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ALL STAKEHOLDERS IS CORE TO
OUR STRATEGY AND LONG‑TERM
SUCCESS. WE THEREFORE ENGAGE
CONTINUOUSLY WITH OUR
PEOPLE, CUSTOMERS, PARTNERS,
SHAREHOLDERS, AND COMMUNITIES
TO ENSURE THAT WE ARE FOCUSED ON
FULFILLING THEIR NEEDS NOW AND IN
THE FUTURE – THAT’S WHAT WE MEAN
BY BEING ‘IN GOOD COMPANY’.
OUR
BUSINESS
We are generating strong Since we laid out our 2020 targets We remain focused on efficiency And we are cultivating We have the right teams in place Sustainable growth is core to
revenue growth and in 2016, we have delivered in all we do, allowing our strong the potential of our people who are empowered to take our long-term success and to
consistently at or above those revenue growth to drive improving intelligent risks and seize support that we launched new
sustainable margin and building trust with our
objectives. profitability. opportunities. 2025 sustainability
expansion communities commitments this year.
CURRENCY-NEUTRAL
REVENUE GROWTH COMPARABLE EBIT MARGIN
+5% on average +270bps 28,884 17
IN THE LAST THREE YEARS FROM 7.5% IN 2015 DIRECT EMPLOYEES NEW COMMITMENTS
See progress against our strategy See more on pages 54-62 See more on pages 26-33 See more on pages 24-25
on pages 18-23
TO LIFE
and brands to achieve sustainable growth.
New categories and brands
We continue to invest in our 28 markets See pages 40-47 for more Variants of Coca-Cola
to grow volumes and create value. information Flavours of other sparkling brands
Flavours for adults
Other flavours
M ME
T E GM
HA OU
EN
margin 2018 FRA
O
M
HO I
R
B
TS
10.5% NS DI
GI
SC
SIO
E
IM S TA
ER
RE
LC
KT
Established markets NT
EN
ENERGY DRINKS
CA
AC
LS
TIM
RTD
KS
O
M
SN
Currency-neutral
SC
M
RIN
NE
OC
E
ER
DI
TEA
revenue growth 2018
CE
D
AN
HA AY FRO
JU
E
RTS
+ 2.1%
FE
S
AST
AW OME
IC
NG
CT
F
E
SPO
CO
CH
Comparable EBIT
AKF
ING M
S
DU
KET
margin 2018
BRE
OUT
WA S
GE
MAR
9.7% TE
PRO
R RA
AT W
E VE
YPER
DB
SOCIAL
E
AS
ORK
DRINKING
T‑B
AT HOME
SUPER & H
AN
OUT
SPARK PL ITS
M SPIR
ISING
LING B
EVERA
GES PREMIU
4 COCA-COLA HBC CHAIRMAN’S LETTER
Dear stakeholder,
Our strong performance during 2018
was the result of the successful execution
of Coca-Cola HBC’s growth strategy,
increasingly efficient operations and the
efforts of our talented and resourceful
people. I am pleased to report that even
as we transformed many aspects of our
business, our approach of creating value
for all of our stakeholders continued.
In Good Company
The theme of this year’s report, In Good
Company, reflects the importance of our
network of partners, including customers,
shareholders, suppliers, our people and
communities. The Board of Directors has
striven to ensure that the Company has
a comprehensive approach to stakeholder
engagement, including building robust
stakeholder engagement practices which
allow us to listen to stakeholder concerns
and feedback, and taking steps to engage
further when deemed appropriate.
As part of our commitment to ongoing
dialogue and engagement, we, along with
The Coca-Cola Company, invited policy
makers, investors, customers, non-
governmental organisations and industry
associations from across our markets to
our Annual Stakeholder Forum. Anastasios
Leventis and Charlotte Boyle represented
the Board at our 2018 forum in Vienna,
where we listened to stakeholders’ views
on sustainability and the key issue of how
we continue to tackle packaging waste.
How and why we work with our
stakeholders forms a key thread
throughout this report.
Sustainability
We have made great progress in managing
the environmental and social aspects of
We are nurturing our people, our business and have already delivered on
building trust in our a number of our 2020 sustainability targets,
communities, growing ahead of schedule. New, ambitious 2025
partnerships with our customers, sustainability commitments were approved
evolving our portfolio for our by the Board of Directors during the year
consumers, and driving to ensure that sustainability remains
efficiencies with our suppliers. integral to our future strategy.
2018 INTEGRATED ANNUAL REPORT 5
SR
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FS
IN GOOD SSR
SI
COMPANY
Our commitments focus on the areas With more new products successfully Priorities for 2019
of most material importance for our launched in 2018 than ever before, On behalf of the Board, I would like to take
stakeholders, industry and society, we achieved currency-neutral revenue this opportunity to give my thanks to
such as: reducing emissions; water use growth in most markets. Our results for everyone at Coca-Cola HBC for another
and stewardship; a World Without Waste; the year are a testimony to the agility and year of outstanding progress towards our
ingredient sourcing; nutrition; and our entrepreneurism of our people. They give 2020 targets.
people and communities. me additional confidence that we have the
right culture to succeed in the future. Our focus in 2019 will be on supporting
Our sustainability leadership has long management with strategy and
been recognised internationally. The 2018 decision‑making as we continue our journey
Dow Jones Sustainability Indices ranked
Governance
to become a Total Beverage Company
Coca‑Cola HBC in the top three of both The Board benefits from a diverse range
and prepare for the next chapter of growth.
the global and European beverage industry of skills, experience, independence and
The Board is in agreement about the
leagues, while we received additional knowledge. I believe our current composition,
importance of sustainability, and we will work
recognition in other sustainability after the process of renewal in the past few
to retain our leadership here, supporting our
benchmarks, such as CDP Climate, years, represents a well‑balanced and
progress towards our 2025 commitments.
FTSE4Good and MSCI. diverse group who can support management
We will also continue to nurture the culture
in leading this Company to long-term
and values which underpin the potential of
Culture and values success. In 2018, we were able to support
the business and to ensure a strong pipeline
our new Chief Executive Officer as he
Effective corporate governance is as much of talent for both Board and senior
worked to drive the business strategy,
about fostering a strong culture and values management positions.
and we look forward to ongoing engaging
as about abiding by corporate codes, and
and collaborative discussions for many Finally, on behalf of the Company, let me
I am proud of our success in embedding
years to come. thank you, our shareholders, for your support
a values-based culture with a drive for
and partnership in our growth. I look forward
excellence. Transforming our business to As the Group transforms into a Total
to seeing you at the Annual General Meeting.
become a Total Beverage Company requires Beverage Company, some of the corporate
us to build on our strong existing culture. governance frameworks we have in place
We know from our success in navigating will need to transform too. In 2018, we have
macroeconomic challenges in recent years promoted changes to support the informed
that our people are resourceful and resilient. risk-taking necessary for innovation and
Successfully transforming our business growth, evolving our risk management
requires that we further empower our people framework. While the Company is identifying
ANASTASSIS G. DAVID
to take bold and entrepreneurial action to and managing material issues and principal
serve our customers, while at the same time risks faster and more proactively, what has
CHAIRMAN OF THE BOARD
asking that they seek to learn from failure not changed is the Board’s process
and remain accountable for their decisions. of overseeing and reviewing these.
In my role as Chairman, I have the
opportunity to meet many of the women
Dividend
and men who form Coca-Cola HBC and Due to the strong operating performance
I see their excitement about the evolution of the business and our confidence in
of our business. I’m confident that our management’s ability to continue to guide
people will rise to meet the challenges the Company to further success, the Board
of faster‑paced innovation, and that we is proposing a full-year dividend payment
are taking the right steps to support our of €0.57 per share. This proposal represents
Company’s long-term success. a 5.6% increase compared to the dividend
that we paid in 2017, which itself was a 22.7%
increase on the dividend that we paid in 2016.
6 COCA-COLA HBC CHIEF EXECUTIVE OFFICER’S Q&A
ZORAN BOGDANOVIC
CHIEF EXECUTIVE OFFICER
“I am very
pleased by
the successful
introduction
of our expanded
product and
package
portfolio, and
am confident
that these
changes
position our
Company for
sustained
profitable
growth.”
2018 INTEGRATED ANNUAL REPORT 7
SR
CG
FS
SI
OF GROWTH
How was 2018 for CCH? All of this work is the foundation of our As a business driver, events such as the
We achieved another year of strong revenue transformation to a Total Beverage World Cup are not just a short-term boost
growth with margin expansion and introduced Company, and it is producing results. to sales, they also support our long-term
more launches of new packages, brands In 2018, we achieved revenues of €6,657 reputation and growth, and these benefits
and even categories than ever before. million, up 6.0% in currency-neutral terms. extend beyond the host nation. From an
These launches accomplish two key things. Our comparable EBIT margin was 10.2%, operational perspective, we delivered by
First, they ensure that we are bringing our up 70 basis points compared with 2017. getting the right drinks to meet the demand
customers a beverage portfolio which meets Reported net profit was €447 million1. of fans in the 12 cities and FIFA Festivals,
emerging consumer trends. Second, they With these results, we are on track to deliver but also by ensuring that we collected
allow for profitable revenue growth on our 2020 financial commitments. and recycled our packaging. Working with
by providing the right package and price The Coca-Cola Company and other partners,
combinations across our channels and What were your personal we supported the recycling of the equivalent
consumption occasions. highlights in 2018? of all the PET packaging distributed to FIFA
It was a great year on many fronts, but one stadiums by the Coca-Cola System during
I am very pleased by the successful the tournament.
introduction of our expanded package and of our key achievements was the launch
product portfolio, and am confident that of FUZETEA simultaneously in 27 of our Of course, it was a great personal highlight
these changes position our Company for markets at the start of the year. This launch to enjoy a Coke Zero while watching my team,
sustained profitable growth. You will find was meticulously planned and the results Croatia, in the World Cup Final – even if the
many examples of our successful launches have been impressive. With FUZETEA, result didn’t go the way I would have wanted.
in the Consumers and Customers sections we have seen volume growth of 1.5% in the
on pages 40-53. ready-to-drink tea category in 2018 after Can you tell us a little more about
several years of decline. I believe this shows the operational changes the shift
More launches of more products requires the tremendous power of the Coca-Cola to becoming a Total Beverage
adjustment throughout the business: System, operating with both speed and scale Company necessitates?
an enhanced route-to-market approach; to achieve a great result.
a more agile supply chain; and ongoing focus This change requires a faster pace of
on cost control. This would not be possible Another highlight was the work that went decision-making within the whole Coca-Cola
without close partnerships with our into the FIFA World Cup in Russia. The biggest System, which is being supported by even
customers and the dedication and hard work sporting event in the world in our biggest greater alignment between The Coca-Cola
of our people. market was always going to be a focal point Company and the bottlers. We are creating
for the year, and our team on the ground did a more agile, responsive system which allows
Our people’s adaptability and agility made a phenomenal job. Their excellent customer us to roll out our successes with speed
it possible to implement these changes. engagement and market activation around and to ensure we focus our efforts on the
We are investing in our people to nurture the event supported the 4.4% volume highest return opportunities, while eliminating
their potential. I want our Company to have growth we achieved in Russia in 2018. unsuccessful products faster.
an empowered, accountable workforce,
fully engaged and motivated by our unlimited Many launches of new packs and flavours
opportunities. It is an honour to work with use our existing assets, by which I mean the
our people and serve them in my capacity manufacturing plants, the distribution centres
as CEO. I applaud their efforts in 2018. and warehouses, through to our sales force
and customer relationships. However, there
2018 was also a year where we saw progress
are examples of new products that require
on our key sustainability goals and in fact
specific investment. We have invested
we have set new, bold commitments for our
in a new line for GLACÉAU smartwater in
business for 2025. Operating sustainably
Hungary for example, and another for AdeZ
and creating value for all stakeholders is core
in the Czech Republic.
to our long-term success.
This transition to being a Total Beverage What are you doing to ensure Nigeria remains a market with huge potential.
Company allows us to offer an even more that your people are engaged? We have worked hard in recent years to
compelling proposition in more sales improve our flexibility to manage challenges,
In the Company’s 2018 employee
channels and more consumption occasions and we prepare meticulously, both for the
engagement results, we saw a 1pp decline
throughout the day. This requires additional most likely outcome and also for potential
in engagement level to 88%. Our results for
sales capabilities and updates to our route risks. The results we produced in Nigeria,
2018 remain high compared to the FTSE 100
to market. We are particularly excited by the achieving an increase in currency‑neutral
companies in the Willis Towers Watson
opportunities that our evolving portfolio, revenues of 5.0% compared with 2017, are
benchmarking pool and the norm for FMCG
including sophisticated, premium products, testimony to our people’s ability to adapt
companies. As our business evolves, our
is giving us to improve our opportunities in and take challenges in their stride. We have
talented people are being asked to be even
premium hotels, restaurants, bars and cafés, a lot of tools for addressing economic and
more agile and more entrepreneurial. We
and we have hired dedicated teams to competitive challenges – in particular using
need to have a culture to support our growth
address this channel directly. the full range of our brands and package
ambitions. Feedback from our people tells
sizes to expand our offer in the market.
us they are passionate about their work and
What are the key projects you our products and brands. They also see the
We were able to use these tools to help us
are undertaking in the Company potential to operate faster and are engaged
stay on course.
to improve performance? by the opportunities to remove unnecessary
The full benefit of our expanded, innovative bureaucracy and focus on results.
The issue of plastic pollution
product portfolio will only be realised seemed to shoot up the media
We have begun to simplify processes and political agenda in 2018.
through targeted, effective marketing and address structural barriers, and we are
initiatives and ongoing revenue growth How are you addressing this?
asking our people to take intelligent risk
management initiatives. where necessary. We are encouraging While plastic waste has received more
We undertook a significant reboot of our empowerment and personal accountability high-profile attention recently in the media,
route to market in 17 of our markets during and to support this, we are focusing on it is an issue we have been working hard
the year. This work expanded our depth and providing faster feedback to our people to tackle for years. We have continually
breadth of coverage with a particular focus so that we can all iterate and improve on redesigned packages to make them lighter
on high-potential channels. We are also a more continual basis. Supporting a shift and easier to recycle and we have made
working to make our customer relationships in our culture is going to take time. This will investments in technology that lets us use
increasingly collaborative, focusing more be an ongoing priority for our leadership more recycled content in packages. In 2019,
of our actions on customer needs and team and me. we will launch PET bottles for four water
prioritising outlets with the highest potential brands in 100% recycled PET, and use 50%
for collaboration and growth. Driving more You talk a lot about growth recycled PET for both Coke and Coke Zero in
value from every case we sell benefits our mindset, what does this mean Austria and Switzerland. This is an important
customers and us. To achieve this, we trial which we will expand in the future.
to you?
introduced new revenue growth management We believe that a litter-free world is possible
As an organisation we have to focus
initiatives to improve category and package and that our industry has a key role and a
on constantly improving, individually and
mix, as well as pricing and promotional responsibility to help achieve this. As part
collectively, to ensure that we keep growing,
management strategies. of our 2025 sustainability commitments,
and our customers, partners and communities
Technological innovations also provide grow with us. This focus requires a mindset we set ambitions to ensure all our consumer
us with new opportunities to add value. that understands the power of learning by packaging is 100% recyclable, that we use
For example by analysing patterns in cooler giving and receiving honest feedback and even more recycled PET in our bottles and
door openings alongside sales data, we then acting on it. We cherish the curiosity of that we help collect more after use. These
can ensure our coolers are well placed to our people which keeps them aware of ideas commitments support the Coca-Cola
maximise growth. Coolers with internet outside of our organisation and encourages System’s World Without Waste goal of
connections can also automate inventory them to bring the most inspiring ideas back helping to collect and recycle a bottle or can
assessments. This frees up time for our into the Company. A growth mindset requires for each one we sell by 2030.
sales people to do what they do best; sell us to continue to embrace collaboration
our beverages to the customer with the and innovation as ways of working and Youth unemployment remains high
best possible level of service. emphasises empowerment, personal in many markets. What are you
accountability and an optimism in the doing to support young people?
