JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win...

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JOHN F. BROCK CHAIRMAN & CEO NIK JHANGIANI SVP & CFO

Transcript of JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win...

Page 1: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

JOHN F. BROCK CHAIRMAN & CEO

NIK JHANGIANI SVP & CFO

Page 2: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Forward-Looking Statements

2

As always, these expectations are based on currently available competitive, financial, and

economic data along with our current operating plans and are subject to risks and

uncertainties that could cause actual results to differ materially from the results

contemplated by the forward-looking statements.

The forward-looking statements in this presentation should be read in conjunction with the

risks and uncertainties discussed in our filings with the Securities and Exchange

Commission (“SEC”), including our most recent Form 10-K and other SEC filings.

Included in this presentation are forward-looking management comments and

other statements that reflect management’s current outlook for future periods.

Page 3: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Agenda

3

SOLID FOUNDATION

CRS AND KEY TAKEAWAYS

OPPORTUNITY FOR GROWTH

SHAREOWNER VALUE

Page 4: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

CCE Snapshot

4

Preeminent western European bottler

$8.2 billion net sales

30 billion servings annually to

170 million consumers

17 production facilities

~11,750 employees

10-K 2013

Page 5: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Vision and Operating Framework

5

Be the best beverage sales

and service company

Strategic

Priorities

Vision

Deliver consistent, long-term profitable growth

Lead category value growth

Excel at serving our customers with world

class capabilities

Drive an inclusive and passionate culture

Page 6: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Solid Foundation for Growth

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#1 in value & volume share in NARTD and Sparkling Successful

Position

Managing the levers of our business to deliver

consistent, long-term profitable growth

and shareowner value

Non-alcoholic ready-to-drink (NARTD); Canadean FY13, excludes tap/bulk water & dairy; AC Nielsen

Historical mid-single-digit compounded growth Growing

Category

NARTD is the # 1 category in retail sales for our customers Large

Category

Page 7: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Agenda

7

OPPORTUNITY FOR GROWTH

CRS AND KEY TAKEAWAYS

SHAREOWNER VALUE

SOLID FOUNDATION

Page 8: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Large and Growing Category

8

~$181B Beverage Market

(Retail Value)

~$27B NARTD - Measured

(Retail Value)

1. Canadean FY13, excludes tap/bulk water & dairy, rounded

2. AC Nielsen FY13, rounded

2013 Growth2

+3%

v.

20

12

+4.5%

3 Y

r C

AG

R

~$40B

~$27B

~$114B

NARTD –

Non-measured1

NARTD –

Measured2

Hot Tea/Coffee, All Alcohol, Dilutables1

Page 9: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Key Category for Our Customers - NARTD

9 Fast Moving Consumer Goods (FMCG)

AC Nielsen FY13 (Strategic Planner); Rankings based on most recent available data (excludes tobacco)

FMCG Sector Ranking 2013 NARTD

#1 #2

NARTD Charcuterie

Charcuterie NARTD

NARTD Charcuterie

NARTD Beer

NARTD Beer

NARTD Charcuterie

NARTD Beer

Value $B Value % Growth

27.3 2.9

10.3 4.2

8.7 0.8

2.2 2.2

2.0 7.7

1.6 6.0

2.5 0.1

Page 10: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Territory Opportunity – 2013 Metrics

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CCE Performance3

1: Population in millions; CCE internal reports 2: Per Caps = Per Capita Consumption; based on eight fluid ounce servings of The Coca-Cola Company (TCCC) beverages 3: AC Nielsen FY13

CCE1 180

207

140

324

254

173

137

#1 in NARTD & Sparkling in

value & volume in every territory

Grew value & volume share in

NARTD category

Grew value & volume share in

Sparkling segment

170

63

64

11

5

10

17

Population1 & Per Caps

2

Page 11: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

43%

18% 3%

22%

36%

10%

35% 46%

87%

NARTD Volume NARTD Value CCE Volume1 1

Sparkling Stills Water

CCE – Focused on High Value Segments

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Category & CCE Mix Segment Strategy

Sparkling: grow segment

Still: selectively grow value share

2

1. AC Nielsen FY13

2. 10-K 2013

Page 12: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Capturing the Growth Opportunities

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Successful Brands

Solid Marketing &

Execution Plans

Great People

Page 13: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Successful Brand Portfolio

13 10-K 2013

69%

Volume

Coca-Cola

Trademark

18%

Volume

Sparkling

Flavors

& Energy

13%

Volume Stills

Page 14: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

2014 Highlights

Sparkling – Coca-Cola Trademark

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2013

Growth:

+15%2

+3M new

households3

Enhance ‘Share a Coke’ campaign

Drive package innovation

Win in digital

Accelerate Coke Zero – ‘Just Add Zero’ campaign

#1 in volume and value cola

share in every territory1

1. AC Nielsen FY13

2. CCE internal reports

3. Europanel 2013

Page 15: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Package Innovation – 1.75L

