Coke Revs Up 2%, Company To Bolster Out-Of-Home Experience.

While Coca-Cola's U.S. business continues its recent struggles, the company expressed continued enthusiasm for its "Coke Side of Life" and other current campaigns Tuesday. It gave no signs it will curtail marketing as it focuses on a turnaround for the Coke umbrella brands. "Our campaigns are creating consumer awareness," said COO Muhtar Kent in a conference call to discuss first-quarter earnings.

That upbeat note comes despite the fact North American volume is down 3% in the quarter versus a year ago, which Kent said the company is "clearly not satisfied" with. (Net revenues did increase 2%, though operating income dropped 11%. North America was the only one of Coke's six regions where all three of those metrics didn't show a jump; executives attributed some of that to U.S. price increases.)

Kent rattled off a series of "solid" first-quarter ad initiatives the company applauds: "Coke Side of Life" spots in the Super Bowl, a run of Diet Coke ads in the Oscars and a Coke Zero push in March Madness broadcasts. All the campaigns included integrated aspects with complementary event marketing and point-of-sale pieces.



He cited "American Idol" as a successful platform for all three brands, though its big in-show visibility is for the flagship Coke brand with cups on the judges' table and the branded "Red Room." Next up: an expected major push this summer for Diet Coke Plus, a spinoff with vitamins and minerals, that's hitting shelves this month. The tagline teed up is "Great Taste Has Its Benefits."

Kent also suggested Coke needs to bolster its out-of-home or, more specifically, "on- or near-store" efforts to promote impulse purchases with more signage, something Coke spread Stateside for years and is now an overseas staple. "You walk around the U.S. market, and we've lost the drive to create impulse ... Now you walk around Latin America, you walk around Europe, you walk around Asia, you walk around Africa, everywhere you have signs that say, 'Ice cold Coca-Cola served here', not in the United States. That's creating the impulse."

On generating momentum for North America, CEO Neville Isdell added: "We will win again in our home market. It will not come quickly, and we continue to expect 2007 to be weak, but we do expect to begin seeing sequential improvement in the second half of the year as we execute against our key goals."

Among potential growth points cited are the recent acquisition of the Fuse brand and launch of a cherry-flavor version of Coke Zero, with future extensions planned for the brand. Resuscitating sales of the Coke umbrella brands remains paramount, Kent said. Internationally, the "Coke Side of Life" campaign from Wieden + Kennedy will be in 200-plus markets by the end of 2007. Coke is performing well beyond North America, and company officials have previously acknowledged that's where much of its future trajectory lies. In the first quarter, volume increased 9%.

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