Of course, you can see at once that the
common factor for success in each of these potential of our people. It’s been a big Another of our 2025 sustainability
areas is the crucial role of our people. We are focus over the past year because we can commitments is designed to step up our
passionate about creating an inclusive, only continue to drive forward with this efforts in this area.
growth culture that ensures that our people growth mindset.
Since 2015, we have been supporting
are not only engaged but empowered. young people in our markets who are not
What have been the key
in education, employment or training by
challenges in 2018? providing skills, networks and access to
Although we have enjoyed strong growth mentors to give them a leg-up to the
in the majority of the Developing and employment ladder. While we are very proud
Emerging markets in which we operate, the of what we have accomplished through our
environment in Nigeria, with sluggish growth Youth Empowered programme, we think
and an intense competitive dynamic, has we can do even more. We have therefore set
been more challenging than we expected. ourselves a big goal of training one million
young people by 2025 through the scheme.
9
SR
CG
FS
Beyond what we are trying to achieve with What will you do with it?
packaging and youth empowerment, we Our priority remains investment in the
have set new ambitious 2025 sustainability business, with a disciplined approach to capital
commitments for emissions, water use expenditure and managing shareholders’
and stewardship, World Without Waste, capital. We have seen increased opportunity
ingredients sourcing, nutrition and our for investment in 2018 and our capex to
people. These commitments are aligned sales ratio stood at 6.4%, an increase on the
to the UN Sustainable Development Goals 5.8% ratio in 2017. We will continue to look
(SDGs) which call on businesses, governments at opportunities to make complementary
and individuals to work to end poverty, fight bolt-on acquisitions, particularly in strong
inequality and tackle climate change. local water and juice brands.
We have a strong track record of managing We also operate a progressive dividend
our business responsibly and sustainably, policy and in 2018 our dividend payout ratio
and we are proud of our continued leadership was 43.6%. Finally, in the absence of the right
positions in the most recognised sustainability investment opportunities we will seek to
benchmarks, such as the Dow Jones optimise the balance sheet, returning to our
Sustainability Index, CDP Climate, FTSE4Good targeted net debt to comparable adjusted
and MSCI. We know that, ultimately, our EBITDA target of 1.5–2.0 times.
success is linked to our ability to create
sustainable value for all of our stakeholders, What are the opportunities and
from customers and investors to the challenges for 2019 and beyond?
communities in which we work.
In 2018, we delivered another very good
There is more about our approach to performance with revenue growth above our
creating value for stakeholders in our target range and another step up in margins.
stakeholder and business model sections Overall, we expect volume to continue to
on pages 10-11 and 14-16. grow in all three segments and that we can
continue to deliver currency-neutral net sales
Now you’ve been CEO for over revenue per case improvement, accompanied
a year, what have you found by margin expansion.
most rewarding? The economic environment is expected
One of the many great things about being to be less of a tailwind in 2019 in our territory.
CEO is seeing and supporting the individual We believe, however, that we are well placed
and team growth stories that contribute to to withstand less favourable conditions.
the overall success of the business. I believe I am confident that 2019 will be another year
that we should never stop learning, personally of growth, both for the Company and our
and professionally; it’s one of our key values people, as we continue strengthening our
and 2018 has certainly been another year capabilities, carry on improving the way we
of rich learning for our business. Our people serve our customers and work collaboratively
are continuously building their capabilities with all of our partners to create shared value.
through our Excel leadership training
programme or the accelerator courses that
our business developers and key account
managers attend. ZORAN BOGDANOVIC
I find it particularly rewarding to see how our CHIEF EXECUTIVE OFFICER
people drive solutions for our customers.
This is true of new ideas that make life easier
for them, such as connected coolers and
on-shelf technology to how we implement
big scale challenges like introducing a new
category in the form of AdeZ plant-based
beverages or launching FUZETEA across
27 markets simultaneously. Again and again
across the business, I see individuals and
teams putting the customer front and
centre of each thing we do by focusing their
efforts on selling or helping us to sell.
10 COCA-COLA HBC OUR STAKEHOLDERS
Col
a Comp
an Our people
a-
oc
y
T he C
en ts O ur c o m
rnm m
e
un
v
Go
ities
IN GOOD
de
rs
COMPANY Ou
rc
l
ho
on
WITH OUR
Share
sum
STAKEHOLDERS
e rs
rs
me
NG
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to
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Pa
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See more on our stakeholders How our Board is informed on stakeholder issues
Page 107
Interview with some of our stakeholders
A selection of decisions where stakeholders
Employees: Page 29 were considered
Consumers: Page 44 Page 107
Customers: Page 53
Suppliers: Page 57
2018 INTEGRATED ANNUAL REPORT 11
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Employees of the Company. ·· Ensuring that all key positions Our people are our most important Through our annual review SI
are filled with the best person for asset and engine of growth. They are process and employee surveys,
the job both the creators and caretakers of our by offering relevant training
·· Maintaining high employee culture and values. both on and off line and by
Our people engagement making a vast wealth of material
·· Nurturing skills and talents available on our HR web portal.
Read more ·· Championing inclusion and
on page 26 diversity
The people who we live ·· Water conservation To build trust by operating responsibly We engage directly with people
and work alongside. ·· Waste and sustainably, and addressing issues in the markets in which we
·· Empowering youth and women that are material for our communities. operate, particularly those living
in the areas around our bottling
To provide training opportunities and
Our communities operations, and through
support to young people currently not
third-party partnerships.
Read more in education, training or employment.
on page 34
People who consume our ·· Continuously evolving our By understanding the consumer and Understanding consumers’
products in the 28 countries products to meet consumers’ evolving our portfolio accordingly, we needs and preferences through
where we operate. needs for healthy hydration, grow our business sustainably in the collecting consumer insights.
quality, taste, innovation and long term. While this is also part of the
Our consumers convenience Coca‑Cola Company’s role, we
gain access to these insights.
Read more
on page 40
A wide range of retail outlets, ·· Identifying channels and To build business plans with specific A system of key account
including supermarkets, customers that offer growth and in-store execution and promotional managers, in whom we are
hypermarkets, discounters, value creation for us and our activities to suit our customers’ needs constantly investing, engage
convenience stores, customers and create joint value. at a strategic level.
Our customers wholesalers, hotels, ·· Offering a total beverage To avoid unnecessary costs. Our business developers make
restaurants, cafés, quick portfolio that meets the changing regular visits to outlets.
service restaurants (QSRs), preferences of the consumers
cinemas and e-commerce ·· Achieving high service levels at
Read more retailers that sell our optimum cost
on page 48 products to consumers.
Our suppliers, consultants ·· Rising costs of ingredients, To share knowledge and expertise and We receive feedback at our
and counterparts in related labour, packaging material, find ways of using all our resources as Annual Stakeholder Forum.
industries. energy and water efficiently as possible, reducing costs
We align and co-ordinate with
·· Minimising the environmental to our Company.
the Coca-Cola System’s
Partners impact of water and energy To ensure a healthy, sustainable Central Procurement Group
in efficiency resources, and air emissions supply chain. and our technology and
·· Recycling and waste commodity suppliers through
Read more management regular interactions.
on page 54 ·· Sustainable sourcing
Non-governmental ·· Wide-ranging issues facing our NGOs have a key contributing role to Via our Annual Stakeholder
organisations (NGOs) with business, from energy and water our annual materiality process and we Forum and our annual
a focus on environmental, use, reductions in packaging engage with them, both in our markets materiality assessment, as well
economic and social issues. waste to corporate governance, as well as at Group level, on an ongoing as through ad hoc meetings.
NGOs human rights and diversity basis to develop and support
community and environmental
Read more initiatives.
on page 65
Equity and debt investors ·· Quality and effectiveness To achieve fair value and appropriate Through open, honest
who provide capital to the of governance ownership of our shares by enabling communication during our
business. ·· Profitability and growth potential the full understanding of the strategy, Annual General Meetings,
of the business as well as the operational and financial investor roadshows and results
Shareholders ·· Capital gain through share price performance of the Company. briefings, and ongoing dialogue
appreciation with analysts and investors.
To benefit from the views of the
Read more ·· Capital return via dividends investment community in
on page 104 or the payment of interest decision‑making and strategy-setting.
Governments, their ·· Industry and/or product-specific We consider it our duty and our Our advocacy efforts are mainly
ministries and regulators. policies, such as taxes, responsibility to make our views clear conducted through trade
restrictions or regulations to those who have the potential to associations, which represent
·· Environmental policies impact the laws, regulations and companies, organisations,
Governments ·· Consumer health and public policies that can influence our causes and industries. We also
health policies business. partner with local governments
Read more to tackle waste collection
on page 64 challenges.
Our partner who develops ·· Profitable growth opportunities To maintain consumer trust and Day-to-day interaction
the beverage brands which ·· Value share in our markets generate sustainable growth for The as business partners, joint
we bottle and sell. They are ·· Sustainable sourcing Coca-Cola System, objectives central projects, joint business
our largest supplier and to both of our business models. planning, functional groups
The Coca-Cola a significant shareholder. on strategic issues and
Company ‘top-to-top’ senior
management forums.
Read more
on page 14
12 COCA-COLA HBC MARKET REVIEW
RESPONDING TO
EVOLVING TRENDS
+1.1%
An estimated 1.1% of our annual revenue
+26%
In e-commerce, we achieved a growth
growth in 2018 is attributable to new of 26% versus 2017, ahead of the
route-to-market approaches. market trend.
2018 INTEGRATED ANNUAL REPORT 13
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SSR
SI
We have committed to help collect the We launched more new products in 2018 Managing our environmental and social
equivalent of 75% of every can and bottle than ever before, greatly expanding our performance is critical to our long-term
we sell by 2025, use more recycled and portfolio to satisfy a broader range of success. In 2018, we introduced new 2025
renewable materials in packaging and make beverage needs. Consistent with our strategy, sustainability commitments to drive our
100% of our consumer packaging recyclable all our innovation in Sparkling was in zero- progress in six areas: emissions reduction;
by 2025. We support transparent product sugar variants and we reformulated recipes water reduction and stewardship; World
labelling to help consumers make informed in Fanta and Sprite to reduce sugar content. Without Waste; sustainable sourcing;
choices, and in 2018 introduced new product We have reinvigorated the ready-to-drink nutrition; and our people and communities.
labels with nutritional information based on tea category with the launch of FUZETEA, a We have achieved positive results for the
the UK’s ‘traffic light’ scheme. We continue sustainably sourced tea blended with natural environment and lowered our operating
to support UNESDA’s commitment in not juice and herbs, and entered the plant-based costs by reducing energy and water use and
selling soft drinks in primary schools and beverage category with the launch of AdeZ. reducing the PET content and weight of
as at the end of 2018, we do not offer Beyond these large-scale launches, we are packaging. We also work in partnership with
added‑sugar beverages in secondary incubating new brands offering naturalness our customers, consumers, suppliers and
schools across the EU and Switzerland. and simplicity in hand-picked outlets and other stakeholders to contribute to solving
introducing or re-introducing premium global challenges such as good health and
mixers for socialising-out-of-home wellbeing, and the employability of youth.
occasions.
45%
In 2018, we recovered 45% of the primary
+2.2pp
In 2018, the share of low- and no-sugar
41%
In 2018, 41% of the total energy we used
packaging we put in the marketplace. variants in our total volume increased came from renewable and clean sources.
by 2.2pp, to 13.1%.
14 COCA-COLA HBC OUR BUSINESS MODEL
OUR BUSINESS
MODEL
Our business model is at the heart of everything we do. It supports our
growth and defines the activities we engage in, the relationships we depend
on and the outputs and outcomes we aim to achieve in order to create value
for all of our stakeholders in the short, medium and long term.
Co
y
Natural
an
Bottling
la H
Comp
Water is the most important ingredient Trademark ownership Sales and distribution
BC deliver
for nearly all of our products. Energy, Customer management
Concentrate supply
sugar, aluminium and PET resin are also In-outlet execution
Brand development
la
s
c
d
o em
Social and relationship C and
The
Our social ‘licence to operate’ is due
to our reputation and the trust of key
stakeholders. Our most valuable
stakeholder relationships are with
The Coca-Cola Company, and our
people, customers, suppliers and partners
3
as well as governments and regulators.
How we do it
Financial
Our business activities require financial
capital, which includes shareholders’
Sourcing sustainable Manufacturing
equity, debt and reinvested cash.
materials & packaging
Coca-Cola HBC has only one class
of shares; ordinary shares. We work with 32,000 Using concentrate from
suppliers to procure the The Coca-Cola Company,
finest ingredients, raw and other ingredients,
Intellectual materials, equipment we produce, package
Our intellectual property includes and services. and distribute products.
our packaging, product and cooler
innovations, and our operational
excellence systems. As we evolve our Serving consumers Delivering to
beverage portfolio, the importance of & communities our customers
these types of innovation is increasing.
We continue to innovate We manage customer
our product portfolio relationships as well as
Manufacturing to meet the changing promotions and displays
As a bottler, we require production consumer preferences at the point of sale.
and logistics assets that allow us to in the market.
manufacture, package and deliver
our products to meet the demands Our values underpin how we work.
of customers and consumers. Read more in our People section on pages 26-33
15
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4 Value created
28
Contribution to local economies
Operating in 28 countries, we are an
important contributor to local economies
and society. Our business has an impact Countries in Europe and Africa
either directly through our core operating
activities or indirectly through the broader
value chain. We also contribute by investing
in community programmes to address
environmental and social issues.
€328m
Value for wider stakeholders
Our business activities generate income
for our employees, and revenue for suppliers
and contractors, improve our customers’ Total taxes
profitability, and support public wellbeing
and infrastructure. In 2018, our percentage
of satisfied key account customers was
81.3%, an improvement of 2.5pp. Total taxes
were €328m, which makes a contribution
to local communities.
€447m
Dividend and share value
Through careful management of all inputs
to our business, we also create profits which
benefit shareholders through dividend Net profit achieved in 2018*
payments and the value of our shares.
18
Socio-economic impact
We measure our impact through the regular
conduct of socio-economic impact studies
(SEIS) across our markets. Over the last Number of countries where we
three years we have conducted SEIS in 18 conducted SEIS
of our countries.
500,000
Direct and indirect employment
According to a survey conducted within
the European Union, the Coca-Cola System
supports more than 500,000 direct and Direct and indirect jobs supported
indirect jobs across our value chain through
the sourcing of ingredients, raw materials,
equipment and services. In 2018, our total
supplier spend was €3,237m, with 98% spent
with local suppliers.
€3,237m
Supplier spend
** Net Profit and comparable net profit refer to net profit and comparable net profit
respectively after tax attributable to owners of the parent.
16 COCA-COLA HBC OUR GROWTH MODEL
OUR GROWTH
MODEL
Our strategy alongside our operational and financial model allows for
strong cash generation and profitable growth opportunities.
