Sorry.
We're keeping an eye on Coca Cola this morning because the soft beverage giant raised its outlook thanks to continued strong sales. Stop a little bit lower right now because that boost overshadowed by an unexpected decline in unit case volume in the third quarter. Joining us now to unpack is John Murphy. He is the CFO of Coca Cola, and I'm so excited to talk about this. Of course, we have such a focus on the economy right now, and I think this is a really interesting sign of
the time. So we're going to talk about price, We're going to talk about volume. Let's start with volume. Because your total unit case volume down about one percent in the quarter. What levers do you have to pull? How do you boost volume at this juncture.
So we did have a decline in the quarter, but i'd highlight the decline was primarily driven by some anomalous factors in July. Sequentially, we improved through the quarter, and in this particular quarter, thanks to our developed economies, we come out towards the end of the quarter in pretty
good shape. And as we go forward, the name of the game is to get back to the more balanced growth equation that we've enjoyed in the last few years, and that is getting the developing emerging economies back to where they had been. And we expect to see that happening throughout the next six to nine months and definitely want.
To get to the international view. But let's talk a little bit about pricing here. Because your price mix, this is the prices that you charge across a range of your products. It increased ten percent in the quarter, and I found that really interesting because not a lot of companies have pricing power left at this point, but how much more can your consumers handle when it comes to raising prices again.
So that price mix number is, for sure, it's an interesting headline number. When you get underneath it, there's three factors. You've got your normal pricing, but three to four percent we have pricing that comes from some of our hyperinflationary environments and other four percent or so. And then in this particular quarter, we've got the benefits from the mixed
impact of our more profitable markets performing better. So as we look to the next phase of the of the journey ahead, you know, we see pricing moderating more in line with the CPI headlines Here in the United States
and typically around the world. That's our approach. Also, we're also investing heavily in our brands to sustain their their relevance and through our various revenue growth strategies, offering both affordability and premium options to consumers for the occasions that they are seeking.
I wonder about your calorie less drinks and how much the impact of we go v and ozepik has had on the product mix. Are you selling more, you know, just playing water or flavored selters and less of the more sugary drinks.
Well, we've had a for the last number of years, We've seen trends towards lower zero calorie products across the portfolio here in the US and elsewhere. We're not seeing a material impact yet in our data on ozepic and similar types of medications. So our goal is to follow the consumer. We have a terrific innovation pipeline. We continue
to invest. I think ahead of the curve on the lower zero calorie because around the world that's what consumers are looking more forum We're going to be there to provide them.
John, I want to double down on Katie's earlier question a little bit here because it looks like that's what investors are really latching onto because on first plush for a company, you would think that being able to raise prices as you have despite everyone else not being able
to that, that would be a good thing. But the worries here rely around and customers buying more ultimately, So if you project out through the next year, how do you expect consumers to behave under this higher price scenario.
So at the highest level, we see continued consumer spending at the levels that we're seeing at the moment and growing pretty much in line with GDP expectations, which low single digit at the global level. I think what's really important, though, is to get underneath that, to understand your consumer customer base at a much more granular level, and then to be able to apply the appropriate solutions that we have in our portfolio, offering affordability in whe where that's important.
There's a lower income segment in the United States, for example, we're offering at one and a quarter liter packages growing at double digit rates. We have premium solutions to for the occasions for that work. So I think the name of the game is going to be adapting to those more granular segments. But at the highest level. We see continued resilience and continued growth in consumer spending around the world.
And John, I want to talk about the competitive landscape and potential m and A coming from Coca Cola because you think about this craze around healthier sodas, you think of poppy, you think of Ollipop for example. Would Coca Cola be open to buying one of those brands, partnering with one of those brands? What might that look like.
Yeah, we're always We're always open to new opportunities that are out there. But right now, we have a portfolio of twenty eight billion dollar brands that we think represents a tremendous amount of headroom for us over the next couple of years. So our primary focus today is to continue to invest and grow the brands that we own.
And you you always have to stay opportunistic. You always have to keep your eyes open, and if something more attractive than what we currently have comes along, we'll be open to look at it.
I wonder about the geopolitical risks out there, John, You know, we focus so much on interest rates and inflation, the labor market, and we cover you know, the war in Ukraine and the war in the Middle East as general news, but we don't hear much about them from business leaders. Until last night we heard from a private equity company that they are concerned more about geopolitics than anything else. Do you see any effect of that on your business? Is it significant?
Well, you know, operating in over two hundred countries around the world, it would be hard to not have an implied effect from what's happening in the geopolitical world. And I think, as you know, as James and I have highled, you know, we have an old weather approach to not just the geopolitical pieces, but the macro economics as well, and I think the name of the game is to is to stay very close to what's coming and to be in a position with our bottling partners around the
world to adapt. So yes, you know, if you look at the situation the Ukraine, yes, it had an impact on the way we go to market and the markets we're in. But with our partners, we adapt and we continue to see the global portfolio being the best one for us to be in. And John quickly before.
We let you go, I am really curious about how you're thinking about marketing at this juncture of course we have that long discussion about price to volume, how much when it comes to your resources are you dedicating to marketing spend.
So marketing is at the core of our ability to create value for both our consumers and for ourselves. And one of the lessons we've learned through COVID, post COVID and as we go into next year is to is to stay consistent, say, investing behind your brands. I think what's important though, is to understand the mix of the
investments that you make. We're particularly keen to ensure on the marketing front that we're leveraging new technologies, we're levering new capabilities to stay close to consumers in the digital world, for example, and so it's a hugely important piece of our growth equation and will be for I think forever. Actually, John, great to get some time with you.
Really appreciated John Murphy, their CFO at Coca Cola.