Slide 1: CAGNY
James Quincey CAGNY President and Chief Operating Officer Feb 23, 2017 Kathy Waller EVP and Chief Financial Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expres
Slide 3: Topics for Discussion
Topics for Discussion Laying the Foundation Looking Forward Financial Performance 3
Slide 4: We Have Been Driving Focused Actions to Continue Our Transformation
We Have Been Driving Focused Actions to Continue Our Transformation Strategic Actions Revitalized Focus on core business model • Organizational Capability and Streamline and simplify Leadership Structure • Brands Drive efficiency through aggressive productivity • Portfolio • Bottling System Focus on
Slide 5: Our Core Business Accelerated After Stepping Up Investments
Our Core Business Accelerated After Stepping Up Investments, Even in a Slower Economic Environment Incremental investments & focus 5% on revenue began in 4% mid 2014 3.2% 3.1% 3% 2.6% 2014 2015 2016 PCE Core Business Organic Revenue* Source for Personal Consumption Expenditure (“PCE”): IHS * Non-GAA
Slide 6: In 2016, We Delivered Growth and Operating Margin Improvement
In 2016, We Delivered Growth and Operating Margin Improvement Value Share Consolidated Revenue* +3% Core Business Revenue* +4% Profit** +8% * Organic revenue (non-GAAP) ** Comparable currency neutral income before taxes (structurally adjusted) (non-GAAP) 6
Slide 7: Accelerated Underlying Performance Has Been Offset by Currency and Structural Headwinds
Accelerated Underlying Performance Has Been Offset by Currency and Structural Headwinds 2014 2015 2016 Comparable Currency Neutral Income Before Underlying 5% 6% 8% Profit Growth Taxes (Structurally Adjusted) Growth Accelerating • Foreign Currency Impact* (7)% (8)% (9)% Currency & Structural • Struc
Slide 8: Topics for Discussion
Topics for Discussion Laying the Foundation Looking Forward Financial Performance 8
Slide 9: Industry Growth Remains Solid
Industry Growth Remains Solid Industry Retail Value Growth Expected Value Growth by Category Incremental Value Growth through 2019 ($B) CAGR Sparkling $31 3-4% Water +0.1 $22 5-7% Value-Added Dairy $19 +$100B +$110B Energy $11 4-6% 6-8% 4% 4% CAGR Juice & Juice Drinks $9 2-3% CAGR Other NARTD $7 4-5
Slide 10: Our Growth Model
Our Growth Model Consumer- Centric Brands System Pervasive Investment GROWTH Distribution Shared Value 10
Slide 11: The Changing Landscape
The Changing Landscape Consumer- Centric Brands System Pervasive Investment GROWTH Distribution Shared Value 11
Slide 12: Our Focus
Reshape growth Our Focus equation to drive sparkling revenue Consumer- Centric Brands Continue to Accelerate for free up money, leadership in other time, focus and consumer preferred engagement categories System Pervasive Investment GROWTH Distribution Strengthen our system to sustain Shared and exp
Slide 13: Our Strategic Priorities
Our Strategic Priorities Accelerate Digitize Growth of Drive Strengthen the Enterprise – Unlock Consumer-Centric Revenue Our ‘Click’s Reach the Power Brand Portfolio Growth System of Desire’ of Our People Making the Right Choices and Investing for Growth 13
Slide 14: Our Strategic Priorities
Our Strategic Priorities Accelerate Growth of Consumer-Centric Brand Portfolio Drive Revenue Growth Strengthen Our System Digitize the Enterprise Unlock the Power of Our People 14
Slide 15: We Are Shifting to More of a Category Cluster Model
Consumer- We Are Shifting to More of a Category Cluster Centric Brand Portfolio Model to Drive Growth Across Our Total Portfolio EXAMPLES FROM OUR PORTFOLIO CATEGORY Plant Enhanced RTD RTD SSD Energy* Juice** Dairy Based Water Water Sports Tea Coffee *** PREMIUM **** AFFORDABLE KO VALUE SHARE >50% ~