We have the exclusive rights to manufacture, We collaborate with our customers to grow Disciplined management of working capital
sell and distribute The Coca-Cola both their businesses and ours, improving and maintenance capital expenditure
Company’s brands throughout our territory. value with price and mix improvements. enhances the cash we generate, and in
We create demand for those brands by At the same time, we continuously seek combination with improving profitability also
investing jointly with The Coca-Cola efficiency improvements in our cost base leads to an improvement in return on
Company, with co-ordinated marketing to and work to optimise our production and invested capital. Our strong cash generation
consumers and customers. We focus on logistics infrastructure. The growth in allows us to reinvest in the business, either
growing the non-alcoholic ready-to-drink revenue, combined with an efficient cost organically or through selective acquisitions,
category while gaining share. base, improves our profitability through and to return cash to shareholders through
operating leverage. dividends. This, in turn, fuels sustained
growth and a return for shareholders.
Execution
Increase quality Brand investment
The Coca-Cola Company Creates and
Marketing and quantity
In-store activation
= delivers demand
of marketing Coca-Cola HBC
Disciplined
Cash Working capital Enhanced by Strong cash
+ maintenance + = generation
management management
CapEx
EBITDA growth
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FOCUSED SSR
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ON DELIVERY
Our strategy is designed to achieve responsible, sustainable and profitable growth.
We set clear objectives for the business in 2016, which we continue to track
against a 2020 scorecard to measure our progress.
A sustainable business
We create a sustainable business by growing profitably, responsibly and by driving positive
change in our communities.
Objectives
Please see pages 22-23 for our performance against our 2018 KPIs
18 COCA-COLA HBC OUR STRATEGY AND KPIs CONTINUED
STRONG PROGRESS
AGAINST OUR 2020
OBJECTIVES
CURRENCY-NEUTRAL
REVENUE GROWTH
AT AN AVERAGE OF
5.0% COMPARED TO OPEX AS A
A TARGET OF 4-5% PERCENTAGE OF
REVENUE AT 27.7%,
NEARING OUR
TARGET OF 26-27%
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INCREASED
INVESTMENT IN DISCIPLINED
COMPARABLE
THE BUSINESS MANAGEMENT
EBIT MARGIN
WITH CAPEX OF CASH WITH
OF 10.2%, IN
AT 6.4% OF WORKING
CLEAR SIGHT
REVENUES CAPITAL OF
OF OUR 2020
IN 2018, WITHIN LESS THAN
TARGET OF 11%
OUR TARGET -€100 MILLION
RANGE OF
5.5-6.5%
2020 OBJECTIVES WERE SET IN JUNE 2016 AND USE FY2015 AS THE BASE YEAR.
20 COCA-COLA HBC OUR STRATEGY AND KPIs CONTINUED
PROGRESS AGAINST
OUR STRATEGY
We are proud of our achievements in 2018 against our strategy,
and look to 2019 with determination to deliver another strong year.
2016
What we said we would do Priorities for 2019
Drive volume ·· Grow volumes in all our segments with ·· Maintain the momentum
growth an acceleration in the Emerging segment ·· Continue to roll out and embed our
new launches
Key performance Challenges in 2018 ·· Ongoing focus on low- and no-calorie
indicators we track ·· Weak economic expansion in Nigeria beverages, as well as adults which are
·· Volume growth ·· Sugar tax implementation in Ireland renewing growth in the sparkling category
See more on page 22 ·· Declines in the non-alcoholic
ready‑to‑drink market in Italy Risk management approach
Addressed under principal risks
What we did in 2018 ·· Consumer health and Channel mix
·· Accelerated the pace of launches
See more on pages 74-76
of new products and brands
·· Re-booted our route to market
Delivered through
·· Returned sparkling to 4.3% growth,
Our consumers
the fastest expansion in a decade
Our customers
·· Returned ready-to-drink tea to growth
with the launch of FUZETEA See more on pages 40-53
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Progress
to date
2018
2020
What we said we would do ·· Maintained cost discipline which allowed
Improve ·· Control our costs, allowing operating operating costs as a percentage of
revenues to decline 20bp in 2018, even
efficiency leverage to drive an improvement
as marketing investments increasing 30bp
in margins
Key performance as a percentage of revenues
·· Gain further efficiencies in our operating
indicators we track cost base ·· Launched new sustainability
commitments for 2025
·· OpEx as percentage of net sales revenue ·· Procure and use all resources
efficiently with consideration of our ·· Optimised our production and logistics
·· Comparable EBIT margin
environmental impact in Nigeria
See more on page 23
Challenges in 2018 Priorities for 2019
·· Higher aluminium and PET resin prices ·· Continued cost discipline
·· Rising transport costs in certain Central ·· Ongoing optimisation of production,
and Eastern European countries logistics and distribution
·· The depreciation of the Russian rouble
Risk management approach
What we did in 2018 Managed as an operational risk by the
business units and functions in line with
·· Followed our hedging policies which
our risk management processes
insulated our cost base from fluctuations
in sugar and aluminum pricing, and the
Delivered through
Russian rouble
Partners in efficiency
Our communities
See more on pages 54-62, 34-39
A STRONG
TRACK RECORD
In June 2016, we set out strategic objectives for the business accompanied by financial
targets and specific KPIs with which to measure our progress.
KPIs
2,500 6
2,192
2,104
2,000
2,058
4.2
4
1,500
1,000
2.2
2
0.1
500
0 2016 2017 2018 0 2016 2017 2018
Page 138
KPIs
6 6
6.0
5.9
4 4
3.6
3.0
2.9
2 2
1.7
Underpinned by our focus How we measure our performance What happened in the year
on sustainability and our people We measure savings made through careful In 2018, we made €2.6 million of savings
Operating sustainably is not just the right use of water and energy. in energy use and a further €0.5 million
thing to do, it is a direct benefit to the savings in water use.
We track the percentage of our employees
Company’s profitability and the potential responding positively to a Group-wide Based on survey results, the employee
of our people. engagement survey and the percentage engagement score was 88% in 2018.
The quality and diversity of our people, of women in management. Women make up 37% of our managers,
and their engagement, is a key enabler 35% of our senior leaders and 23% of our
of our business performance. Board of Directors.
2018 INTEGRATED ANNUAL REPORT 23
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KPIs
30 12
28.2
27.9
27.7
10
10.2
9.5
20 8
8.3
6
10 4
2
0 2016 2017 2018 0 2016 2017 2018
KPIs
8 15
13.7
12.4
6.4
6
5.8
10
10.3
5.3
4
5
2
KPIs
100 3 40
37
89
88
88
35
2.60
80
33
2.44
30
2
60
20
1.56
40
1
20 10
Employee engagement score (%) Energy savings (€ millions) Women in management (%)
24 COCA-COLA HBC OUR 2025 SUSTAINABILITY COMMITMENTS
40% ofrenewable
total energy from
and clean sources**
41% ofand clean
total energy from renewable
sources achieved
World Without
Waste
40% ofrecovered
packaging to be
for recycling
45% offor recycling
packaging recovered
20% ofPETPETand/or
used in the Group to be recycled
PET from renewable materials
9% PET used is recycled PET and/or
PET from renewable materials
Achieved
10% ofvolunteering
employees will be participating in
initiatives during work time
21% ofin volunteering
employees participated
Well on track
* Baseline 2010
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50% ofand clean
our total energy from renewable
sources
recognition in other sustainability benchmarks, such as CDP,
FTSE4Good and MSCI ESG.
For our current sustainability targets, we are approaching our 2020
100% total electricity used in EU&CH
from renewable and clean energy timeline. Therefore, this year we introduced 17 new 2025 sustainability
commitments, addressing six key areas along our value chain, by
following our materiality approach: reducing emissions; water use
20% water reduction in plants located
in water-risk areas and stewardship; World Without Waste; ingredient sourcing; nutrition;
and our people and communities.
100% of consumer packaging to be recyclable** outputs and impacts rather than inputs. In this context, we have
discontinued our practice of setting a target for investing a specific
percentage annual pre-tax profit in community programmes, as this
of our key agricultural ingredients
100% sourced in line with sustainable
agricultural principles
commitment in itself doesn’t ensure that we are creating a positive
impact on our communities. Therefore, we have introduced new
community commitments to train one million young people, to help
secure water availability in water-risk areas as well as engage in zero
25% reduce calories per 100ml of sparkling
soft drinks (all CCH countries)*** waste partnerships.
We are very proud that we have achieved our 2020 carbon emissions
10% community participants in first-time reduction goal in the value chain (approved science-based target),
managers’ development programmes reaching 25% reduction in 2018, and our renewable and clean energy
commitment. In addition, we achieved our target of 40% of our
10% ofin volunteering initiatives
employees take part On track with the UNESDA pledge on sugar reduction per 100ml
of our carbonated beverages, for 2025 we have a new goal for calorie
reduction in sparkling drinks portfolio.
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CREATING
AN INSPIRING
WORKPLACE
FOR OUR PEOPLE
Our people are among our closest
and most important stakeholders.
To support sustained business
success, we offer an inspiring
workplace with opportunities
to learn, develop and achieve
great results.
2018 progress
·· Further improved the talent pool and
succession bench for our key positions
·· Invested in building the Company employer
brand and sourcing and recruitment
capabilities to attract and hire the best
people into the key positions
·· Further improved our revenue growth
management and route-to-market
capabilities, invested in building Big Data
and Advanced Analytics capabilities
·· Continued digitalising learning
and development and simplifying our
processes for speed and employee
experience as a source of engagement
and customer service
2019 priorities
·· Continue making our business more
agile and innovative
·· Further develop skills and capabilities to
take advantage of growth opportunities
·· Make talent development our lighthouse
capability which each leader should
rank highly
·· Maintain employee engagement and
commitment to Company values, and
achieve more through learning, inclusion
and a superior employee experience
28 COCA-COLA HBC OUR PEOPLE CONTINUED
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Petros Papageorgiou is one of the Our people asked for further simplification SSR
of processes and they see opportunities
Company’s employees who benefited to be more empowered to find better ways SI
from our Fast Forward programme. of performing their work.
Petros is a Channel Sales Manager in Italy. He has recently Going forward, especially in light of the 2018
completed our Fast Forward programme, an experiential survey results, we will also ask our people to
learning programme for people with leadership potential suggest ways to address the concerns that
and an aim to progress to a function head role. surfaced in the survey, ensuring we remain
an organisation with high engagement and
PETROS What has helped you to become a candidate strong growth.
PAPAGEORGIOU for a promotion?
Our performance framework also aligns
CHANNEL My job is to help the 400 business developers on my
with our core values. In managing team and
SALES team serve our 9,000 customers successfully through
individual performance, we apply an iterative
MANAGER activating our full portfolio. What has made the difference
‘plan, act and review’ cycle to continuously
was communicating the strategy so that our people
improve. This allows us to bridge our strategy
understand our priorities, involving customers in
and its execution by aligning priorities across
developing our plans, and removing internal barriers
functions and teams.
which keep business developers from serving our
customers. This way, I achieved both revenue and profit To ensure that our people balance short-
targets, as well as increases in customer satisfaction and long-term objectives, in addition to
and employee engagement numbers. planning and assessing performance against
financial objectives, we also plan and measure
On a personal level, the skills learned going through
achievement for fostering partnerships,
the Fast Forward programme are very relevant for what
innovation, people leadership, managing
I would need for my next role. I knew that the majority
resources and compliance with policies
of employees who go through this programme earn
and procedures.
promotions within a year of graduating, so I was very
interested in participating. We aim to further simplify elements of our
performance framework and improve our
How does the Fast Forward programme help ability to support growth by fostering ongoing
you to accelerate your development? conversations between managers and team
members about priorities, goals, progress
The Fast Forward programme has taught me to reflect
and lessons learned. Because continuous
and ask for feedback. This helps me avoid making the
learning supports development and improves
same mistakes twice, so I’ve been able to achieve more
performance, we also facilitate real-time
and become more effective. It has helped me develop
feedback from employees’ networks.
future business scenarios and anticipate the implications.
By participating in Fast Forward, I also got to work on a
cross-country project assignment on evolving our field
sales as we transform into a Total Beverage Company
and got exposure to the work of the country senior
leadership team. This has made me more comfortable
with new business situations, helped me to make better
decisions in complex situations, and to become better at
serving our customers.
High-performing norm 89
CCHBC 88
CCHBC 88
84
skill building modules. This experiential learning
SANDA
FMCG norm 81
PAREZANOVIC 78
development of our talent towards senior leadership roles.
GROUP HUMAN
In 2018, our talent management practices were
RESOURCES recognized by the Chief Learning Officer Learning in
72
DIRECTOR Practice awards with a Silver Talent Management Award.
66
60 16 17 18 18 18 18 18 18
Employee engagement:
outperforming peer companies (%)
30 COCA-COLA HBC OUR PEOPLE CONTINUED
28,884
only improve the skills and knowledge of our Our focus on succession for business unit
people, but we also adjust our processes and function heads also paid off as we further
structures and we change how we monitor enriched our successor pool for this critical
and measure our progress. workforce segment in 2018.
To match internal skills with business needs,
(2017: 29,427) our learning and leadership development
To support our efforts to recruit the best
people into key positions, we refreshed our
architecture reflects the priorities of our employer value proposition, underlying
business strategy. We have identified when benefits for each workforce segment and
EMPLOYEE ENGAGEMENT learning needs to happen to be the most enhanced our social media presence.
INDEX impactful and where development is needed, Investment in recruiting and onboarding
focusing on prioritised skills that can accelerate
88%
helped us to improve retention, retaining
the performance of all our people. nine out of ten new hires.
In 2018, we completed an upgrade of our Our ability to develop leaders internally is an
onboarding and induction programmes. important competitive advantage, ensuring
These programmes, together with ones cultural continuity. Career progression in our
(2017: 89%) supporting leadership transitions, contributed Company depends on performance against
to a higher success rate and better standards, potential and alignment with core
performance, with 89% of new appointees values, and related behaviours. Leadership
assessed as competent in their new role acceleration centres have been established
KEY PEOPLE IN KEY POSITIONS after six months. to support developing successors for
94%
Increasingly, these programmes use a mix leadership positions. They help our people
of in-person and online training. This helps understand their strengths and the areas
engage people and maximise learning from of opportunity for development in their
critical work experiences. In leadership current and future roles.
training, the mix of digital learning in total To accelerate the development of more
(2017: 92%) learning doubled in 2018 compared to 2017 than 1,200 people with leadership potential,
and reached 34%. we offer experiential learning through our
In 2018, we further digitalised our workplace Fast Forward programmes. In 2018, we
KEY POSITION BENCH and introduced cloud-based applications further improved the effectiveness of the
STRENGTH for performance and talent management Fast Forward programme and five out
as part of our HELO (hiring, empowering and of six graduates from this high-potential
65%
learning online) platform. HELO is available programme were promoted within
to all our on-line employees, democratising 12 months of graduation.
learning, accelerating development and We also successfully operate a management
helping our people fulfil their potential. trainee programme that was recently
(2017: 57%) updated to make it more relevant for the new
generation of graduates and a more effective
entry point for our leadership pipeline.
12 months of graduation.”
enhance talent management as our signature
organisational capability.
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Aiming to create a truly proactive safety
culture, we involved our people more than
ever before in improving safety at work in
2018, using our newly established Innovation
for Growth platform to collect improvement
ideas of our employees. Many of the 488
(5% REDUCTION VS, 2017)
safety improvement ideas received,
addressing the three most important safety
challenges, have already been implemented.
FLEET ACCIDENTS PER For the ninth consecutive year in 2018, the
MILLION KILOMETRES number of employee workplace accidents
TRAVELLED fell. The Lost Time Accident Rate (LTAR)
3.66
was 0.39, compared with 0.40 in 2017.
