James Quincey
Chairman and Chief Executive Officer at Coca-Cola
Thanks, Tim, and good morning everyone. After a strong first half of the year, we continued our momentum in the third quarter with effective execution across our global system, despite a macro backdrop that remains challenging. In the face of these pressures, consumers stayed resilient and we continued to invest behind our loved brands to drive value in the marketplace and growth in our business. Given our strong results year-to-date, and increased visibility into the rest of the year, we are raising our top line and bottom line guidance, while continuing to invest strategically.
So this morning, I'll provide a business update and discuss how we are expanding the circumference of what we can control. Then I'll pass to John, and he will discuss financial details for the quarter, our revised guidance for the full-year 2022 and some early considerations for 2023. During the third quarter, macroeconomic cross-currents continued to impact the operating environment. The conflict in Ukraine is ongoing, which creates challenges in that country and beyond and we saw renewed pandemic related mobility restrictions in China. Inflationary forces are driving costs, pricing, and interest rates higher, resulting in currency volatility in many parts of the world. Against this backdrop, our industry remains healthy and is growing both in value and volume, which continues to include some benefit from cycling COVID-related impacts of the prior year.
In the third quarter, we delivered strong organic revenue growth across all operating segments. This was driven by pricing actions and robust volume growth. We had share gains overall and across most categories, as well as within both at-home and away-from-home channels. We accomplished this by investing in our business and providing the right portfolio of brands and packages to retain and add consumers. Notably, we drove revenue growth ahead of transactions growth, which is also ahead of volume growth in the quarter, reflecting the strength of our revenue growth management capabilities.
Consumer elasticities in core categories have continued to hold up well. We are leveraging our consumer-centric marketing model and increasingly using digital engagement to link consumption occasions with passion points. Our system has never been stronger and our global network model is allowing us to leverage the vast experiences of the systems leaders from various parts of the world. We are increasingly sharing learnings and generating faster responses to a changing environment through the right mix of local relevance and scale.
Now, recapping the third quarter performance across the world, starting with Asia-Pacific. In India, we continued to strengthen the first half of the year as we gained share in sparkling soft drinks. Trademark Coke delivered strong growth through effective execution and occasion-based marketing. Year-to-date, we drove approximately 2.5 billion transactions at affordable price points through the expansion of returnable glass bottles and single-serve PET packages. Sprite has grown to become $1 billion brand in the market, driven by the success of locally adapted occasion-based global marketing campaign at Heat Happens and Screentime [Phonetic].
In Japan, we continued to strengthen our business. Amidst an inflationary environment in the country for the first time in many years, we took price increases in large PET packages. Through intelligent innovation on small packs, we've gained value share, transactions and household penetration year-to-date. Additionally, we continued our strong share gains in vending in the quarter and we expanded our leadership position in e-commerce. In China, we grew volume in the quarter and achieved strong growth in sparkling soft drinks during the summer selling season amidst varying levels of pandemic-related mobility restrictions. We focused on digital to unlock new opportunities. We deployed Fans Festival [Phonetic], a drink, scan, win pilot at scale, which drove widespread brand exposure and connected consumer traffic to more than 30,000 outlets. We remained focused on executing RGM strategies to drive outlet expansion and increase key SKU availability. In ASEAN and South Pacific, we saw strong volume and transaction growth across most markets, driven by new product launches and continued recovery in away from home channels. We saw significant top line improvement in sparkling flavors for most markets, driven by our Sprite Lemon+ and Schweppes Soda Zero Sugar innovations.
In EMEA, European consumers continued to experience inflationary costs. We leveraged our RGM strategies to drive away-from-home single-serve mix and retain consumers and delivered value share gains across most categories. Our system has delivered top-tier incremental retail value for customers year-to-date, the second year in a row. We accelerated digital engagement with more than 4 million connected consumers year-to-date. In Africa, despite the macro environment remaining challenging, we gained volume and value share. We focused relentlessly on excellence in execution and reduced retail out-of-stocks. We've built sustainable customer engagement in more than 80,000 points of sale year-to-date through a customer loyalty partnership program.
In Eurasia and Middle East, we remained resilient amid some unprecedented inflationary environment in many markets and some supply-related disruptions. Across market, launch of FIFA activations and the Fanta Fest campaign were key enablers of growth. With strong focus on execution, we placed over 50,000 coolers and have gained availability in 33,000 new outlets year-to-date.
In North America, we drove volume and value share gains, through strong core sparkling performance complemented by a robust innovation and music-led experiential marketing, despite intermittent supply chain challenges. Smartwater growth was strong during the quarter and innovations like Coca-Cola Creations and Minute Maid Aguas Frescas continued to expand and exceed expectations. The Coca-Cola value bundle, a collection of core sparkling offerings, providing more choices to cost conscious consumers, is helping to retain and recruit more consumers, while creating value for our customers.
In Latin America, we leveraged connected experiences and strong execution to drive top line growth and sequentially improve on our share losses. We strengthened our connections through music, leveraging the Coca-Cola marshmallow flavor to stream Rock in Rio across the continent. Through RGM initiatives, we focused on single-serve package growth to drive transaction growth. Alignment with our bottling partners remained strong and our joint market initiatives are ensuring our focus on accelerating growth.
