers, while “linked” refers to the company’s efforts to connect all these messages to one coherent brand strategy, which this additional investment will help drive forward, she said.
The announcement of the additional marketing expenditure came just two days before PepsiCo is expected to announce its own investment of between $400 million and $500 million into its brand marketing.
Coca-Cola reported a 71% decrease in earnings for the fourth quarter compared with the same period in 2010, but posted a 5.2% increase in revenue, to $11 billion. In the North America and Europe markets, sales volume increased 1%, while it was up 5% in the Pacific region, and 4% in the Eurasia and Africa. Sales volume in India rose 20% for the quarter.