Our contractor partners also reduced LTAR
by 9.6% compared to 2017. There were no
employee fatalities during the year.
While we continue to improve our focus
(7% REDUCTION VS, 2017) on safety, we regret that one contractor died
in a fatal road traffic accident in 2018. Our Fleet
Safety Policy and training programmes
provide customised approaches for different
ABSENTEEISM DAYS DUE
types of drivers within the Group. The blend
TO SICKNESS PER FULL‑TIME of online, classroom and on-the-road training
EMPLOYEE elements is adjusted for different groups,
1.69
reflecting their relative risk classification.
Overall, 11,839 participants completed these
programmes in 2018, with an average 12%
safety knowledge improvement, as measured
by the online programme.
(2017:1.67) We also continued installing collision
avoidance technology in fleet vehicles, and
67% of the Company’s light fleet vehicles are
now equipped with OEM or MobilEye collision
10 driver warning technology to avoid collisions.
9 As a result of these efforts, the number
8 of accidents per million kilometres travelled
fell to 3.66, compared with 3.92 in 2017.
7
This was our sixth consecutive year of
6 improvement, resulting in a cumulative
5.40
5 reduction of 59%.
4.96
4
4.22
3.66
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BUILDING TRUST
We are an active part of the
communities we live and operate in.
Several of our new 2025 sustainability
commitments describe how we
are engaging with them. In order
to amplify our impact as a System,
we have aligned a joint community
investment approach with The
Coca-Cola Company.
2018 progress
·· €7.9 million invested in community
programmes, 7% more than in 2017
·· More than 64,000 young people
participants in #Youth Empowered
·· More than 34,000 hours volunteered by
employees in both free time and work time
·· More than 1,400 tonnes of waste collected
by our employee volunteers and partners
on river and sea shores, and in packaging
collection schemes
·· More than 5,000 trees planted
2019 priorities
·· Co-operate with companies with flexible
e-learning solutions in order to transition
#Youth Empowered to an open-source
educational platform
·· Launch first wave of Zero Waste
Partnerships, supported by country
guidance
36 COCA-COLA HBC OUR COMMUNITIES CONTINUED
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45%
recycling infrastructure varies considerably, Maintaining the long-term sustainability
and we cannot solve this challenge alone. of the watersheds around our bottling plants
is important to our business and to our
While we are committed to collecting and
relationships with local communities.
recycling 75% of the equivalent of every can
or bottle we sell, we also invest in package Our approach to water stewardship begins
(2017: 41%) design and innovation to reduce packaging with a focus on our own water use. We protect
content and are exploring packaging-free the water resources supplying our facilities,
alternatives for product delivery. Our efforts reduce the amount of water we use to
WASTE COLLECTED to design better packaging are outlined produce our soft drinks, and treat waste
water to levels that support aquatic life.
1,400
in the Partners in efficiency section on
pages 54-62. We also partner with suppliers to minimise
our water footprint across the value chain.
Progress in collecting waste
To replenish the water we use and help
As part of our approach to waste, we have water access through innovative sustainable
committed to engage in 20 Zero Waste technologies, we have a 2025 sustainability
(TONNES)
partnerships either with cities or along commitment to help secure water availability
coastlines. We piloted this approach under for all our communities in water-risk areas.
the brand Zero Waste City with the City
of Thessaloniki, Greece, and other partners Using indicators from the World Wildlife
during the year. Based on the first results, Fund for Nature’s Water Risk Filter and
we will introduce guidelines in 2019 to facilitate Global Water Tool, we have identified 17 of
more Zero Waste City partnerships in our plants as operating in water-risk areas.
our markets. This includes facilities in Nigeria, Russia,
Greece, Cyprus and Armenia. Moving forward,
We support 19 packaging waste management we will focus on either water access initiatives
schemes across our markets and we have or on replenishment activities. For all these,
a Group-wide policy on packaging waste we will seek partnerships with the Coca-Cola
and recycling, which provides the framework System, other companies operating
within which our countries operate. In Russia, in the relevant watershed area and
the ‘Separate with Us’ project has helped international organisations.
us recover more than 28% of our primary
packaging placed in the market. Local initiatives
We also spearheaded initiatives to clean Along with our three key programme
up coastlines. Nearly 100 of our people areas, we address local issues, which have
more than participated in an Adriatic Coast clean-up strategic relevance for our business.
activity, collecting a total of 260kg of waste One example is community wellbeing, which
64,000
participants from the islands of Krk in Croatia and Strunjan we have supported by offering a rapidly
in Slovenia. expanding portfolio of low- and no-calorie
Through a partnership project with beverage options.
International Ocean Conservancy, more than We continue to support initiatives across our
400 Coca-Cola HBC people collected more 28 countries to improve community wellbeing
than 500 bags of litter, or three tonnes of and health. We promote active, healthy
Nigeria: 24% waste, on Ireland’s coast. We also partnered lifestyles by installing active zones, walking
Italy: 17% with Centra stores in the heart of coastal trails and paths, and supporting sports
Ukraine: 10% communities to encourage consumers events and social gatherings. As our business
Greece: 6%
Hungary: 6%
to join the Big Beach Clean. and product portfolio evolves, we expect
Other: 37% Overall during 2018, through projects that more of our impact on well-being will
supported by dedicated employee volunteers, come directly from new products that
Top 5 contributing countries to the we – together with our partners – collected support healthy lifestyles.
#YouthEmpowered programmes* more than 1,400 tonnes of waste on river
** Based on number of #YE participants in 2018. and sea shores across our territories.
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In natural disasters or crisis situations, we are For this purpose, we will seek more SSR
often among the first companies supporting employment opportunities throughout our
emergency services and communities with value chain with key customers and suppliers. SI
in-kind or cash contributions. When a series We will also offer additional mentorship
of wildfires erupted in Greece in July 2018, guidance for our senior managers.
nearly 100 people were killed. We supported
the survivors in the region by offering our We aim to expand the scope of participation
products and refrigerators, blood, medicines in the programme in 2019 through strategic
and other essential items, and by contributing #Youth Empowered partnerships. We will
to rebuilding efforts. We supported a range particularly strive for co-operation with
of initiatives sponsored by local municipalities companies which will support us with flexible
and non-governmental organisations, and e-learning solutions in order to transition
more than 150 colleagues volunteered their #Youth Empowered to an open-source
time to help residents of the affected areas. educational platform. Besides this, we will
further adapt the measurement methodology
Key partnerships and stakeholder to better reflect actual achievements, i.e.
engagement from counting e-learning registrations
to counting active users only.
We strive for long-term partnerships with
non-governmental organisations, customers, For Zero Waste City partnerships, we will
suppliers and other stakeholders to maximise develop support material for our markets
the impact of community programmes. and launch the first wave of local initiatives
In 2018, we co-operated with nearly 400 next year. In water stewardship, we will
non-governmental organisations and focus on water access initiatives and
non-trade partners, including the International replenishment activities. We will work
Federation of the Red Cross, the World Wide closely with the Coca-Cola System, and
Fund for Nature, Junior Achievement, Teach we will start engaging with relevant local
for All and the Global Water Partnership. as well as international stakeholders.
IN GOOD
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2018 INTEGRATED ANNUAL REPORT 41
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INNOVATING OUR
PORTFOLIO FOR
OUR CONSUMERS
As we become a Total Beverage
Company, we are unlocking growth
potential in segments outside our
core sparkling portfolio, offering
consumers a wider choice of drinks
to meet their needs and desires
at any time of day and for different
drinking moments. This supports
our strategy to innovate in the
sparkling category with
The Coca‑Cola Company through
reformulation of the recipes as
health-conscious consumers look
for low- and no-sugar options,
and to introduce new flavours,
innovative products with functional
benefits as well as smaller, more
convenient packages.
2018 progress
·· Achieved the highest pace of growth
in sparkling beverages in a decade, with
further progress towards low- and
no-calorie variants
·· A return to growth in ready-to-drink
tea with the introduction of FUZETEA
·· Another year of double-digit volume
growth in energy drinks
2019 priorities
·· Continue to evolve into 24/7 Total
Beverage Company, for shared value
with our consumers and customers
·· Consolidate the performance of product
innovations by increasing distribution
and repeat sales
42 COCA-COLA HBC OUR CONSUMERS CONTINUED
The busiest year of portfolio This exciting progress has been achieved
evolution by overhauling our recipes to remove sugar
while maintaining or improving taste.
New brands, categories and premium
segments help us ensure that our products
can be part of a balanced diet and that we
Sophisticated options for adults
cater to the evolving preferences of busy, With the rising adult population in our
health-conscious consumers. We introduced territory, a new generation of consumers
more new products in 2018 than ever before, with an eye for quality and superior taste,
with significant product launches in ready- and a sense of adventure, are keen to
to-drink tea and premium water. With AdeZ experiment. We tapped into this growing
plant-based beverages, we added an entirely value opportunity in the adults sparkling
new category to our portfolio. We also drinks segment, introducing or re-
continue to explore high-growth, high-value introducing tonics and other mixers which
sub-segments in our core categories, such were once special occasion drinks but are
as sparkling beverages for adults with increasingly popular with consumers.
tailored innovations accretive to our growth. As a step forward in the transformation
of our portfolio, these products allow us to
Wider choice in sparkling drinks cover a wider range of occasions in the day,
Our flagship sparkling beverages continue expand our presence in the premium hotels,
to bring happiness to consumers across restaurants and cafés channel, and leverage
our markets, with our overall sales volume revenue synergies with our premium
for sparkling beverages up 4.3% in 2018 spirits portfolio.
compared to the prior year. We are pleased We introduced Royal Bliss mixers in Austria,
to have achieved the highest volume growth Hungary, Italy and Switzerland as a premium
of our sparkling portfolio in the last decade, proposition in high-end cafés, bars and
with improving price/mix, enabled by powerful clubs during the year. In these four markets,
country-specific revenue growth strategies, we do not own our flagship ‘adults’ brand,
edgy marketing campaigns and disciplined Schweppes. The launch of this premium
in-store execution. proposition, with revenue per case nearly five
Sales volume of Trademark Coca-Cola and times higher than the average for sparkling
Fanta both grew more than 5%. As health- beverages, met with considerable success.
conscious consumers look for low- and In just one year, Royal Bliss category share
no-sugar options, Coca-Cola Zero, which reached second place in Italy and Austria
is strongly visible in our advertising and within the immediate consumption premium
promotions such as combo meal activations, tonic mixers segment, performing well
continued its robust growth with sales against established competition.
volume for the year up 29.1%. We introduced With an expanded portfolio of innovative new
Coca-Cola Zero Vanilla, Cherry and seasonal flavours, our Schweppes mixers and sparkling
flavours such as Cinnamon and Ginger in beverages give consumers new premium
many of our markets. We also continue to options for socialising-out-of-home and
drive packaging innovation with smaller, more aperitif occasions. In Romania, we focused
convenient packages. on premiumisation, launched new flavours
In 2018, we rolled out our new recipe for in 200ml bottles for hotels, restaurants
the core Fanta Orange variant with 30% less and cafés, introduced the very successful
sugar in several markets, including Hungary, mandarin flavour and stepped up in-store
Greece, Cyprus and Ireland, and have made activations, achieving 28% volume growth in
preparations for roll-out in other markets. the year. In Greece, we leveraged Schweppes
as a premium proposition for adults moving
As a result of our work throughout the year,
from soda to a leading master brand, and
the share of low- and no-sugar variants in
promoted the availability of new Schweppes
our total volume grew by 2.2 percentage
Drops (Lemon and Mastic Mint) and infused
points to 13.1%. This was driven by all of our
tonics. We also updated our iconic glass
markets, with the biggest contributions
Schweppes pack with the introduction
coming from Russia, Romania, Italy, Poland,
of a premium glass shape.
Nigeria and Ireland.
With a strategy including consistent support
In line with our commitment, made in
and dedicated activation of new packaging,
partnership with the Union of European Soft
we relaunched Kinley, a distinctive tonic with
Drinks Associations (UNESDA), to reduce
a slight bitterness. In the key market of Poland,
sugar in sparkling beverages by 10% by 2020
the successful re-introduction of the Kinley
across EU countries and Switzerland, we
brand grew volume by 40% and net sales
reduced sugar per 100 ml by 3% in 2018,
revenue by 43% in 2018.
reaching a cumulative reduction of 8.2%.
2018 INTEGRATED ANNUAL REPORT 43
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Our energy drinks portfolio, led by Monster, Italy, Czech Republic, Slovakia, Hungary,
had another impressive year of growth, Serbia, Croatia, Russia, Switzerland and the
with volumes up 30.6% compared to 2017 Republic of Ireland. An evaporated and
and significant share gains in 18 out of 23 condensed natural mineral water, GLACÉAU
markets. Growth in the energy category was smartwater is processed to replicate
strongest in Russia and Poland, with each nature’s water cycle, with the right amount
market adding an incremental two million unit of mineral salts to create a clean and crisp
cases to sales in the year. This accelerated taste. Its sleek, modern and iconic design
performance was driven by increased reflects the quality inside the bottle.
distribution, chilled product availability Enhanced/functional waters are gaining
and in-store execution. traction, and with this addition to our product
Following seven years of 30% average line we address consumer demand for
compounded growth in Monster sales volume, affordable, premium physical replenishment.
we introduced Monster Hydro in several We expect GLACÉAU smartwater, which
markets and achieved a notable repositioning is designed for ‘premium yet affordable’
of other category products, enabled by physical replenishment targeting the urban,
innovation, marketing, dedicated promotions tech-savvy, ambitious and motivated
and in-store execution. consumer to be fully complementary to our
existing mainstream propositions. Our aim,
launches in ready-to-drink tea
our focus in the juice category in 2018 was
on introducing innovative propositions.
This strategy brought positive results, with
and premium water.” value for our Cappy brand growing faster
than volume across the business, as well as
in key markets such as Bulgaria, Romania
Premium water offerings
and Hungary.
As hydration is becoming a complex category
ranging from basic thirst quenching to Two innovative premium products were
indulgent refreshment with flavoured waters, brought to market: Cappy Plus, with a
we have developed our product portfolio range of different variants combining taste
to meet the full spectrum of hydration needs. and enhanced functional attributes, and
The hydration category accounts for more Cappy Smoothies, with a range of flavour
than half of non-alcoholic ready-to-drink combinations featuring smooth textures
volume, and almost 30% of retail value. and good nutritional value. These product
According to industry estimates, it will also offerings are positioned to meet the
comprise the biggest incremental growth consumer needs for breakfast and
in our sector through 2025, contributing snacking occasions.
45% of the incremental volume and 20% During the year, we were also able to
of the incremental value. successfully combine brand value with
As less than 20% of our volume is in hydration, premiumisation focus to increase the share
we see significant room for growth, and are of our Next juice product line in Serbia, both
working to meet consumers’ varied hydration in volume and value, with the latter
needs and grow our business. While we growing faster.
continue to build local relevance with our
mainstream waters across our regions,
we are expanding our product offerings
beyond pure water to seize additional
hydration opportunities.
44 COCA-COLA HBC OUR CONSUMERS CONTINUED
With The Coca-Cola Company, we continuously innovate For this entirely new category for our
in this category to offer function and serve local tastes. Company, we built manufacturing capabilities
We are continuing to develop and introduce additional as well as the market knowledge. Less than
options for health-conscious consumers who are looking a year later, we launched AdeZ in 12 of our
for low- and no-sugar flavoured options, as well as more markets, demonstrating our determination
convenient and sustainable packages. to explore and establish ourselves in this
fast-growing segment, while bringing
And we have a piece of good news for Bruce. Later this incremental value for our customers.
year, he will be able to buy Deep RiverRock in 100%
recycled PET packaging.