Slide 16: We Grow Our Portfolio in Multiple Ways
Consumer- We Grow Our Portfolio in Multiple Ways Centric Brand Portfolio Innovate Locally Scale Globally Drive M&A 500+ new products Expanding VEB launched in 2016… Expanding smartwater globally… …500+ more planned to 20 markets in 2017 starting in Asia in 2017 16
Slide 17: We Have Strong Sparkling Marketing Plans and Investments in 2017
Consumer- We Have Strong Sparkling Marketing Plans Centric Brand Portfolio and Investments in 2017 ‘Taste the Feeling’ New Campaign, New Visual Identity Reformulation New Bottle Premium SSDs Small Single- Coca-Cola Flavor Serve Packs Zero/No Sugar Innovation (Mini PET bottle Relaunch & Mini Can) Ref
Slide 18: Our Approach for Added Sugar Has Evolved
Consumer- Our Approach for Added Sugar Has Evolved Centric Brand Portfolio • Reduce sugar INSIDE • Evolve recipes Drive sustainable, profitable THE BOTTLE • New and different drinks growth of our brands Encourage and enable • Smaller packages consumers to control their intake of added sugar OUTSIDE
Slide 19: Taking More and Bolder Action in 2017 to Reduce Sugar Footprint
Consumer- Drive Taking More and Bolder Action in 2017 Centric Brand Revenue Portfolio Growth to Reduce Sugar Footprint Key Business Actions Global Rollout of 1 Focus on Zeros Coca-Cola Zero Sugar 500+ now in pipeline 2 Reformulate to Reduce Sugar 2X previous number Affordable 3 Drive Small Packs Sma
Slide 20: Building Out a Portfolio for Every Moment
Consumer- Drive Building Out a Portfolio Centric Brand Revenue Portfolio Growth for Every Moment We support the WHO added A day… sugar guidelines of 10% limit of total calorie intake per day Exponential Growth Opportunity Within WHO Guidelines 20
Slide 21: We Are Working to Better Balance Our Revenue Growth
Drive We Are Working to Better Balance Our Revenue Growth 2017 Revenue Growth Revenue Growth Volume Growth Transactions Price/Mix Incidence Value Share 21
Slide 22: Sparkling Soft Drinks Continue to Grow, But the Composition of Growth Has Changed
Drive Sparkling Soft Drinks Continue to Grow, But the Revenue Growth Composition of Growth Has Changed Global Sparkling Industry Value Growth 2016 Value Growth by Market Type 5% 3-4% 4% 3% 2% Average for 2016 Developed Developing Emerging 2012-2015 Volume Price/Mix Total Volume Price/Mix Total Volum
Slide 23: Building Segmented Opportunities Across and Within Markets
Drive Building Segmented Opportunities Revenue Growth Across and Within Markets Emerging Markets Developed Markets China North America PREMIUM RELATIVE AFFORDABILITY, MARGIN AFFORDABLE 23
Slide 24: The Coca-Cola Company
THE COCA-COLA COMPANY beverages for life 24
Slide 25: Our Strategic Priorities
Our Strategic Priorities Accelerate Growth of Consumer-Centric Brand Portfolio Drive Revenue Growth Strengthen Our System Digitize the Enterprise Unlock the Power of Our People 25
Slide 26: Refranchising Will Drive Local Market Performance
Refranchising Will Drive Local Market Performance Strengthen Our System Better System Alignment, Synergies, Improved Customer and Consumer Attention EUROPE CHINA JAPAN AFRICA NORTH AMERICA Coca-Cola European 2-Bottler Strategy for Merger Coca-Cola Beverages 21st Century Beverage Partners Mainland Ch
Slide 27: Franchise Leadership Is Needed to Ensure Execution
Franchise Leadership Is Needed to Ensure Execution Strengthen Our System Multiplies the Marketing Plans and Investment Improvement in Marketing 2016 Revenue Growth and Execution Is the Objective Top 32 Markets Improving Marketing Improving Execution 27
Slide 28: Focusing on Productivity as a System
