Coca-Cola has boosted its marketing spend in a bid to raise customer perception and justify the jump in its product prices.
The soft drinks giant increased investment in its consumer-facing marketing over the second quarter of 2022, while at the same time implementing a 12% average increase in its prices.
CEO James Quincey said consumer spend has “largely held up better than expected” as the price increases have been rolled out, with no “significant pullback” from customers.
Consumers tend to pull back on “high ticket items” during a cost of living crisis, he explained, adding that the company will be “watching closely” for signs of changing consumer behaviour as the year goes on.
READ MORE: Coca-Cola remains the world’s most chosen brand for a decade
“As the average cost of the consumer basket continues to go up, we expect the consumer environment to be more challenging and we are preparing accordingly,” he said.
Reporting on the company’s six-monthly results, chief financial officer John Murphy told investors that the decision to increase spend was made to “create more value” for Coca-Cola’s brands, and to “continue to earn respect of price points”.
Murphy’s comments reinforce those made by Quincey in October last year, when he said Coca-Cola’s brands needed to “earn the right to adjust their prices”, as inflation rates began to climb.
Looking to the second half of the year, the drinks giant will be focusing on “understanding and providing what consumers want”, giving them more reasons to choose Coca-Cola brands.
Last year, Coca-Cola unveiled a new marketing model, with the aim of driving profitable long term growth for its entire portfolio of brands.
At the time, Quincey said the new marketing model would be “focused on adding and retaining consumers”, adding that it was doing this through an “ecosystem of experiences that link consumption occasions with consumer passion points”.
Click here to sign up to Marketing Beat’s free daily email newsletter