45
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The selected ‘incubate – grow – scale’ To grow consumption on these key occasions,
portfolio has been introduced in hand-picked we leverage a full product portfolio, including
outlets in targeted cities, supported by complementary categories such as coffee
experiential and opinion-leader marketing and premium spirits. These efforts are
to attract early adopters. Once a certain helping us to materialise our ambition of
consumer and customer base is achieved, becoming a Total Beverage Company.
the brands will expand selectively across
regions and channels, in a broader but still Capturing value
very segmented selection of outlets. While pursuing our 24/7 vision, we also
We plan to continue incubating new brands, identify and prioritise the right strategies to
while the brands that reach scale will be capture value. We used a phased approach
integrated in our well-established, effective to roll out a revenue growth management
system. Through this process we seek to framework, starting in the third quarter of
maintain an attractive, contemporary and 2016 with Nigeria and Russia and reaching
high-value product portfolio. all of our markets by September 2018.
The unit began its work in Vienna, Milan, While there are distinct initiatives in each
Rome and Zurich in late 2017. The products market, common themes of our revenue
in scope were GLACÉAU smartwater, ZICO growth management initiatives include
Coconut Water, Appletiser and Coke in an premiumisation, brand stratification and
aluminium bottle pack. We began with the price and pack size interventions. Expanding
goal of reaching an average of 200 hand- availability and visibility of Schweppes 1783
picked outlets per city in the first 12 months. in the hotels, restaurants and cafés channel
In 2018, the unit’s incubation efforts is a good example of our efforts to seize the
expanded into six additional European cities adult premiumisation opportunity. We also
with more products, including Honest Tea, entered the promising organic segment
special Coke Zero flavours and Tumult, with Bio Limo in Switzerland and Austria.
a fermented non-alcoholic drink. We have had success with several
These incubation efforts have boosted the approaches to brand stratification, such
energy of the local organisations, bringing as establishing a fighter brand like Limca
enthusiasm to our people, our consumers in Nigeria or establishing different pricing for
and our customers, and driving our Trademark Coca-Cola and flavours in the
competitiveness. As part of the unit’s efforts, Ukraine. In Greece, where low- and no-sugar
an additional 8,000 new cooler doors were options have lower price elasticity, we adapted
placed in the market during 2018, increasing our pricing for these variants.
the availability of our still drinks portfolio. Using smaller and more affordable
propositions such as the 900 ml future
Options for every drinking moment consumption entry pack in Russia, we
To meet our consumers’ preferences, we improved our strategy for recruiting new
need to understand what drives their desire consumers. In Italy, we resized the entry
for beverages throughout the day. To satisfy pack to 660 ml to attract consumers in
these desires, we need to provide the right smaller households and launched a 450 ml
brand, in the right package, through the right PET package for consumers on the go. In all
channel, and at the right price. This process of our markets, we leveraged differing price
is called Occasion, Brand, Pack, Price, Channel elasticities, not just by package and brand,
(OBPPC) and it is an integral part of our but also by channel.
revenue growth management work, which
We estimate that our revenue growth
helps us prioritise opportunities.
management initiatives contributed 1.8%
of our total revenue growth in 2018, and
project that they will contribute 3.1% to
growth in 2019.
46 COCA-COLA HBC OUR CONSUMERS CONTINUED
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+2.2pp
of our target of 18. For 2019, we have set
a target of 18 complaints per 100 million
bottles sold to maintain this high
performance level.
To maintain consumer trust, we have
robust product quality processes and (2018: 13.1%)
zero tolerance for quality and food safety
non-compliance. Collaboration with key
suppliers of our ingredients and primary GROWTH IN SPARKLING
packaging materials helps us minimise
DRINKS FOR ADULTS VS. 2017
quality issues in our supply chain. We were
+6%
able to maintain the low level of business
losses from quality issues we achieved in
2018, when we reduced losses by more than
80% compared to 2017.
48 COCA-COLA HBC
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EVOLVING WITH
THE CHANGING
NEEDS OF OUR
CUSTOMERS
With our expanding innovative
product portfolio and excellent
service, we engage customers
to excite shoppers, creating joint
value for long-term success.
2018 progress
·· Rolled out our new route-to-market
approach across our biggest markets,
resulting in increased outlet coverage
and customer-facing time
·· Further improvement in customer
satisfaction
·· Focus on e-commerce, leading to growth
ahead of the market
2019 priorities
·· Introduce an organisational end-to-end
customer management approach
·· Further develop customer-centricity
mindset for joint value creation
·· Accelerate our capabilities in e-commerce
50 COCA-COLA HBC OUR CUSTOMERS CONTINUED
Creating value for customers Combining tea extract, fresh juice and
through our expanding portfolio herbs, FUZETEA offers something new
for consumers who want to experiment.
Our many product innovations in 2018,
It may also help our customers increase
supported by other initiatives in marketing,
margins by encouraging switching from
revenue growth management and route
lower-value categories.
to market, drove results with our customers
and in outlets across our 28 countries. With the introduction of AdeZ plant-based
By offering a broader portfolio with a wider beverages, our customers have an
choice of natural, healthy options and opportunity to attract more shoppers
premium products, we helped our customers and gain incremental revenue and margin.
excite shoppers and grow their businesses. Limited awareness, availability and modest
In established categories, new recipes taste from existing propositions in the
and new variants had immediate impact category have not lifted consumption
while initiatives supporting the introduction to maturity levels.
of new categories laid the groundwork for Yet, the category is projected to grow faster
long‑term success. than other categories due to health and
With every initiative, we are focused on wellness trends, new eating habits, increases
growing the value of the category. In more in allergies and intolerances, and the rise
than half of our markets we grew value in of environmental and ethical consciousness.
sparkling beverages faster than the overall To accelerate category growth in our
category, thus supporting value creation for markets, we launched AdeZ, the leading
our customers. brand in Latin America, in 12 of our European
markets in 2018.
The water category is growing rapidly and
is expected to continue to do so. Our Consumption per capita of plant-based
introduction of affordable, premium brand beverages in Central and Eastern Europe
GLACÉAU smartwater helped our customers markets is still modest. By removing the
attract upscale and affluent shoppers who category barriers, and supporting per capita
seek trendy, lifestyle solutions for hydration. consumption levels in line with Western
Smartwater also drives profitable category Europe, there is an opportunity for the
growth with higher margins, upgrading category to reach €1 billion in retail value
current mainstream water drinkers to more within five years. Plant-based beverages’
premium propositions. value per transaction is nearly double that
of cow’s milk.
We know from consumer insights that
shoppers are looking for natural, healthy
options, and the ready-to-drink tea category
Serving customers efficiently
has the potential to meet these needs. As our product portfolio has grown and
Due to unclear positioning of existing evolved to support our total beverage
products, the category had been stagnating, portfolio strategy, we have become even
with many consumers having never tried it. better at bringing our products to market
efficiently and effectively. We revamped our
A differentiated proposition with strong
route-to-market approach in all of our major
brand promise, FUZETEA has the potential
markets in 2018, which added an estimated
to re-invent the entire category and
1.1% to our annual revenue growth. In 2019,
subsequently increase customers’ revenue
we expect the contribution to be 1.4%.
opportunities. Ready-to-drink tea is a
powerful revenue driver, as it has c.20%
higher revenue per case compared to the
average for non-alcoholic ready-to-drink
beverages.
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We made improvements to our processes In Greece and Cyprus, we leveraged the SSR
to identify and recruit new outlets, increased strong summer tourist business with
the time we spent with customers, improved limited-edition bottles inspired by Greek SI
our co-ordination with wholesalers, and mythology. The bottles were launched
refined processes for online sales. These in cafés, restaurants, and souvenir shops,
efforts ensure that we capture opportunities and supported by targeted advertising
and optimise market coverage for new and at airports, on tourist maps, in the Aegean
established products. Airlines magazine and digital channels.
HIGHLY ENERGY-EFFICIENT
In Croatia, we increased contracts with
COOLERS IN THE MARKET Improved prospecting processes helped us
hotels, restaurants and cafés in Split and
increase our overall market coverage across
19%
Dubrovnik, and sales of our premium spirits
our countries, with a particular focus on
went up owing to the efforts of our local
execution in the hotels, restaurants and
centres of excellence for the channel.
cafés channel. In Nigeria, we added 20,000
Our activation programmes prompted
new outlets in Lagos alone during 2018.
consumers to switch from beer to cocktails,
In the vast territory of Russia, we optimised
growing our sales volume in targeted
our sales force and introduced central route
outlets by 17%.
SHARE OF SATISFIED planning, which significantly improved our
ability to spend time with customers. We also
CUSTOMERS Joint value creation
improved our partnerships with wholesalers
+2.5pp
by adjusting our approach to market We continually seek to improve shopper
segmentation and account management. satisfaction while generating higher margins
for our customers and for our business.
As consumer buying habits change, we are
Our success, and the success of our
adjusting our processes to support growth
customers, requires us to collaborate
in digital commerce and the at-work channel.
(2018: 81.3%) We established dedicated structures and
effectively. Joint business plan workshops
are an essential part of this collaboration,
teams, and segmented the digital retail
resulting in clearly defined shared
space and e-food customers, as well as the
responsibilities and joint tracking scorecards
at-work universe. To help our customers
to evaluate progress and results.
embrace the digital way of working, we made
improvements to our web portal. A tailor-made marketing plan created with
Partnerships with vending operators and a key retail customer in Poland, for example,
caterers help us create joint value in the improved execution of promotional activities
at-work channel. for the FIFA World Cup and Christmas. Along
with innovations in online sales, the success
We also continued to provide the best
of these promotional activities resulted
service quality for our customers while
in increased revenue.
reducing our service costs. In Poland, for
example, we worked with our customers Joint business plan workshops have also
to increase full-truck, full-pallet deliveries helped us capture growth in immediate
by establishing minimum order quantities consumption with single-serve packages.
and a charge for non-standard orders. Our partnership journey with one of the
leading global travel retail customers started
Serving hotels, restaurants with a workshop at the beginning of 2018,
and cafes effectively where we established a common vision and
strategy, set joint priorities and defined
The hotels, restaurants and cafés channel
detailed action plans to capture all growth
is becoming increasingly critical for our
opportunities. This collaboration, along with
business as it offers revenue growth and
strong activation plans, led to strong sales
supports the penetration of our brands.
for FUZETEA in the customer’s Czech
To seize these opportunities we were both
Republic outlets.
agile and focused during 2018, particularly
with large-scale initiatives in Italy, Greece, Another way we strengthen relationships
Cyprus and Croatia. is by sharing our insights into shopping
habits. In Switzerland, the local team shared
We introduced a new structure in Italy in
the results of research on shoppers’ needs
the summer of 2018, with people dedicated
and attitudes with several key accounts in a
to serving premium hotels, restaurants
series of cross-functional workshops. Based
and cafés. This approach addresses the
on an analysis of 31,000 shopping trips and
increasing needs of high-demand
interviews with 6,000 shoppers, the research
customers. A new merchandising model
provided customers with unique insights.
was also introduced for coolers, improving
As a result, one of the fastest-growing
our presence in these outlets and freeing up
Swiss customers has agreed to undertake
business developers’ time to focus on
a category management project with us
customers’ specialised needs, while also
in 2019 to optimise product assortment
incentivising customers with clear guidance
and layout.
on positioning our products.
52 COCA-COLA HBC OUR CUSTOMERS CONTINUED
Building excitement with We use an approach called Right Execution By 2022, all outlets deemed to have the
promotions – FIFA World Cup Daily (RED) which measures aspects required highest potential will have 100% cooler
for strong execution, such as product coverage, and outlets with strong potential
We engaged customers and supported
availability, secondary placements and will have at least 90% coverage with at least
powerful in-store promotions linked to the
merchandising, and awards a score to each one cooler.
FIFA World Cup hosted in Russia, our largest
customer, channel and, ultimately, country. We don’t just want to have more coolers,
market. Strong customer engagement plans
and in-store activations took place across These scores reflect our execution level we want coolers to be more energy-efficient
our markets, while in host country Russia we relative to our internal targets, and we use and more effective. By the end of 2018,
implemented 41,000 displays in our retail key all this data to continually improve. The score 270,000 or 19% of all of our coolers were
account partners. In branded ‘Red Zones’ that measures our success in the market highly energy-efficient, with HC (hydrocarbon)
in all 2018 FIFA World Cup host cities in Russia, (RED Benchmark) grew in 2018 by 10pp refrigerant gas. At present, all of our 28
we attracted football fans with almost compared to the start of the year, which markets have connected coolers.
5,000 pieces of summer equipment, including reflects the fact that we are activating the Connected coolers increase business
large screens in areas dedicated for public market with increased speed and developer productivity by scanning and
viewing of matches, and more than 17,000 stronger impact. communicating inventory automatically.
cooler doors. Customer-centricity is a key objective for The time saved adds up to four days every
This focused execution, along with favourable the entire organisation and this means that year per business developer and can be
summer weather, boosted volume growth we seek to always deliver in full, on time and re-invested in time spent with customers.
in targeted areas by 156%. accurately invoiced, an internal metric we In addition, the technology helps us drive
monitor and call by the acronym DIFOTAI. sales. We are able to analyse and improve
With the Russian and Croatian national
We track our success in achieving this each the placement of coolers by monitoring how
football teams advancing to the quarter‑finals
day, for each customer, and constantly work consumers use them. The technology also
and finals, respectively, we had a great
to improve our performance. Our overall supports proximity marketing with beacons,
opportunity to celebrate and cheer for
DIFOTAI score for 2018 was 96,5% – a 1.4pp allowing marketing teams to push impulsive
winning teams with real-time social media
shortfall compared to 2017 due to challenges messages to consumers for the right
feeds. We also produced limited‑edition
with product availability in a unique year, when occasion and at the right location – when
bottles featuring winning scores in fewer
we added 1,000 new SKUs to our portfolio. consumers are near coolers.
than two days. This real-time marketing
approach achieved significant engagement,
generating more than 81 million impressions
Supporting growth in immediate e-commerce
online and organic social media posts from consumption As shoppers are increasingly looking for
top influencers. We helped our customers serve consumers convenience, e-commerce continues to
by placing more coolers and new options grow in our countries, increasing in value for
Exceeding customer expectations for single-serve packs across our product our categories by 20% in 2018 compared
portfolio. As a result of these initiatives, sales to 2017. Our investments and focus allowed
We monitor customer satisfaction by
of profitable single-serve packs increased us to achieve volume growth of 26% versus
commissioning an annual survey of more
during the year by 170 bps, now accounting 2017, ahead of the market trend.
than 15,000 customers, comparing
ourselves with other beverage suppliers, for 43.7% of our total volume sold. We activate e-commerce across different
including suppliers of beer and dairy During 2018, we introduced smaller juice channels, supporting traditional retail
products. We listened to our customers’ packages, launched multi-packs of customers as well as emerging channels
feedback from 2017, their key satisfaction single‑serves, and focused on glass packages such as online delivery or e-food. In the
and dissatisfaction drivers and developed to increase penetration in hotels, restaurants, e-food channel in Ireland, we partnered with
a strong action plan for 2018 to improve bars and cafés. These efforts supported the Boojum chain to create a combo meal
customer service quality. This resulted in an overall improvement in our package mix. for delivery. By leveraging a strong
the number of customers recognising us as communication plan across social media
As cold drink equipment is one of our
Supplier no. 1 in three additional countries channels, the activation increased the
strongest tools for creating joint growth
at key account headquarters level, and in five number of new shoppers by 27% and drove
of profitable single-serve packages, we
additional countries at wholesaler level the number of beverages sold by 58%,
invest in finding the right chilled solutions
compared with the previous year. creating value for all parties.
for our customers. This may involve our own
Following our collaboration with our key branded coolers, which increasingly are To provide our customers with services that
accounts, we increased our share of satisfied highly energy-efficient and internet simplify their operations, we continued to
customers by 2.5pp to 81.3% in 2018. Our connected for greater effectiveness, or evolve our web-based customer portal,
improved partnerships with wholesalers led optimising the product offering in allowing customers in the fragmented trade
to a 10.8pp increase in our share of satisfied customer‑owned coolers. to order our products at any time.
customers to 75.9% in 2018. The feedback Our e-commerce capabilities have been
We launched a cooler acceleration plan
we receive helps direct priorities for training enhanced by investing in our people.
during the year to boost cold drink availability,
and development, indicating where we need We have appointed dedicated resources in
and invested nearly €120 million in coolers
to improve skills and capabilities. countries and have trained our key account
in our markets. To maximise our return on
To ensure that the right product is present these investments, we use data from our teams on strategies and steps to succeed
in the right location and properly activated, annual Every Dealer Survey to assess the with customers online. We also continued
we track real-time execution in our sales potential of retail outlets. the roll-out of e-commerce tools including
customers’ stores and use that data to eRED, our online performance tracking
evaluate and improve in-store operations. system. These capability-building efforts will
continue in 2019 to capture the maximum
value of online channels.
