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Speaker 1: Sorry.

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Speaker 2: We're keeping an eye on Coca Cola this morning because

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Speaker 2: the soft beverage giant raised its outlook thanks to continued

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Speaker 2: strong sales. Stop a little bit lower right now because

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Speaker 2: that boost overshadowed by an unexpected decline in unit case

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Speaker 2: volume in the third quarter. Joining us now to unpack

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Speaker 2: is John Murphy. He is the CFO of Coca Cola,

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Speaker 2: and I'm so excited to talk about this. Of course,

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Speaker 2: we have such a focus on the economy right now,

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Speaker 2: and I think this is a really interesting sign of

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Speaker 2: the time. So we're going to talk about price, We're

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Speaker 2: going to talk about volume. Let's start with volume. Because

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Speaker 2: your total unit case volume down about one percent in

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Speaker 2: the quarter. What levers do you have to pull? How

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Speaker 2: do you boost volume at this juncture.

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Speaker 3: So we did have a decline in the quarter, but

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Speaker 3: i'd highlight the decline was primarily driven by some anomalous

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Speaker 3: factors in July. Sequentially, we improved through the quarter, and

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Speaker 3: in this particular quarter, thanks to our developed economies, we

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Speaker 3: come out towards the end of the quarter in pretty

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Speaker 3: good shape. And as we go forward, the name of

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Speaker 3: the game is to get back to the more balanced

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Speaker 3: growth equation that we've enjoyed in the last few years,

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Speaker 3: and that is getting the developing emerging economies back to

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Speaker 3: where they had been. And we expect to see that

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Speaker 3: happening throughout the next six to nine months and definitely want.

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Speaker 2: To get to the international view. But let's talk a

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Speaker 2: little bit about pricing here. Because your price mix, this

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Speaker 2: is the prices that you charge across a range of

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Speaker 2: your products. It increased ten percent in the quarter, and

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Speaker 2: I found that really interesting because not a lot of

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Speaker 2: companies have pricing power left at this point, but how

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Speaker 2: much more can your consumers handle when it comes to

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Speaker 2: raising prices again.

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Speaker 3: So that price mix number is, for sure, it's an

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Speaker 3: interesting headline number. When you get underneath it, there's three factors.

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Speaker 3: You've got your normal pricing, but three to four percent

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Speaker 3: we have pricing that comes from some of our hyperinflationary

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Speaker 3: environments and other four percent or so. And then in

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Speaker 3: this particular quarter, we've got the benefits from the mixed

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Speaker 3: impact of our more profitable markets performing better. So as

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Speaker 3: we look to the next phase of the of the

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Speaker 3: journey ahead, you know, we see pricing moderating more in

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Speaker 3: line with the CPI headlines Here in the United States

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Speaker 3: and typically around the world. That's our approach. Also, we're

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Speaker 3: also investing heavily in our brands to sustain their their

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Speaker 3: relevance and through our various revenue growth strategies, offering both

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Speaker 3: affordability and premium options to consumers for the occasions that

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Speaker 3: they are seeking.

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Speaker 1: I wonder about your calorie less drinks and how much

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Speaker 1: the impact of we go v and ozepik has had

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Speaker 1: on the product mix. Are you selling more, you know,

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Speaker 1: just playing water or flavored selters and less of the

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Speaker 1: more sugary drinks.

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Speaker 3: Well, we've had a for the last number of years,

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Speaker 3: We've seen trends towards lower zero calorie products across the

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Speaker 3: portfolio here in the US and elsewhere. We're not seeing

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Speaker 3: a material impact yet in our data on ozepic and

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Speaker 3: similar types of medications. So our goal is to follow

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Speaker 3: the consumer. We have a terrific innovation pipeline. We continue

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Speaker 3: to invest. I think ahead of the curve on the

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Speaker 3: lower zero calorie because around the world that's what consumers

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Speaker 3: are looking more forum We're going to be there to

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Speaker 3: provide them.

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Speaker 4: John, I want to double down on Katie's earlier question

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Speaker 4: a little bit here because it looks like that's what

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Speaker 4: investors are really latching onto because on first plush for

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Speaker 4: a company, you would think that being able to raise

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Speaker 4: prices as you have despite everyone else not being able

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Speaker 4: to that, that would be a good thing. But the

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Speaker 4: worries here rely around and customers buying more ultimately, So

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Speaker 4: if you project out through the next year, how do

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Speaker 4: you expect consumers to behave under this higher price scenario.

