Simon Gwynn
Oct 24, 2020

Coca-Cola’s marketing spend in Q3 remained 30% down year on year

Soft drinks giant has announced plans to retire a large number of brands.

George the Poet: appeared in Coca-Cola campaign this summer
George the Poet: appeared in Coca-Cola campaign this summer

Coca-Cola is carefully bringing back marketing spend after a complete moratorium earlier in the year, but has admitted it was still down substantially in the third quarter of 2020.

“While our marketing spend remained below last year's levels, we did increase it sequentially and in a targeted way as we saw recovery in the business,” chief executive James Quincey said. 

Quincey and chief financial officer John Murphy were speaking on a call to analysts as Coca-Cola released its results for the 13-week period to 25 September. 

Net revenues were down 9% year on year to $8.65 billion. Organic revenues fell 6% globally, with this figure ranging from 3% in North America to 8% in Asia-Pacific.

Murphy said marketing spend in the quarter was down 30% year on year, but there was a “sequential improvement” of about 65% on Q2’s level of spend. “And I'd expect Q4, based on what we're seeing around the world, for us to continue to have targeted investments in those markets where it makes sense to do so,” he added.

In the early stage of lockdown, Coca-Cola paused all marketing activity, with Quincey commenting in April: "We've developed and determined that in this initial phase, there is limited effectiveness to broad-based brand marketing.”

While that decision was contentious among many in the marketing community, who argue brands that invest in marketing through a crisis will benefit once consumer spending starts to recover, it was praised by influential marketing professor and author Byron Sharp in an interview with Campaign in September.

On the flagship Coca-Cola brand, Quincey said that “while we have been judicious in our use of marketing spend in Q2 particularly but also in Q3, we have continued to market, including marketing strongly behind the Coke brand”.

Coca-Cola announced last week it would streamline its portfolio of brands, removing a series of products from sale including Tab, its first diet soda (which predated Diet Coke). 

On how this would unfold, Quincey said: “We have finalised the master brands in this growth portfolio [those that will remain], which consists of about 200 global regional and local brands that will allow us to remain truly consumer-centric, focusing on those brands that can be scaled to drive profits for the long term.

“There's going to be some brands we're going to retire. But there are some brands where the better answer is to transition it into one of the regional brands.

"So it might be we have a strong regional juice brand and then there's a local brand in one market and we're going to transition it into the regional brand because it's going to be much more efficient and effective to leverage the marketing and the innovation but from that regional brand rather than repeating everything into the local brand.”

Source:
Campaign UK

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