2018 INTEGRATED ANNUAL REPORT 53
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2018 INTEGRATED ANNUAL REPORT 55
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PARTNERSHIPS
TO IMPROVE
EFFICIENCY
We partner with our suppliers and
communities, and we leverage the
ingenuity of our people to help us
improve our operational efficiency,
reducing our costs and
environmental impact.
2018 progress
·· Aligned production capabilities
with product innovation pipeline
·· Leveraged technology in our
shared services centre with robotic
process automation
·· Saved 708,210m3 of water and
79,820 tonnes of PET plastic packaging
·· Reached our internal target for use
of renewable and clean energy ahead
of 2020
2019 priorities
·· Continue to invest in the business
to support the 24/7 Total Beverage
Company strategy
·· Focus on initiatives to make progress
in the delivery of the 2025 sustainability
commitments
56 COCA-COLA HBC PARTNERS IN EFFICIENCY CONTINUED
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1.82
1.79
1.71
1.5
impact of beverages they consume. We plan to work with
Climeworks and scale up the use of this solution as the
1.0
technology matures.
0.5
79,820
procurement processes, with a goal to
Sustainable sourcing
complete by 2021. This reduces transactional
costs and speed to market, and simplifies The sourcing of our raw materials accounts
and streamlines processes for our people. for a large portion of our economic,
In 2018, we introduced a new online platform operational and environmental footprint,
to manage variances in commodity rates and the behaviour of our suppliers directly
(VS. BASELINE) impacts the sustainability performance
as part of this effort.
and commitments of our Company.
In our continuous effort to achieve greater
Consequently, we consider our suppliers as
value through innovation, we held a Supplier
WATER SAVED IN 2018 Innovation event, sponsored by our Group
critical partners, contributing to the ongoing
and sustainable success of our business.
708
Supply Chain Director, in June 2018. With 11
of our most critical suppliers, we explored
potential opportunities and collaborations in
sustainability, automation, augmented reality,
digital printing and innovative packaging,
(’000 M3) kicking off a number of innovative ventures.
59
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0.42
0.4 40
0.41
0.39
0.37
0.3 30
0.2 20
18.1
17.7
16.6
14.8
12.9
0.1 10
0.0 2010 2016 2017 2018 Target 2020 0 2004 2016 2017 2018*Target 2020
2019 goal* 2019 goal
These certifications recognise excellence at We believe that every package has value
every stage of water management, including beyond its initial use and should be collected
protection of water sources, the quality of and recycled.
waste water released into the environment As a leading bottler in the Coca-Cola
and engagement with all water users and System, we play a key role in delivering on the
stakeholders in the water catchment area. ambitious World Without Waste objective.
At the end of 2018, 32 of our production Managing progress in collecting packaging
sites in 18 countries, accounting for 60% of waste is part of our 2025 sustainability
the total number of sites, had received water commitments, and we partner with local
stewardship certifications (European Water communities, non-governmental
Stewardship Certification or Alliance for organisations, industry, suppliers and
Water Stewardship Certification). We have consumers to tackle the challenge. Please
now, as part of our 2025 sustainability see Communities section, pages 34-39.
commitments, taken on the challenge
of securing water availability in all our Our approach to packaging is holistic,
communities in water-risk areas. We use minimising our impact on every stage of
tools such as the World Wide Fund for the lifecycle. We do this by reducing weight,
Nature’s Water Risk Filter and Global Water increasing the use of recyclable materials
Tool to identify the main future risks in water and the overall recyclability of packaging,
catchments. At our 17 manufacturing sites and developing renewable (plant-based)
located in water-risk areas, we aim to reduce materials. We are also investing in design
our water intensity by 20% by 2020, innovations to build better packages and
compared to our consumption in 2017. explore packaging-free alternatives for
delivering our products.
To address water use issues across our
value chain, we consider water use in our In 2018, we reduced packaging materials
supplier evaluation assessments. Using the by 19%* vs. 2010, eliminating 79,820 tonnes
World Wide Fund for Nature’s Water Risk of PET plastic, 21,700 tonnes of glass and
Filter, we identify the suppliers with high 4,200 tonnes of alumunium material, which
water risk per river basin and investigate would otherwise have been put into the
with them their specific water targets and market. The recycled and renewable
programmes. For our approach in our (plant-based) content in our PET packaging
communities, please see the Communities was 9% or 25,722 tonnes, an increase of
section on pages 34-39. 1,570 tonnes compared to 2017. This helped
to reduce our annual CO2 emissions
Packaging, recycling and waste by 38,330 tonnes.
management
At the beginning of 2018, The Coca-Cola
Company announced the World Without
Waste vision to help make a litter-free world
possible. The objective is to collect and
recycle the equivalent of 100% of the
** Considering neutral package mix evolution vs. 2010;
primary packaging the Coca-Cola System packaging intensity reduction per litre of beverage
puts in the market by 2030. produced is 4% in 2018 vs. 2010
75 500
493
60 400
402
387
370
369
360
50.3
45 300
47.0
43.4
41.3
39.1
30 200
15 100
0 2010 2016 2017* 2018 Target 2020 0 2010*2016*2017* 2018 Target 2020*
2019 goal 2019 goal
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For the fifth consecutive year, four of our Furthermore, we reduced energy SSR
plants sent no waste to landfill in 2018, consumption in manufacturing by 2.5%
and we reduced the total amount of waste in 2018 compared with 2017, and by 28% SI
from plants to landfill to 0.36 grams per litre compared to 2010.
of beverages produced. This was an 8.5% We realise we can and must do even more,
reduction from 0.39 grams per litre of and have therefore further raised our
beverage produced in 2017. ambition level with our 2025 sustainability
Please see the Communities section commitments. These commitments include:
for examples of our progress with waste ·· reducing further the carbon intensity
on pages 34-39. of our operations by 30% vs. 2017;
·· increasing energy-efficient refrigerators
Carbon and energy
to 50% of our coolers in the market;
Climate change is increasing our energy
·· sourcing 50% of total energy used from
and tax expenses, disrupting supplies
renewable and clean energy; and
of raw materials and causing disruptions
·· sourcing 100% of total electricity used
in operations due to severe weather
in the EU and Switzerland from renewable
conditions. At the same time, this material
and clean energy.
issue presents opportunities to make our
value chain more efficient and sustainable. To ensure we meet our targets, we use an
internal carbon price of €25 per metric tonne
We have made notable progress addressing
of CO2. We use this as part of our financial
climate-related risks, taking an aggressively
evaluation and in decision-making for further
proactive approach. In 2016, we set
investments in carbon reduction and
science-based targets to reduce carbon
renewable energy. We hold regular reviews
emissions per litre of produced beverage
to confirm that we adhere to all applicable
by 50% in our operations and by 25% across
environmental laws and regulations, and
our value chain by 2020 vs. our 2010 baseline.
internal standards. In addition, our
We were proud to be one of the first
environmental management systems and
companies to introduce science-based
data at all bottling plants are audited annually
targets, and are even prouder to have
by third parties.
achieved, by the end of 2018, our 25% 2020
target for reduction of emissions in our To tackle the biggest part of our value chain
value chain. carbon emissions, we are investing in a new
generation of coolers which cut electricity
In 2018, we reached our internal target for
use by more than half and use safe
use of renewable and clean energy – 40%
refrigerants which cause no harm to the
of our total energy consumption. We are also
on track to achieve our science-based target
atmosphere. In 2018, we invested in new UN Sustainable Development
of 50% reduction in carbon emissions from
coolers that helped our customers to save Goals
1,001.5 million kWh electricity in absolute
direct operations, with a 42g/lpb reduction Our sustained efforts to reduce our costs
numbers and 6% in relative numbers, thus
in 2018 and an overall reduction of 45% and improve our impact have generated
eliminating 401,263 tonnes of CO2
vs. 2010 emissions levels. significant results for our business,
emissions annually.
our communities, society and the
To further strengthen our actions regarding environment. These results correspond
climate change, and further improve our to contributions to the Sustainable
disclosure about our approach, we have Development Goals for clean water
committed to meeting the recommendations and sanitation, clean energy,
of the Task Force on Climate-related Financial economic growth, industry innovation,
6 -93%
Disclosure (TCFD). See the Managing risk sustainable communities, responsible
vs. 2004
and materiality section of this report on pages production, climate action, life below
5
5.0
2
0.51
0.39
0.36
0.35
During the year, we found 2. Heat pumps for energy and CO2 4. Vigilance pays off in Nigeria
innovative ways to save savings in Bosnia and Herzegovina In the last two years, our Port Harcourt plant
In our Sarajevo plant, we installed heat in Nigeria reduced its water consumption
water, energy and materials
pumps as a renewable alternative to fossil by double digits. The 19% drop in water
across our territory. Here are fuels. Heat generated from cooling consumption compared with 2016, is due
a few examples. processes in production will be reused for to a massive behavioural change, including
heating our administrative building. With an a bottom-up approach to investigating each
1. New cleaning technology investment of €60,000, we are able to save water, air and steam leak, and immediate
introduced in Romania 160,000kWh of energy and 110 tonnes repair. The project captured the imagination
of carbon emissions annually. of the whole production floor.
In our plant in Ploiești, Romania, we invested
€900,000 to introduce a new technology for
better and faster cleaning of our production 3. Decreased water consumption 5. Reduced packaging for water
equipment, which will be in full operation in in Russia brands in Hungary and Austria
2019. Using electro-chemical activation In our juice plant in Moscow, we increased For our water brands in Hungary and Austria,
cleaning will result in annual reductions of the efficiency of the water treatment we introduced new closures and bottle
100 tonnes of chemicals, 18,000m3 water, equipment by investing €200,000. designs which are up to 2.17g lighter.
2,730MWh in energy used and a drop in The net impact is savings of 50,000m3 The impact of this change is a reduction
carbon emissions of 870 tonnes. of water annually. of more than 630 tonnes of plastic and 570
tonnes of carbon emissions annually.
5. HUNGARY
AND AUSTRIA
up to 2.17g 3. RUSSIA
50,000m3
LIGHTER DESIGNS FOR
BOTTLES WATER SAVED
1. ROMANIA
€900,000 2. BOSNIA AND
HERZEGOVINA
INVESTMENT IN NEW
TECHNOLOGY 110 tonne
FEWER CARBON
EMISSIONS
4. NIGERIA
19%
DECREASE IN WATER
CONSUMPTION
63
MANAGING RISK
AND MATERIALITY
64 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
OUR APPROACH
TO MATERIALITY
Our material issues are those that matter most to our stakeholders and
subsequently impact on the Company’s value drivers, competitive position
and long-term value creation. We assess our material issues annually to fully
understand how to manage the risks and opportunities they present.
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Every year, we discuss with a comprehensive We are working to ensure that our annual
group of experts our material topics at a materiality process and especially the related
Group Stakeholder Forum, which we organise stakeholder engagement is mirrored in our
together with The Coca-Cola Company. countries. In 2018, this was implemented in
Our 2018 forum took place in a waste 12 out of our 19 business units. Local teams
incineration plant in Vienna and discussions use the same 12 material issues as the
focused on packaging waste and the Group, and they may add up to three
Coca-Cola System’s World Without Waste additional ones specific to their local market
strategy. We welcomed 35 participants context, following endorsement of the local
from 20 countries representing customers, senior leadership.
industry and waste associations, You can read more about our stakeholder
non‑governmental organisations, policy engagement processes on pages 10-11 and
makers and investors. Stakeholder 106-107 of this report and on our website.
recommendations included:
·· help change consumer attitudes through
partnerships and Coca-Cola campaigns;
·· reduce design complexity, for example
avoiding coloured bottles or full-body
sleeves with glue;
·· industrialise new technologies such
as chemical recycling;
·· focus equally on returnable models,
packaging-free options and bio-based
and biodegradable options;
·· advocate for industry-owned return
systems; and
·· support clean-up of rivers, lakes
and seashores.
Along with the Annual Stakeholder Forum,
we ask more than 420 key stakeholders
to provide online feedback every year via our
material issues survey. This gives them the
opportunity to prioritise our material issues Local/regional/ global NGO, IGO: 21%
based on their own interests and perception Supplier partner (materials, ingredients): 18%
Supplier partner/professional services
of the value we create.
(consultancy, agency, auditor): 18%
The survey includes open-ended questions Industry association, chamber of commerce: 18%
Customer/trade partner: 8%
allowing stakeholders to share feedback Academic institution: 5%
on anything we may have missed. In parallel, Government agency/regulator/EU office: 4%
we conduct this survey internally to collect Media: 2%
Supplier partner/other services
input from our top 300 business leaders, (transport, catering, cleaning): 2%
which includes senior leadership teams Analyst, rating organisation: 2%
in our 28 countries, as well as the regional Local community representative: 2%
management teams and the Group
top management. External survey by stakeholder group
66 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
MANAGING OUR
MATERIAL ISSUES
While the prioritisation of our 12 material issues has evolved, the same issues
continue to be the most relevant and important to our stakeholders and our business.
The outcome of our material issues survey We understand that companies such You can find more about how our
is a ranking of material issues. By assessing as Coca-Cola HBC play a critical role in sustainability commitments align with the
the importance of these issues to our addressing challenges the world faces. In the targets underpinning the SDGs in the GRI
stakeholders, combined with an assessment past, we have linked our material issues to Content Index: https://coca-colahellenic.
of their impact on society and environment, the Sustainable Development Goals (SDGs), com/Campaigns/AnnualReport2018/
we derive the relative materiality of each established by the UN to achieve long-term assets/pdf/Coca-Cola-HBC-2018-GRI-
issue and prioritise them accordingly. growth and development by 2030. In 2018, Content-Index.pdf
when introducing our new 2025 sustainability Our work to manage the potential risks,
Following the process of prioritising our
commitments, we went a step further, opportunities and impacts of our material
material issues, the Operating Committee
aligning our materiality topics not only with issues takes place across the Company,
ensures their proper implementation in our
the applicable 15 goals, but with all relevant and on the front lines of each of our markets.
overall strategic framework.
underlying targets for each SDG. The list on page 67 outlines where our
This includes setting and disclosing targets
approach to managing each material issue
and metrics to measure progress.
is reported.
waste management
Corporate governance,
business ethics & anti-corruption Product quality & integrity
High
Marketing
Sourcing
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Environmental ·· Environmental policy ·· Our approach to sustainability 2-3, 4-5, 9, 13, 22, 25
matters ·· Climate change policy ·· Sustainability commitments related to 24-25
·· Packaging waste and recycling policy environment
·· Sustainable Agricultural Guiding Principles ·· Climate, energy, water 24, 25, 57, 59-60
·· Water stewardship policy ·· World Without Waste 24, 25, 38, 39, 60
·· Sourcing 58-61
Human rights ·· Human rights policy ·· Human rights 11, 31, 70-71, 81, 121
·· Supplier Guiding Principles ·· Working with suppliers 58-59
·· Slavery and Human Trafficking Statement
Anti-bribery ·· Code of Business Conduct ·· Governance and compliance 68-69, 76, 117,
and corruption ·· Anti-bribery policy and compliance 88-121
handbook
·· Supplier Guiding Principles
·· Community contributions policy
ALIGNING OUR
MATERIAL ISSUES
On pages 68-71 we discuss how our material issues align
with the SDGs and our 2025 sustainability commitments.