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1.75L

Contour

PET

Transition From 2L To 1.75L

New primary package in Great Britain

Comments

Pricing flexibility

Consumer preferred packaging

Add value to the Cola segment

Page 16: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Drive Recruitment

Package Innovation

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250ml Can

1L Contour PET

Create Value Boost Frequency

1.25L Contour PET 4 x 1.5L Multipacks

Page 17: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Brand Innovation - Finley

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New adult sparkling non-alcoholic beverage

Low calorie

Preservative free

With lemon juice

Range of flavors

Fully integrated marketing plan

Page 18: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Brand Innovation – Glacéau Smartwater

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Vapor distilled spring water with electrolytes

Vapor distillation: a process inspired by the clouds

Added electrolytes for a clean, crisp taste

IC packs: 600ml and 850ml

Integrated marketing campaign

Scheduled launch: August, 2014

Page 19: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Brand Innovation – Coca-Cola Life

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Naturally sweetened Coca-Cola

Launches in September, 2014

Delicious

Taste

33% Fewer

Calories

Natural

Sweeteners

Page 20: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

2014 Marketing Calendar

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Jan. Dec.

World Cup

Trophy Tour

Recruitment Pack / Music “COKE WITH MEALS”

Always “on”

Enhanced

Page 21: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

‘Share a Coke’ and World Cup

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Expand ‘Share a Coke’ World Cup

Trophy Tour: 5 countries and 10 cities

“Get Active” activation in-store and community

Fully integrated marketing campaign

Over 1,000 names

More packages (Home & Cold)

In-store promos, Pop-up stores

Social media

Page 22: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Commercials

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World Cup Share a Coke

Page 23: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Customer Centric Supply Chain

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Pan European scale supported with global procurement

capability

Flexible & efficient logistics & distribution

Cost efficient production & expandable infrastructure

Responsible & sustainable

Procurement, Production, and

Logistics Excellence

Page 24: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Enhanced Capability and Capacity

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Flexibility to

execute wide-

scale customized

programs

Norway: new

package and

route to market

Continuously

improving

efficiency &

effectiveness

Expanding

package, pack,

and pallet

flexibility

Page 25: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Serving Our Customers With World-Class Capabilities

25 2013 Advantage Group survey

GREAT BRITAIN

FRANCE

BELGIUM

NETHERLANDS

#1

#2

#1

#1

10 years in a row

Up from #5 in 2008

4 years in a row

4 years in a row

Most Valued FMCG Supplier

Page 26: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Optimizing Our Business

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Standardizing (e.g. channel-focused sales and

marketing organization)

Centralizing (e.g. shared services center)

Improving (e.g. cold-drink equipment service

activities)

Business

Transformation

Program

(BTP)

Enhancing our operating model for driving

sustainable future growth

Page 27: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Our People

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Experienced Team

Solid Bench Strength

Investing In Capabilities

Drive an inclusive and passionate culture

Page 28: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Agenda

28

CRS AND KEY TAKEAWAYS

OPPORTUNITY FOR GROWTH

SHAREOWNER VALUE

SOLID FOUNDATION

SHAREOWNER VALUE

Page 29: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Financial Priorities

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CONSISTENT earnings in line with

our long-term objectives

MAXIMIZE free cash flow (FCF) and

maintain financial flexibility

INCREASE return on invested capital

and deliver shareowner value

Deliver

Consistent

Long-Term

Profitable

Growth

Page 30: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Financial Approach

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Maintain target leverage range

Invest in high return M&A opportunities

and/or return cash to shareowners

Opportunistically

Invest and/or

Return Cash To

Shareowners

Optimize

Capital

Structure

Focus on total shareowner return

Grow profitably while investing CapEx prudently Drive

Cash From

Operations

Page 31: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Grow Profitably to Drive Cash from Operations

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Net Sales

Operating Income

EPS

Growth

4 - 6%

6 - 8%

High Single-Digit

Long-Term Targets

Low Single-Digit

Mid-Single-Digit

+10%

2014 Outlook

Comparable & currency neutral

Generate Solid Free Cash Flow

Page 32: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Cost of Sales - Profile

32 CCE internal reports for bottle/can; rounded

COGS Mix Comments

Maintain and opportunistically

expand gross margin

~85% of COGS is variable,

while ~15% is fixed

Of commodity based costs,

~half are related to conversion Commodity Based

Costs

Concentrate,

Finished Goods

Manufacturing,

D&A, All Other

Excise

Taxes

45%

30%

15%

10%

Page 33: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Selling, Delivery, and Administrative (SD&A) - Profile

