Coca-Cola is gearing up to launch a ready-to-drink Costa product in “the coming weeks” as it praises “constant innovation” for solid results.
The drinks giant beat estimates for quarterly earnings, with growth boosted by its water, sports drinks and Coca-Cola Zero Sugar beverages.
Soft drink sales were up 1% with a 6% increase in sales of water and sports drinks, while juice, tea and coffee sales were flat from the prior year.
Speaking on an investor call today (23 April), Coca-Cola CEO James Quincey said that “constant innovation is crucial for sustained growth”, noting that “blurring category lines” was allowing the company to innovate in different areas.
He explained: “Innovating and investing in our core categories to emerging ones like kombucha allows us to proactively address [and benefit] from blurring category lines.”
The company has been bolstering its portfolio through non-carbonated drinks such as coffee, flavoured waters and smoothies under Quincy. The CEO is committed to Coke expanding into new occasions to become a “total beverage company”.
He added that a key goal is to accelerate Costa and Innocent Smoothies, which recently expanded into dairy-free milk alternatives.
Coca-Cola paid £3.9bn for Costa Coffee earlier this year to tap into the coffee market – primarily with the aim of launching new products.
Explaining his plans for the brand, Quincey said: “Costa is our platform in coffee. Overall this requires more and better connectivity than ever before. As we look to the second quarter we are looking to launch our ready-to-drink Costa Coffee.”
The continuing power of Coca-Cola
Coca-Cola has been expanding its core Coca-Cola brand at a rapid rate with the launch of its first energy drink, Coca-Cola Energy last month.
Quincey shows no signs of slowing this down and is promising more innovation on the Coca-Cola brand to capture different occasions. Quincey said it will launch Coca-Cola Coffee by the end of the year in 25 countries after successful pilots in nine other markets.
Coca-Cola Coffee is the core brand’s coffee variant that aims to target “mid-day slump”. It reiterates the company’s desire to maintain Coca-Cola’s relevancy by expanding into occasions where sparkling drinks is less common.
Quincey was keen to highlight the success of “building on brand Coke”, noting that its “growth is in large part because of Coke Zero Sugar, which did not happen overnight”.
Quincey praised the company’s current innovation pipeline and said that half of its explorer brands are growing in double digits, up from a third last year.
Coca-Cola split its brands into leaders (those leading the market), challengers (brands that have a decent market share and can challenge leaders in their category) and explorers (which are testing out new products, categories and occasions).
He also argued that innovation should be seen in both “the narrow and the broad” and not limited to physical product.
“Innovation shouldn’t be seen as narrowly as the physical liquid product but include the marketing and packaging,” he explained.
Quincey also revealed how the company is constantly measuring how innovation was contributing to the overall business in order to ensure it is always relevant.
“One metric that we track is looking at the contribution of innovation to overhaul volume and revenue growth and just racking what was existing and what was new and what’s contributing to the base,” he explained.
“That’s useful to us because its on the basis that is the most important thing is how to stay relevant.”