Coca-Cola pauses marketing spend amid COVID-19

Soft-drinks giant plans to re-engage with consumers 'when timing is right.'

Photo credit: Getty Images
Photo credit: Getty Images

Coca-Cola has paused all of its marketing spend, blaming a reduction in return on investment amid the coronavirus pandemic.

According to the company's Q1 results, it had been "on track to achieve" forecast targets for the year across all markets except China, with 3% growth through the end of February.

However, Coca-Cola said that by the beginning of April, it was experiencing a volume decline globally of about 25%, leading the company to withhold its financial and operating predictions for the year ahead.

"We've developed and determined that in this initial phase, there is limited effectiveness to broad-based brand marketing," said James Quincey, chairman and CEO of Coca-Cola. "With this in mind, we've reduced our direct consumer communications. We'll pause sizeable marketing campaigns through the early stages of the crisis and re-engage when the timing is right."

While operating income for Coca-Cola’s Costa products has declined by 71% across the globe, mostly as a result of café closures across China and the U.K. during the lockdown, volumes for the Coca-Cola brand grew 1%, propeled by a strong performance for Coca-Cola Zero Sugar.

Last month, Coca-Cola suspended all of its brand marketing in the U.K., claiming it would review the decision periodically and update agency partners of further developments.

"We have paused all capital spend, other than what is absolutely essential or has already been committed. By moving quickly and decisively, we will avoid waste, improve ROI and spend and give us maximum flexibility for the second half of the year as we gain clarity on the outlook," said John Murphy, CFO and EVP at Coca-Cola. "Some of the work that matters most is smart use of the many levers we have at our disposal to maximize profit and cash flow. On the revenue side, we have made substantial changes to our brand and pack portfolio focus and are leveraging the playbooks on affordability and value that have served us so well in past crises around the world."

Coca-Cola was set to sponsor a series of events that have been postponed as a result of COVID-19, including the Olympic Games and Euro 2020. 

The brand works with agencies in the U.K. including McCann, Wieden & Kennedy, Ogilvy, Grey London and MediaCom, with the account boasting a value of £50 million, according to Nielsen figures.

This story first appeared on campaignasia.com. 

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