Emmet McGonagle
Apr 23, 2020

Coca-Cola pauses marketing spend amid Covid-19

Soft-drinks giant plans to re-engage with consumers 'when timing is right'.

Coca-Cola: claims it was ‘on track to achieve’ targets for 2020 before Covid-19 lockdown
Coca-Cola: claims it was ‘on track to achieve’ targets for 2020 before Covid-19 lockdown

Coca-Cola has paused all of its marketing spend, blaming a reduction in return on investment as the coronavirus pandemic continues.

According to the company's first-quarter results, it had been "on track to achieve" forecast targets for the year across all markets (except China), with 3% growth up to the end of February.

However, Coca-Cola said that by by the beginning of April it had experienced a volume decline globally of about 25%, leading the company to withhold its financial and operating predictions for the year ahead.

James Quincey, chairman and chief executive officer of Coca-Cola, said: "We've developed and determined that in this initial phase [of the lockdown], there is limited effectiveness to broad-based brand marketing.

"With this in mind, we've reduced our direct consumer communications. We'll pause sizeable marketing campaigns through the early stages of the crisis and re-engage when the timing is right."

While operating income for Coca-Cola’s Costa products has declined by 71% across the globe – mostly as a result of café closures across China and the UK during the lockdown – volumes for the Coca-Cola brand grew 1%, propelled by a strong performance for Coca-Cola Zero Sugar.

Last month, Coca-Cola suspended all of its brand marketing in the UK, claiming it would review the decision periodically and update agency partners of further developments.

John Murphy, chief financial officer and executive vice-president at Coca-Cola, said: "We have paused all capital spend, other than what is absolutely essential or has already been committed. By moving quickly and decisively, we will avoid waste, improve ROI and spend, and give us maximum flexibility for the second half of the year as we gain clarity on the outlook.

"Some of the work that matters most is smart use of the many levers we have at our disposal to maximise profit and cash flow. On the revenue side, we have made substantial changes to our brand/pack portfolio focus and are leveraging the playbooks on affordability and value that have served us so well in past crises around the world."

Coca-Cola was set to sponsor a series of events that were later postponed as a result of Covid-19, including the Olympic Games and Euro 2020. 

Source:
Campaign UK

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