Dive Brief:
- Atlanta-based Coca-Cola is seeking to “stay relevant” to a broad range of customers — including some feeling financial pressure — by continuing to balance the price, volume and mix of its products, Coca-Cola CFO and President John Murphy said Wednesday at a conference.
- Beneath headlines touting resilient consumers is a more nuanced picture, Murphy said, as some consumers are “not as resilient as you think” and unable to afford a typical basket of goods and services, he said.
- People earning less than $50,000 or $60,000 annually are feeling pinched and don't have the purchasing power, so “something's got to go,” he said, according to a transcript of his talk at the dbAccess Global Consumer Conference. “The challenge is to figure out, how do you become the last guy to go.”
Dive Insight:
Customer price sensitivity is rising across industries, with 57% of CFOs reporting an increase in their sector, CFO Dive previously reported. Soaring gasoline prices rattled consumer sentiment to a new record low last month, the University of Michigan said on May 22, reporting on survey results.
Asked Wednesday by Deutsche Bank equity analyst Steve Power what issues Murphy is focused on to keep the company’s performance on track through turbulence, he highlighted relationships across partners, suppliers, bottling partners, customers, other stakeholders, and the company’s employees, along with resources and talent. Another area of focus is knowing that the company isn’t immune to major unexpected events like the war in Iran.
“We did not have this latest version of the Middle East crisis on our radar screen in December,” Murphy said. “And yet to date, our system is navigating through it not perfectly well, but without fear, without trepidation.”
The beverage giant is also facing headwinds as it looks to adapt to changing consumer tastes around sugary drinks and consuming more waters and sports drinks, CFO Dive sister publication Food Dive reported.
During the talk, Murphy emphasized that the energy drink segment was very important and part of a long-term strategy for non-soda type of beverages, including sports drinks. “That is not something you sort out over breakfast. It's a — that's a topic that needs constant attention and performance management,” he said.
In April, Coca-Cola reported net income for the first quarter ended April 1 rose to $3.9 billion on net operating revenues of $12.4 billion, from net income of $3.3 billion and revenues of $11.1 billion in the year earlier period.