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Speaker 3: So at the highest level, we see continued consumer spending

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Speaker 3: at the levels that we're seeing at the moment and

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Speaker 3: growing pretty much in line with GDP expectations, which low

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Speaker 3: single digit at the global level. I think what's really important, though,

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Speaker 3: is to get underneath that, to understand your consumer customer

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Speaker 3: base at a much more granular level, and then to

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Speaker 3: be able to apply the appropriate solutions that we have

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Speaker 3: in our portfolio, offering affordability in whe where that's important.

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Speaker 3: There's a lower income segment in the United States, for example,

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Speaker 3: we're offering at one and a quarter liter packages growing

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Speaker 3: at double digit rates. We have premium solutions to for

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Speaker 3: the occasions for that work. So I think the name

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Speaker 3: of the game is going to be adapting to those

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Speaker 3: more granular segments. But at the highest level. We see

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Speaker 3: continued resilience and continued growth in consumer spending around the world.

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Speaker 2: And John, I want to talk about the competitive landscape

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Speaker 2: and potential m and A coming from Coca Cola because

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Speaker 2: you think about this craze around healthier sodas, you think

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Speaker 2: of poppy, you think of Ollipop for example. Would Coca

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Speaker 2: Cola be open to buying one of those brands, partnering

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Speaker 2: with one of those brands? What might that look like.

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Speaker 3: Yeah, we're always We're always open to new opportunities that

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Speaker 3: are out there. But right now, we have a portfolio

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Speaker 3: of twenty eight billion dollar brands that we think represents

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Speaker 3: a tremendous amount of headroom for us over the next

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Speaker 3: couple of years. So our primary focus today is to

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Speaker 3: continue to invest and grow the brands that we own.

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Speaker 3: And you you always have to stay opportunistic. You always

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Speaker 3: have to keep your eyes open, and if something more

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Speaker 3: attractive than what we currently have comes along, we'll be

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Speaker 3: open to look at it.

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Speaker 1: I wonder about the geopolitical risks out there, John, You know,

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Speaker 1: we focus so much on interest rates and inflation, the

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Speaker 1: labor market, and we cover you know, the war in

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Speaker 1: Ukraine and the war in the Middle East as general news,

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Speaker 1: but we don't hear much about them from business leaders.

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Speaker 1: Until last night we heard from a private equity company

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Speaker 1: that they are concerned more about geopolitics than anything else.

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Speaker 1: Do you see any effect of that on your business?

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Speaker 1: Is it significant?

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Speaker 3: Well, you know, operating in over two hundred countries around

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Speaker 3: the world, it would be hard to not have an

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Speaker 3: implied effect from what's happening in the geopolitical world. And

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Speaker 3: I think, as you know, as James and I have highled,

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Speaker 3: you know, we have an old weather approach to not

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Speaker 3: just the geopolitical pieces, but the macro economics as well,

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Speaker 3: and I think the name of the game is to

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Speaker 3: is to stay very close to what's coming and to

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Speaker 3: be in a position with our bottling partners around the

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Speaker 3: world to adapt. So yes, you know, if you look

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Speaker 3: at the situation the Ukraine, yes, it had an impact

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Speaker 3: on the way we go to market and the markets

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Speaker 3: we're in. But with our partners, we adapt and we

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Speaker 3: continue to see the global portfolio being the best one

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Speaker 3: for us to be in. And John quickly before.

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Speaker 2: We let you go, I am really curious about how

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Speaker 2: you're thinking about marketing at this juncture of course we

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Speaker 2: have that long discussion about price to volume, how much

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Speaker 2: when it comes to your resources are you dedicating to

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Speaker 2: marketing spend.

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Speaker 3: So marketing is at the core of our ability to

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Speaker 3: create value for both our consumers and for ourselves. And

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Speaker 3: one of the lessons we've learned through COVID, post COVID

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Speaker 3: and as we go into next year is to is

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Speaker 3: to stay consistent, say, investing behind your brands. I think

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Speaker 3: what's important though, is to understand the mix of the

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Speaker 3: investments that you make. We're particularly keen to ensure on

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Speaker 3: the marketing front that we're leveraging new technologies, we're levering

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Speaker 3: new capabilities to stay close to consumers in the digital world,

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Speaker 3: for example, and so it's a hugely important piece of

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Speaker 3: our growth equation and will be for I think forever. Actually, John,

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Speaker 3: great to get some time with you.

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Speaker 1: Really appreciated John Murphy, their CFO at Coca Cola.