Focusing on Productivity as a System Strengthen Our System Design To Cost Route To Market Collaborative Procurement Marketing Productivity INVESTING + BUILDING CAPABILITY 28
Slide 29: Digitizing the Enterprise
Digitizing the Enterprise Digitize the Enterprise Digitizing TO GROW with Digitizing INTERNALLY to Be Consumers & Customers Faster & More Engaging Common Enablers 29
Slide 30: Driving Change through a New Leaner, More Agile Operating Model
Driving Change through a New Leaner, More Agile Operating Model to Enable the Growth Strategy Our Operating Model Our Growth Culture • Local business units drive growth • Externally focused ‒ Business models designed to win in each category • Empowered ‒ Performance enablement system • Focused, lean
Slide 31: Looking Forward
Looking Forward Revenue Gross Margin Operating Margin • Grow faster than industry • Smart choices • Leverage scale in marketing • Benefit from category mix • Manage category mix • Drive opex leverage • Leverage category scale longer term 31
Slide 32: Topics for Discussion
Topics for Discussion Laying the Foundation Looking Forward Financial Performance 32
Slide 33: We Have Made Progress Returning to Our Core
We Have Made Progress Returning to Our Core 2016 vs. 2015 Net Revenues* $41.9B $(2.4)B Key Drivers Operating Margin* • Refranchising activities reduced 23.8% +0.4% revenue and operating capital: – North America Intangible Assets** $21.1B $(3.0)B – Germany Net PP&E $10.6B $(1.9)B – Africa • Underlyin
Slide 34: In 2017, EPS Will Be Impacted as We Sell Profitable Businesses
In 2017, EPS Will Be Impacted as We Sell Profitable Businesses Full Year First Quarter 2017 Outlook 2017 Outlook • 2 fewer days vs 1Q16 Underlying • Easter shift into 2Q17 +7% to +8% Performance* • Year-over-year increase in interest expense will skew heavily to 1H17 Structural -5% to -6% -1% to -2%
Slide 35: Refranchising Will Result in Higher Margins
Refranchising Will Result in Higher Margins Illustrative example using 2016 performance and adjusting to remove certain bottler transactions* 2016 ADJUSTED Net Revenues** $41.9B $28.4B Gross Margin** 60% 68% Operating Margin** 24% 33% Capex*** $2.3B $1.3B FCF Margin**** 16% ~+700bps * Includes trans
Slide 36: Refranchising Will Result in Higher Returns
Refranchising Will Result in Higher Returns Updates Considerations 2015 During 2016 2016 Going Forward 2017 • CCR asset base • CCR asset base Invested Down $50B • CCEP $47B • Transaction with Capital** Arca Continental $7 to $8B*** • CCBA • China transaction Cash $0.3B $0.9B ̴$5B*** Proceeds ROIC* 1
Slide 37: Post Refranchising, We Expect Accelerated Financial Performance
Post Refranchising, We Expect Accelerated Financial Performance • Greater confidence to deliver our long term growth objectives • Scaled bottlers in Western Europe, China and Africa • North America - taken the necessary steps to support the system for long-term growth 37
Slide 38: Strong Record of Returning Cash to Shareowners
Strong Record of Returning Cash to Shareowners Over $40B 3.6% of Value Dividend Returned to Yield** Shareowners* 55 Consecutive Years of Annual Dividend Increases * Cumulative dividends and net share repurchases 2012 to 2016 ** Calculated using annual dividend of $1.48 and closing stock price of $41
Slide 39: Transforming Our Company
Transforming Our Company • Accelerating consumer-centric brand portfolio • Reducing sugar footprint • Driving segmented revenue growth strategies • Top-line growth and operating margin expansion • Implementing new operating model • Leading system of strong aligned partners 39
Slide 40: Q&A
Q&A aes THE COCA-COLA COMPANY beverages for life #5 a” 40