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35% ofand/or
total PET used from recycled PET
PET from renewable material
17.17 Encourage and promote
effective cross-sector partnerships 20 engage in 20 Zero Waste partnerships
(city and/or coast)
100% ofin line
12.7. Promote sustainable, public our key agricultural ingredients sourced
procurement practices with sustainable agricultural principles
12.8. Ensure information and awareness
for sustainable development and
lifestyles in harmony with nature 25% reduce calories per 100ml of sparkling soft
drinks (all CCH countries)***
30% reduction
operations
in carbon ratio in direct
50% ofand clean sources
our total energy from renewable
100% ofin line
our key agricultural ingredients sourced
with sustainable agricultural principles
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2025 sustainability commitments*
SI
10% ofinitiatives
employees take part in volunteering
10% ofinitiatives
employees take part in volunteering
100% ofin line
our key agricultural ingredients sourced
with sustainable agricultural principles
** Baseline 2017
*** Technical recyclability by design
**** Baseline 2015
72 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
EFFECTIVE MANAGEMENT
OF RISK
creating and protecting ·· an enhanced ERM framework that drives In addition to the review of our risk
business value monthly leadership discussions on risk management programme, the Board and its
and opportunity, and supports the Smart Committees also conduct an annual review
Enterprise risk management Risk model and related culture shift. of the effectiveness of our internal controls
The management of our business risks It clearly articulates the continuous and further details are set out in the Audit
is intrinsically linked to materiality. During process for the identification and and Risk Committee Report on pages
2018, we have further embedded the evaluation of significant risks to the 112-117. The Board confirms that it has
Enterprise risk management (ERM) achievement of our business objectives. concluded that our risk management and
programme into our Company’s culture These new features and activities build internal control systems are effective.
through the development of a Smart Risk on our ongoing processes, which include:
programme. This programme is linked to Our principal risks
·· clear business strategies, objectives
our growth mindset and drives cultural While the overview of our most important
and principles;
change by encouraging us to take informed risks involves an assessment of the likelihood
risks to leverage opportunities. The cultural ·· Group statements on strategic direction, of their occurrence and their potential
component is supported by an enhanced ethics and values; consequences, it does not include all risks
ERM framework that boosts our speed in ·· programme integration into the business that can ultimately affect the Company.
risk identification and management. planning cycle; There are predictable levels that we can
The ERM programme is led by the Group ·· continual monitoring of our internal and identify and manage. However, there are
Chief Risk Officer (CRO) who works in close external environment for factors that risks that are not yet known to us, and risks
collaboration with the risk owners across may change our risk profile and create currently believed to be immaterial that
our business units and specialised functions, opportunities; could ultimately have an impact on our
such as information technology, on specific ·· training and awareness programmes business or financial performance.
business risks. The CRO also maintains a across all business units and functions Leveraging our robust risk management
wide-angled view of all business streams which are focused on embedding the programme, we are constantly vigilant to the
and the linkages between risk and innovation. Smart Risk concept into our DNA, creating uncertainty in our operating environments.
Our Board retains overall accountability for informed risk-taking leaders across all In this way, we proactively identify new risks
the Group’s risk management and internal management levels; and and opportunities, and strive to understand
control systems. ·· the annual evaluation of the type and the threats to our business viability.
amount of Group insurance purchased
Through quarterly reporting to the Audit and During 2018, we observed general trend
from the market while leveraging our
Risk Committee, the Board is provided with stability across the majority of our principal
captive insurance entity. This is with
updates on critical issues and visibility of the risks. In some areas, we have seen changes
reference to the availability of insurance
effectiveness of the systems and processes. to the operating environment that
cover and cost measured against the
The Board has defined the Group’s risk necessitated minor changes to risk
probability and magnitude of the
appetite and reviews our risk exposure, articulation and prioritisation. For example,
relevant risks.
ensuring that material matters and principal our sustainability risk (Climate, Carbon,
risks are managed and aligned to our Packaging and Water) increased in
Review of the programme
strategic goals and objectives. importance with the escalation of consumer
Annually, our internal audit department concerns and public debate relating to
Our new Smart Risk programme enhances conducts an independent review of the plastics and packaging waste across our
cross functional collaboration with the risk management programme. The audit markets, and investor interest in risks and
strong internal partnerships driving the team evaluates, across business units opportunities relating to climate adaptation.
successful application of the programme. and functions, the risk management and We are also cognisant of the continued
New features and activities introduced in business resilience programmes, the threats all businesses face regarding
2018 include: specific processes and their application cyber-incidents and this principal risk has
·· development of the Smart Risk model, against business best practices and the therefore also increased in priority.
which drives a culture of informed International Accounting Standard.
The Corporate Audit Director makes Furthermore, our regulatory challenges risk
risk-taking, supporting innovation
recommendations to improve the overall was renamed and modified to ‘Ethics and
and growth; and
risk management programme, where Compliance’ as this more accurately reflects
required, with the findings submitted to the dynamics of this risk.
the Audit and Risk Committee.
2018 INTEGRATED ANNUAL REPORT 73
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<
Our enterprise risk management process for the identification, review,
management and escalation of both risks and opportunities was further enhanced
Monthly
in 2018, and integrates the best aspects of both ISO 31000 and the revised
focus with
COSO frameworks. In 2018, this process incorporated the following activities: Opportunities
quarterly
reviews and risks
·· Monthly risk discussions were undertaken by the business units; and
·· Quarterly risk reviews were undertaken by the business units
CRO
and corporate functions.
leadership
sessions
·· The CRO and his team facilitated 25 of these sessions with senior leaders; and
·· An introduction to the Smart Risk programme was delivered to the
business units.
·· The CRO facilitated regional-level reviews with the Regional Management review
Directors and their teams evaluating the risks and management
actions in May and November; and
·· Stakeholder feedback was provided after these sessions, ensuring
a cyclic bottom-up, top-down information loop.
·· Our internal think tank, the Group Risk Forum (GRF) which is The Group
chaired by the CRO, convened in May and November. The forum Risk Forum
evaluated risk trends and the risk environment as part of the
preparation of our strategic risk register and principal risks.
Operating
·· The Operating Committee reviewed the findings of the GRF in May
Committee
and November. With the CRO they discussed, evaluated and
review
aligned our strategic risks and exposures.
·· On a quarterly basis, the CRO briefed the Audit and Risk Board review Feedback
Committee on material risks, management actions, and process
to this
compliance with the risk management elements of the UK
process
Corporate Governance Code.
<
Winner of the 2018 CIR Award for Risk Management Team of the Year
The Business Resilience team was announced ‘Risk Management Team of the Year’ at the 2018 CIR awards in London.
The award recognises both our ERM programme and its activation across Coca-Cola HBC by the team.
74 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
Link to material
Principal risks Description Potential impact Key mitigations issues
1. Environmental: Failure to reduce our ·· Long-term damage to ·· Energy management programmes and ·· Carbon and
Climate, carbon, environmental our licence to operate transition to renewable and clean energy energy
plastics, waste footprint and to meet ·· Losing our ‘seat at the ·· Water reduction and waste water treatment ·· Packaging,
and water stakeholders’ table’ to contribute to programmes, as well as support for water recycling
expectations, legislation related to stewardship initiatives in water-risk areas and waste
particularly relating to environmental and ·· Packaging waste management and World management
climate change, water social sustainability Without Waste global programmes ·· Sourcing
availability, packaging ·· Increased cost of ·· Partnering with local and international NGOs ·· Water
waste and sustainable doing business on common issues such as nature conservation, stewardship
agriculture.
·· Loss of consumer water stewardship and packaging recovery
base ·· Partnering with local communities, start-ups
and academia to minimise environmental
impacts
·· Focus on sustainable procurement
·· Commitment to the Task Force on
Climate‑related Financial Disclosures (TCFD)
recommendations
2. Consumer Failure to adapt to ·· Failure to achieve our ·· Focus on product innovation and expansion ·· Marketing
health and changing consumer growth plans to a total beverage portfolio ·· Nutrition
wellbeing health trends, public ·· Damage to our brand ·· Expand our range of low- and no‑calorie ·· Product
health policies and corporate beverages quality and
addressing reputation ·· Introduce smaller packs integrity
misconceptions about ·· Loss of consumer
·· Reduce the calorie content of products
our formulations, sugar base in the portfolio
and the health impact
of soft drinks. ·· Clearer labelling on packaging
·· Promote active lifestyles through consumer
engagement programmes focused on health
and wellness
3. Cyber incidents A cyber-attack or data ·· Financial loss ·· Implement a cyber-security and privacy control ·· Economic
centre failure resulting ·· Operational disruption framework and monitor compliance impact
in business disruption, ·· Damage to corporate ·· Safeguard critical IT and operational assets
or breach of corporate reputation ·· Detect, respond and recover from cyber
or personal data incidents and attacks
·· Non-compliance with
confidentiality. data protection ·· Foster a culture of cyber-security
legislation (e.g. GDPR) ·· Monitor threat landscape and remediate
associated vulnerabilities
4. Foreign Foreign exchange and ·· Financial loss ·· Treasury policy requires the hedging of 25% ·· Economic
exchange and commodity exposure ·· Increased cost base to 80% of rolling 12-month forecasted impact
commodity prices arises from changes in ·· Asset impairment transactional foreign currency exposure
exchange rates and ·· Hedging beyond 12 months may occur
·· Limitations on cash
commodity prices. in exceptional cases subject to approval
repatriation
Currency devaluation, of Group CFO
in combination with ·· Treasury policy requires the hedging of rolling
capital controls, three-year commodity exposures; different
restricts movement policy limits apply for each hedge-able
of funds and increases commodity
the risk of asset
·· Derivative financial instruments are used, where
impairment.
available, to reduce net exposure to currency
and commodity price fluctuations
2018 INTEGRATED ANNUAL REPORT 75
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Increasing SI
Stable
Decreasing
Link to material
Principal risks Description Potential impact Key mitigations issues
5. Channel mix A continued increase ·· Reduced availability ·· Enhance our key account capabilities to partner ·· Economic
in the concentration of our portfolio and and grow with top customers impact
of retailers and overall profitability ·· Work closely with our immediate consumption
independent channel customers to drive incremental
wholesalers on whom transactions
we depend to ·· Accelerate RED execution to support our
distribute our products. commitment to operational excellence
The immediate
·· Develop our digital and e-commerce capabilities
consumption channel
to capture opportunities associated with
remains under
existing and new distribution channels
pressure as consumers
alter consumption
habits.
6. People Inability to attract and ·· Failure to achieve our ·· Upgrade our Employer Value Proposition and ·· Employee
attraction retain sufficient growth plans Employer Brand wellbeing and
numbers of qualified ·· Develop leaders and people for key positions engagement
and experienced internally, improve leaders’ skills and ·· Corporate
employees in highly commitment for talent development citizenship
competitive talent ·· Create shared value with the communities ·· Human rights
market. in which we work to ensure we are seen and and diversity
considered as an ethical business with an
attractive purpose
·· Expand talent pool by hiring more diverse
workforce
7. People Inability to ensure ·· Failure to achieve our ·· Promote operational excellence and remove ·· Employee
engagement ongoing engagement growth plans barriers to performance well-being and
and commitment of ·· Measure culture and engagement, and address engagement
our workforce. findings through continuous listening to ·· Human rights
our people and diversity
·· Improve wellbeing of employees
·· Improve leaders’ skills to enable, engage and
energise employees sustainably
·· Promote inclusive environment that allows all
employees to realise their full potential
8. Declining Volatile and challenging ·· Eroded consumer ·· Seek to offer the right brand, at the right price, ·· Economic
consumer macroeconomic, confidence affecting in the right package through the right channel impact
demand security and political spending ·· Robust security practices and procedures to ·· Corporate
conditions can affect ·· Inflationary pressures protect people and assets citizenship
consumer demand and ·· Social unrest ·· Crisis response and business continuity
create security risks strategies
·· Safety of people and
across our diverse mix security of assets
of markets.
76 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
Link to material
Principal risks Description Potential impact Key mitigations issues
10. Quality The occurrence of ·· Damage to brand and ·· Stringent quality/food safety processes in place ·· Product
quality/food safety corporate reputation to minimise the likelihood of occurrence quality and
issues, or the ·· Loss of consumer ·· Early warning systems (Consumer Information integrity
contamination of our trust Centres and social media monitoring) that
products across our ·· Reduction in volume enable issue identification
diverse total beverage and net sales revenue ·· Robust response processes and systems that
portfolio. enable us to quickly and efficiently deal with
quality/food safety issues, ensuring customers
and consumers retain confidence in our
products
11. Ethics and We operate in some ·· Damage to our ·· Annual ‘Tone from the Top’ messaging ·· Corporate
compliance complex markets with corporate reputation ·· Code of Business Conduct (COBC), ABAC and governance,
high levels of perceived ·· Significant financial commercial compliance training and awareness business
corruption. As a result, penalties campaigns for our entire workforce ethics and
we are exposed to an ·· Management time ·· All third parties that we engage to deal with anti-
increased risk of fraud diverted to resolving government on our behalf are subject to ABAC corruption
against the Company legal issues due diligence, and must agree and comply with
as well as to the risk of our Supplier Guiding Principles
·· We may suffer
Anti-bribery and
economic loss ·· Cross-functional Joint Task Force in Nigeria and
Corruption (ABAC)
because of fraud and Russia that pro-actively addresses risks in the
fines or sanctions if our
reputational damages, most challenging of our operations
employees or the third
fines and penalties, in ·· Risk-based internal control framework and
parties we engage to
the event of non- assurance programme with local management
deal with government
compliance with ABAC accountability
fail to comply with
regulations by our ·· Periodic risk-based internal audits of ABAC
ABAC requirements.
employees or by third compliance programme
parties representing
·· Speak Up Hotline
us with government
12. Strategic We rely on our ·· Termination of ·· Management focus on effective day-to-day ·· Economic
stakeholder strategic relationships agreements or interaction with our strategic partners impact
relationships and agreements with unfavourable renewal ·· Working together as effective partners for
The Coca-Cola terms could adversely growth
Company, Monster affect profitability ·· Engagement in joint projects and business
Energy and our planning with a focus on strategic issues
Premium Spirits
·· Participation in ‘Top to Top’ senior management
partners.
forums
13. Health and The risk of health and ·· Death or injury ·· Standardised programmes, policies and ·· Employee
safety safety issues being of employees, legislation applied locally wellbeing and
ineffectively managed. contractors or ·· Group oversight by the Health and Safety (H&S) engagement
This incorporates the members of the public Team
management of ·· Employee ·· H&S Board with the clear purpose to accelerate
third-party providers, engagement and the H&S step-change plan implementation
particularly fleet and motivation ·· Implemented the Behavioural-Based Safety
logistics. ·· Attraction of talent/ Programme
prospective
employees
2018 INTEGRATED ANNUAL REPORT 77
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HEAT MAP
This heat map depicts the likelihood and impact of our principal risks.
