Announced this morning, the company’s revenue decline in Q2 was primarily driven by pressure in away-from-home channels, which represent approximately half of the company’s revenues.
However, volumes improved over the quarter as lockdowns ease, and this recovery is expected to continue in the coming months. Meanwhile, off-trade sales continue to be elevated above normal.
Net revenues declined 28% to $7.2bn in Q2. Organic revenues (non-GAAP) declined 26%. Revenue performance included a 22% decline in concentrate sales (all figures compared to the same quarter the previous year).
Increasing volumes signal recovery
Over Q2, global unit case volume declined 16%. Volume trends have improved sequentially since April, however: from a decline of approximately 25% in April to a decline of approximately 10% in June. In the month-to-date, unit case volume (month-to-date) has continued to improve with volumes declines of ‘mid-single digits’.
“Performance has been driven by improving trends in away-from-home channels, along with sustained, elevated sales in at-home channels,” says Coca-Cola.
“The improvement in away-from-home trends during the quarter closely correlated with the easing of lockdowns, and the company expects this correlation to continue in the second half of 2020.”
Q2 ‘the most severely impacted quarter’
“While the company believes the second quarter will be the most severely impacted quarter of the year, given the ongoing uncertainty surrounding the coronavirus pandemic and levels of lockdown, the ultimate impact on full year 2020 results is unknown,” states the company.
“The company's balance sheet remains strong, and the company is confident in its liquidity position as it continues to navigate through the crisis.”
Steering the way through the coronavirus pandemic is a challenge for all businesses: and Coca-Cola highlights this uncertainty around its ultimate impact.
“I'm proud of the people of the Coca-Cola system as we continue to adjust and accelerate our strategies in this fast-changing landscape," said James Quincey, chairman and CEO of The Coca-Cola Company. "We believe the second quarter will prove to be the most challenging of the year; however, we still have work to do as we drive our pursuit of 'Beverages for Life' and meet evolving consumer needs."
Innovating quickly to address consumer needs
Moving forward, Coca-Cola identifies the need to innovate quickly to meet consumer needs. This month it announced contactless, mobile technology for its Freestyle machines, which will roll out across the US by the end of the year.
“As the coronavirus pandemic continues to reshape consumer behaviors, the contactless Coca-Cola Freestyle solution allows consumers to choose and pour drinks in just a few seconds, without creating an account or downloading an app.”
In Australia, bottler Coca-Cola Amatil has also started accepting cryptocurrency at vending machines to reduce contacts.
The Coca-Cola Company has been championing its larger, trusted brands (which consumers are increasingly looking to in a time of uncertainty) as well as focusing on streamlining its innovation pipeline to prioritise scalable initiatives, highlighting the need for a ‘disciplined approach’ to local experimentation in order to further strengthen the company's leader, challenger and explorer framework.
“The portfolio will be supported by a refreshed marketing approach, with a step-change in marketing investment effectiveness and efficiency," says the company.
"The company will also lead the Coca-Cola system in driving system-wide efficiencies to support these investments, and will invest in new capabilities to capitalize on emerging, lasting shifts in consumer behaviors.”