In Global Ventures, we witnessed robust volume growth. However, our overall cost performance was impacted by a dynamic operating environment in the UK, along with investments in the marketplace as we expand internationally. China ready-to-drink value share grew with the strong performance of innovation like Costa Cha Tea [Phonetic] and Oat Coffee. Ready-to-drink in Japan is also delivering strong performance supported by sampling, in-store execution and the launch of Caramel Latte. Finally, our Bottling Investments Group delivered strong volume and top line performance driven by focus on affordable entry-pack expansion across all markets. Additionally, we're driving availability and efficiencies in cost-to-serve.
As we look forward beyond this year, we continue to see great opportunity for our industry. We are allocating resources in a disciplined way to gain share. Success from our marketing model is based on two critical components, linking occasions and passion points to drive engagement and leveraging experiments to optimize our marketing. This drives deeper connections with consumers reaching them in new and unique ways. The launch of the Believing is Magic global campaign for the FIFA World Cup celebrates the passionate journey of soccer fans by unveiling a suite of digital experiences that capture the full extent of fans devotion to their beloved teams. The campaign includes the FIFA World Cup trophy tour, as well as a digital hub for Coca-Cola Fan Zone which creates impost opportunities for fans to come together to trade Panini stickers behind the Coca-Cola labels. This campaign has already led to a gain of more than 3.5 million consumers with direct engagement.
Building on our digital experiments, we also announced a strategic partnership in six countries with Grab, Southeast Asia's leading connected app. This builds new consumer connections and offers a new level of convenience. Through a mix of offline advertising on the Grab fleet, online advertising in the Grab app, gamification and product sampling we are building more purchasing occasions to grow demand for at-home consumption.
Our innovations have delivered strong results with more than 25% contribution to incremental gross profit year-to-date. Our innovations span markets and categories, with 55% of year-to-date innovations outside of the sparkling category. Our pipeline is robust and we are excited about their unique consumer propositions. For example Coca-Cola Creations is providing bold on-trend flavors designed to build buzz with younger consumers. Ready-to-drink Costa offers new and exciting flavors with authentic, rich coffee and milk taste. We are also excited about the potential for Jack Daniel's and Coca-Cola ready-to-drink, which we'll launch in Mexico in the fourth quarter and it's coming to additional markets next year, including the U.S. in the spring through our agreements with Brown-Forman. This will give consumers a convenient way to enjoy the world's most popular bottle corp. Our innovations are designed with scalability in mind to further support our growth portfolio.
We expect inflationary pressures to continue. So we are leveraging all the levers of RGM at our disposal, including price, promotional intelligence and proactive mix management. Our RGM capability is mining insights such as consumer motivations as well as category and customer opportunities, giving us a precise approach to package, placement and promotional investments. This drives trip conversion and value growth for customers. For example, in Japan, we are seeing strong results from our segmented approach. Instead of our key 500 ml PET pack for Fanta, we now sell one smaller 350 ml PET pack from the go and one larger 700 ml PET pack for home occasions. This dual pack strategy has increased beverage incidents by 9%.
In Q3, retail value transactions and market-share were all up for these packages. Our system is investing to grow our executional footprint, adding to what was already pervasive distribution, resulting in availability of our products in nearly two-thirds of all outlets globally. These strong results are clear proof points of what is possible when our alliance system leans forward for growth. Underpinning all of this work is our purpose to refresh the world and make a difference. Sustainability remains an integral part of our business and strategy and is a key driver of future growth and business resilience. While we have made progress towards our World Without Waste goals, we remain committed to do more and faster so we can grow our business the right way. We're continuing to partner with other businesses, civil society and governments to support cooperative action on this critical issue.
During the quarter, we played a leadership role and helped launched the business coalition for a global plastics treaty convened by key partners the Ellen MacArthur Foundation and World Wildlife Fund, alongside other private sector companies. We are also continuing to take steps to help drive the circular economy by making our bottles more eco-friendly. In North America and Latin America, Sprite has shifted all of its PET packaging from green to clear, improving efficiency of recycling systems and increasing the availability of food grade rPET. In Vietnam, we launched Coca-Cola bottles made from a 100% recycled plastic, excluding the cap and the label. We now have more than 30 markets where we offer at least one brand in a 100% rPET package with similar launches planned in additional markets next year. In an operating environment that increasingly puts more variables into the equation than we've seen in the past, we are focused on delivering and executing for growth. We are encouraged by what we're seeing in the business. We are committed to expanding the circumference of what we can control by delivering world-class marketing, disciplined innovation, excellence in revenue growth management, and laser-sharp execution in the marketplace, with a goal of operating at a higher level through these challenging market conditions.
We are doing this with capable and align bottling partners around the world. The combination of strong loved brands and a pervasive distribution system is a formula for resilience in times like these and we are pleased to be raising both our top line and bottom line guidance today.
With that, I'll turn the call over to you, John.