Coca-Cola’s Digital Investments Lead to Revenue Rebound

A loyalty app in Japan and an AI assistant in South Africa are among Coca Cola's pandemic digital investments.

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Need to Know

  • Case sale volumes at Coca-Cola have bounced back to pre-pandemic levels, the company reported.
  • Digital initiatives, such as Japan’s Coke On app and an AI assistant in South Africa, have helped the company recover from a pandemic sales slump.
  • The company has also seen recent initiatives result in cost reductions, such as the increasingly digitized approach to buying trade materials.

Analysis

Coca-Cola has bounced back from a pandemic sales slump, reporting in an earnings call this week that its global unit case volume is back up to pre-pandemic levels.

Net revenue for Coca-Cola grew 5% year-over-year, hitting $9 billion while the company’s sparkling soft drinks category saw volume growth of 4% in Q1 of 2021. The hydration, sports, coffee, and tea category, however, saw an 11% decline, though that marked an improvement from Q4’s decline of 15%.

Coca-Cola has struggled during the COVID-19 pandemic, as stay-at-home orders significantly affected the company’s restaurant industry sales, among other obstacles. In an earnings call on April 19, company CEO James Quincey said he anticipates the company will continue to see “asynchronous” results throughout 2021, as the pandemic eases in some markets while it continues to worsen in others.

“You’ve got countries where the vaccine levels are going up, and the reopening is occurring—US, UK, China, for example,” Quincey said. “And yet you’ve got countries going in exactly the opposite direction with cases shooting up and more levels of lockdown … It may be that as a total company, it all looks smoothed out somewhat, but this asynchronous feature will be very important in 2021.”

Quincey pointed to the company’s digital initiatives as key to its success in recent months, adding that new digital projects will help Coca-Cola continue to grow in the future.

The company’s Coke On app in Japan, for instance, incentivizes purchases from vending machines with loyalty rewards; the app also enables contactless payments, which have spiked in popularity during COVID-19.

In China, meanwhile, the company has used digital campaigns to harness consumer data, as well as machine learning and AI tools to stay on top of evolving consumer trends. South Africa, too, has seen significant AI engagement for Coca-Cola; there, an online chatbot “engages with consumers on social media to increase away-from-home transactions.”

Quincey added that the company has experienced “commerce share gains” in advanced markets such as North America, Japan Great Britain, and Turkey, where e-comm sales have more than tripled. In addition to customer-facing innovations, the company has also digitized its internal operations, implementing a digitized approach to buying trade materials that resulted in a 15% cost reduction and improved user experience.

Coca-Cola has launched a number of projects and innovations since the beginning of the COVID-19 pandemic, strategically aimed at increasing online customer engagement in an increasingly contactless world. These have included equipping its Freestyle self-serve machines with QR code-reading technology, and the relaunch of its Insiders Club, which sends unreleased flavors to subscribers each month.

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