33 CCE internal reports; comparable; rounded

SD&A Mix Comments

Expand operating margins with

modest SD&A leverage

Our Ownership Cost Management

(OCM) approach ensures disciplined

cost management

Our flexible route to market enables

our supply chain to work with

customers to optimize delivery D&A 10% D&A 10%

General Admin 30%

Sales & Marketing

30%

Supply Chain 30%

Non-Labor 45%

Labor 45%

Page 34: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Invest for Long-Term Growth

34 10-K 2013

2013 Capital Mix Capital Highlights

Long-term target 4.0% – 4.5%

of net sales

~2/3 supports growth

~1/3 maintains existing assets

61%

23%

16% Operations

Cold Drink

Equipment

IT, Other

Page 35: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Balance Sheet Flexibility

35 1. 10-K; Net Debt is total 3rd party debt less cash & cash equivalents; comparable EBITDA

2. Pro forma FY10 assumes D&A of low to mid $300M

1.6x2 1.7x

2.0x

2.6x

0.0

1.0

2.0

3.0

2010 2011 2012 2013 2014+

Net Debt1 to EBITDA

LONG-TERM TARGET

RANGE = 2.5x – 3.0x

Weighted average cost of debt ~3%

Page 36: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Invest in High Return M&A Opportunities

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Opportunities Evaluation Criteria

Core business growth

Adjacent territories and adjacent

categories

Other territories

New business

Cash flow of existing business

Incremental value creation by CCE

Incremental value to CCE’s core

business

Risk, cost, and timeframe

Opportunities evaluated against alternatives,

including return of cash to shareowners

Page 37: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Improving Net Income to Free Cash Flow Conversion

37 10-K 2013; CCE internal reports; comparable; one-time / other = cash restructuring, cash tax, other

FCF as a % of Net Income Comments

2013 impacted by non-recurring

items (e.g. restructuring)

Over time, we expect FCF to more

closely align with Net Income

Continued focus on annual ROIC

improvement

~75%

~100%

~25%

0%

25%

50%

75%

100%

2013 FCF One-Time /

Other

Net Income

Page 38: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Future Cash Availability

38

Opportunity to generate significant cash annually

for M&A and/or shareowners

CCE internal reports; illustrative

Annual Cash Available as % of Market Capitalization

~6-7% ~8-10%

~2-3%

Net Income

Organic growth while

maintaining debt

leverage Annual cash

available + =

Page 39: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Cash Returned to Shareowners

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Almost $8B of cash returned after the

formation of new CCE through 2014E

2010 2011 2012 2013 2014E

$3.6B

$1.0B $1.0B

$1.2B

$1B

Other Share Repurchase Dividends

10-K, YE market cap (2014 as of 06/12/2014); internal reports; rounded

44% 12% 11% 11% 9%

% of

Mkt

Cap

Page 40: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Key Financial Takeaways

40

Focus on consistent long-term profitable growth

and total shareowner return

Realistic about challenging environment

History of and commitment to managing the levers of our

business to deliver growth

Favorable and flexible capital structure

Long-term financial objectives are challenging, yet achievable

Page 41: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Agenda

41

SHAREOWNER VALUE

OPPORTUNITY FOR GROWTH

SHAREOWNER VALUE

SOLID FOUNDATION

CRS AND KEY TAKEAWAYS

Page 42: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

CRS Vision and Recognition

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Sustainability

Vision:

Improve operational effectiveness

Increase engagement and advocacy

Enhance image and reputation

Rated #1 Food & Beverage

Company by Corporate Knights;

#2 Newsweek Green Rankings

Corporate Responsibility and Sustainability (CRS)

We will deliver for today, growing a low carbon, zero waste business, and inspire and lead change for a more sustainable tomorrow

Page 43: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

CRS Progress/Achievements

43

Water Use Ratio

(water used to make 1 liter of product)

1.64 1.57 1.51 1.48 1.43 1.40 1.35 1.20

2007 2008 2009 2010 2011 2012 2013 2020

target

Carbon Footprint

(energy consumed per 1,000 liters of product)

91 90 88 88 82 82 77 75

2007 2008 2009 2010 2011 2012 2013 2020

target

Decreasing environmental impact while reducing costs

CCE internal reports

Page 44: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Business Environment Risks

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Though optimistic about our long-term outlook,

we are realistic about key business environment risks

Challenging macroeconomic environment

Increasing focus on health and wellbeing

Risk of increased taxes

Page 45: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

Key Takeaways

45

CCE is executing our strategic priorities

Operating environment remains challenging

Financial priorities focused on long-term profitable growth

Track record of and focus on delivering shareowner value

Page 46: JOHN F. BROCK · 2019. 9. 3. · Enhance ‘Share a Coke’ campaign Drive package innovation Win in digital Accelerate Coke Zero – ‘Just Add Zero’ campaign #1 in volume and

JOHN F. BROCK CHAIRMAN & CEO

NIK JHANGIANI SVP & CFO