The timeframes for our principal risks are qualitatively assessed as part
of the preparation of our Viability Statement.
High
12
1
7 3
10 2
5
11 9
6
8
Impact
13
4
Low
1 2 3 4 5 6
Environmental: Consumer Cyber Foreign Channel mix People
Climate, carbon, health and incidents exchange and attraction
plastics, waste wellbeing commodity
and water prices
7 8 9 10 11 12 13
People Declining Discriminatory Quality Ethics Strategic Health and
engagement consumer taxes and stakeholder safety
demand compliance relationships
78 COCA-COLA HBC MANAGING RISK AND MATERIALITY CONTINUED
TASK FORCE ON
CLIMATE‑RELATED
FINANCIAL DISCLOSURES
Task Force on Climate-related To begin working and disclosing in alignment This has seen the Group Risk Forum,
Financial Disclosures with this framework, in 2018 we created business units, core functions and the
a working party to design and plan the TCFD working party actively discussing and
The Financial Stability Board established
implementation of core elements of its evaluating risk and opportunity. From these
the Task Force on Climate-related Financial
four pillars of governance, strategy, risk initial deliberations, our initial modelling that
Disclosures (TCFD) with the aim of
management and metrics and targets. addresses transition and physical risks,
improving disclosure of climate-related risks
together with potential opportunities,
and opportunities. At Coca-Cola HBC, we In respect to the area of governance, the
was generated.
set our first carbon reduction commitments Group Risk Forum brings together senior
in 2006 and were subsequently one of the leaders from across the business to analyse In the area of metrics and targets, we have
first companies in the world to introduce risk and opportunity stemming from the performed a high-level assessment of a
science-based targets. We support efforts provided data, to ensure visibility by the two-degree scenario, and in 2015 we set
to improve quality and consistency of Operating Committee and our Board. carbon reduction targets in both direct
disclosures in this area and have therefore Ultimately, the Board has oversight of operations and in the value chain aligned with
publicly committed to implementing the climate-related risks and opportunities this scenario. Approved as science-based
recommendations of the TCFD. through the Social Responsibility Committee targets in early 2016, we committed to
and the Audit and Risk Committee. reduce the carbon emissions intensity in
These recommendations form a voluntary
direct operations by 50% and in the value
framework for providing information on Our approach evaluates the external
chain by 25% by 2020 vs. 2010.
climate-related risks and their financial influences and internal contributors that
impacts for the use of investors, lenders, impact risk and opportunity, thus influencing In addition, we set targets for renewable
insurers and other stakeholders. Adopting our risk modelling. energy, renewable electricity and carbon
the recommendations enables us to better targets beyond 2020. Please see pages
During 2018, discussions on climate-related
understand and communicate the nature of 24-25 for our 2025 sustainability
risk were integrated into the overall risk
the risks, the market forces and sensitivities, commitments. The findings of our risks
management process across our Group.
and the financial implications to our business. evaluation confirm the importance of
understanding the critical dependencies of
climate change on our business and ensuring
that we have action plans in place to mitigate
the risks and leverage opportunities.
CG
FS
VIABILITY SSR
SI
STATEMENT
Business model and prospects ·· spending for production overheads Scenario 3: Lower estimates for sales revenue
Our business model and strategy, as outlined and operating expenses; for reasons other than volume decline are
on pages 14-17 of this report, document the ·· working capital levels; and considered. Principal risk: channel mix.
key factors underpinning the understanding ·· capital expenditure. Scenario 4: The risk of discriminatory taxes
and evaluation of our prospects, which are our: The Board has assessed that a viability in areas such as sugar and packaging.
·· attractive geographic diversity; period of five years remains the most Principal risk: discriminatory taxes.
·· strong sales and execution capabilities; appropriate due to its alignment with the Scenario 5: The impact of higher raw material
·· market leadership; Group’s strategic business planning cycle. costs was also considered. Principal risk:
It is also consistent with the evaluated commodity prices.
·· global brands; and
potential impacts of our principal risks which
·· diverse beverage portfolio. The above scenarios were tested both
are disclosed on pages 74-76, the Group’s
in isolation and in combination. The stress
Our strategy is being modified over time to debt profile and our impairment review
testing showed that due to the stable cash
sustainably create value for our shareholders, process, where goodwill and indefinite-lived
generation of our business, the Group would
suppliers, employees, and the customers intangible assets are tested based on our
be able to withstand the impact of these
and communities we serve. five-year forecasts.
scenarios occurring over the period of the
The Group’s business model has proven to financial forecasts. This could be conducted
be effective and resilient even during periods Assessment of viability
by making adjustments, if required, to our
of challenging market conditions. Our Board Qualitatively, we analysed the output of our operating plans within the normal course
has historically applied a prudent approach enhanced, robust enterprise risk management of business.
to the Group’s decisions relating to major and internal business planning and liquidity
management processes, to ensure that the Following a thorough and robust assessment
projects and investments. From 2014
risks to the Group’s viability are understood of the Group’s risks that could threaten
to 2018, we generated free cash flow
and are being effectively managed. our business model, future performance,
of €394 million per year on average.
solvency or liquidity, the Board has concluded
The Board considers that our diverse The Board has concluded that the Group’s that the Group is well positioned to effectively
geographic footprint, including exposure comprehensive processes across multiple manage its financial, operational and
to emerging markets with low per capita streams continue to provide a comprehensive strategic risks.
consumption, and a proven strategy framework that effectively supports the
in combination with our leading market operational and strategic objectives of the Viability Statement
position offer significant opportunities for Group. It also provides a robust basis for
Based on our assessment of the Company’s
future growth. assessment and confirmation of the
prospects, business model and viability as
Company’s ability to continue in operation
outlined above, the Directors can confirm
Key assumptions of the business and meet its obligations as they fall due over
that they have a reasonable expectation that
plan and related viability period the period of assessment. Supporting the
the Group will be able to continue operating
qualitative assessment was a quantitative
The Group continues to maintain a and meet its liabilities as they fall due over the
analysis performed as part of strategic
well-established strategic business planning five-year period ending 31 December 2023.
business planning. This assessment
process which has formed the basis of the
included, but was not limited to, the Group’s
Board’s quantitative assessment of the
ability to generate cash. We have continued
Group’s viability.
to stress test the plan against several severe
The business plan reflects our current but plausible downside scenarios linked to
strategy over a five-year rolling period. The certain principal risks as follows:
financial projections included in the plan are
Scenario 1: The impact of changes to
based on the following key assumptions:
foreign exchange rates was considered,
·· key macroeconomic data that could particularly the depreciation of foreign
impact our consumers’ disposable income currencies including the Russian rouble,
and consequently our sales volume Nigerian naira and the Swiss franc. Principal
and revenues; risk: foreign exchange.
·· key raw material costs;
Scenario 2: Lower estimates for sales
·· foreign currency rates; volumes were assessed. Principal risk:
declining consumer demand.
80 COCA-COLA HBC FINANCIAL REVIEW
MICHALIS IMELLOS
CHIEF FINANCIAL OFFICER
2018 INTEGRATED ANNUAL REPORT 81
SR
CG
FS
SI
+6%
by 0.9% in 2018 compared to the prior year,
on our cash deposits in the current low as increased operating profitability was
yield environment. offset by an increase in working capital.
On a comparable basis, the Group’s effective Capital expenditure, net of receipts from
tax rate was 26.2% for 2018 and 24.5% for the disposal of assets and including principal
COMPARABLE 2017. On a reported basis, the effective tax repayments of finance lease obligations,
OPERATING PROFIT rate was 26.6% and 24.5% for 2018 and increased by 13.0% in 2018 compared to the
2017 respectively. The Group’s effective tax
€681m
prior year and represented 6.4% of net sales
rate varies depending on the mix of taxable revenue compared to 5.8% in 2017.
profits by territory, the non-deductibility of
certain expenses, non-taxable income and We generated €370 million of free cash flow
other one-off tax items across its territories. in 2018, compared to €426 million in 2017.
This result reflects increased operating
COMPARABLE EBIT Comparable net profit increased by 6.8% profitability offset by higher working capital
and net profit by 5.0% in 2018 compared
MARGIN IMPROVEMENT and capital expenditure to support
to the prior year. The increase was primarily
+70bps
revenue growth.
due to higher operating profitability, partially
offset by higher net finance costs and Economic value
increased taxes.
Efficient use of capital and higher profits
resulted in an increase in return on invested
Dividend
capital (ROIC) from 12.4% in 2017 to 13.7%
In view of the Group’s progressive dividend in 2018. At the same time, our weighted
policy and the assessment of the progress average cost of capital (WACC) decreased
against the Group’s strategy, the Board from 7.8% in 2017 to 7.4% in 2018. We
of Directors has proposed a dividend of continued to grow the positive economic
€0.57 per share. This is a 5.6% increase value generated by our operations.
from €0.54 per share for 2017. The dividend
payment will be subject to, among other Financial risk management
things, shareholders’ approval at our Annual
With volatility in foreign exchange rates
General Meeting.
and commodity prices related to our
operations throughout 2018, our continuous
Balance sheet
and proactive financial risk management
Total non-current assets increased by €71 approach proved to be critical yet again.
million in 2018, mainly driven by purchases Financial market volatility in 2018 was
of property, plant and equipment for the evident in the second part of the year, mainly
year. Net current assets increased by €30 driven by geopolitical events like trade tariffs
million in 2018, as increased inventory and and sanctions.
investments in financial assets were partially
offset by payables relating to the purchase In terms of managing foreign exchange risk,
of own shares and increased taxes payable. the Group is exposed to exchange rate
fluctuation of the euro versus the US dollar
and the local currency of each country of our
operations. Our risk management strategy
involves hedging transactional exposures,
arising from currency fluctuations,
with available financial instruments on
a 12-month rolling basis.
Cash flow
2018 2017
€ million € million
CG
FS
The Russian rouble was particularly affected In early 2016, we issued a €600 million bond, SSR
in 2018, experiencing double-digit repayable in November 2024, at an effective
depreciation versus the euro and the US interest rate of 2.99%. This was utilised SI
dollar, but the existence of an active foreign mainly in the refinancing of the €600 million
exchange market and a prudent hedging bond maturing in November 2016. Our
strategy allowed us to mitigate a large part €800 million bond, with June 2020 maturity,
of the negative impact. The Nigerian naira is still outstanding.
was also affected during the year, though to We also have a €500 million syndicated
a lesser extent. We eased part of the adverse revolving credit facility, which was extended
effect by using mechanisms available in the until 24 June 2021. We have never drawn
local futures market. The overall negative down on this facility, which can be used for
impact of foreign exchange fluctuations general corporate purposes and carries
for 2018 was €51 million. This includes a floating interest rate over EURIBOR
€22 million of transactional impact and and LIBOR. Corporate income tax: 49.0%
€29 million of translational impact.
Withholding tax: 1.1%
In terms of commodities, the Group’s high Looking ahead Payroll taxes: 41.7%
VAT (cost): 1.3%
hedging coverage of aluminium exposure We will have less of a tailwind from economic Environmental taxes: 0.1%
proved very successful in counterbalancing conditions in 2019, however, we believe Other taxes: 6.8%
a large part of the price increase experienced we are well placed to manage this. Overall,
in April 2018. Similarly, existing hedges in fuel we expect volume to continue to grow in all Total tax by category
oil performed very well against the price three segments. We expect the Established
increase surges during the year. PET resin and Emerging market segment to grow at
prices were particularly strong in the late Taxes we contribute
a similar pace to 2018, while the Developing
summer of 2018, due to a combination of to our communities
markets moderate to a more normalised
rising oil prices and market-specific factors. pace of growth after a very strong year. When considering tax, Coca-Cola HBC
Careful inventory management and existing ensures that due consideration is given
contracts in place provided a partial offset Our revenue growth management initiatives, to the Group’s corporate and social
to these price spikes, as PET resin prices which are designed to grow revenue faster responsibilities, and the value it places
moderated in the last quarter of the year. than volume, should continue to enhance on earning community trust. More
We were also able to conclude a number the value we get from every case we sell. specifically, Coca-Cola HBC commits
of purchases of EU sugar in certain countries We will continue to take pricing where the to continue paying taxes in the countries
and take advantage of the lower prices market conditions allow it and to offset where value is created and ensures that
during 2018. foreign currency depreciation where it is fully compliant with tax laws across
necessary. We expect our plans to continue all relevant jurisdictions. In addition,
Our general policy is to retain a minimum to improve currency-neutral net sales Coca-Cola HBC commits to being open
amount of liquidity reserves in the form of revenue per case in the year. and transparent with tax authorities
cash and cash equivalents on our balance
On the cost side, we expect our input costs about the Group’s tax affairs and to
sheet. During 2018, we invested our excess
per case to increase by low single digits disclose relevant information to enable
cash primarily in short-term time deposits
on a currency-neutral basis and comparable tax authorities to carry out their reviews.
and money market funds.
operating expenses to see a further We support the communities in the
Borrowings reduction as a percentage of net sales countries where we operate directly,
revenue in the year. by creating wealth, and also indirectly,
Our medium- to long-term aim is to maintain
a ratio of net debt to comparable adjusted by paying taxes. These taxes include
EBITDA in the range of 1.5 – 2.0 times. corporate income tax calculated on
In 2018, we ended the year with a ratio of each country’s taxable profit, employer
0.61 times. Our funding strategy in the debt taxes and social security contributions,
capital markets involves raising financing net VAT cost and other taxes that are
through our wholly owned Dutch financing reflected as operating expenses. Excise
subsidiary, Coca-Cola HBC Finance B.V. taxes and taxes borne by employees are
In cases of subsidiaries with joint control, not included.
or countries where certain legal, tax or
market restrictions apply, financing at lower
levels in the organisation is considered.
We use our €3 billion European Medium
Term Note programme and our €1 billion
Global Commercial Paper programme as the
main basis for our financing. We endeavour
to maintain our presence and profile in the
international capital markets and, where
possible, to broaden our investor base.
Bonds issued: 1,395
We also seek to maintain a well-balanced
Commercial paper: 95
redemption profile. Finance leases: 66
Other: 48
SEGMENT HIGHLIGHTS
Established markets
2018 is the second consecutive year of growth in VOLUME VS. 2017
+1.0%
both volumes and currency‑neutral revenue per
case in the Established segment. We are pleased
to see continued momentum in low- and no-
sugar sparkling, and also in adults sparkling,
which is helpful for driving improved price/mix.
Our new launches like FUZETEA, Royal Bliss CURRENCY-NEUTRAL
and AdeZ have got off to a strong start. NET SALES REVENUE
PER CASE VS. 2017
SOTIRIS YANNOPOULOS
REGION DIRECTOR +1.1%
Developing markets
Developing markets delivered extremely good VOLUME VS. 2017
+8.8%
results this year with volume growth showing
strong acceleration. Crucially, we also saw an
improvement in currency‑neutral revenue per
case, which accelerated in the fourth quarter.
All categories saw broad-based growth aside
from ready-to-drink tea. CURRENCY-NEUTRAL
NET SALES REVENUE
PER CASE VS. 2017
NIKOS KALAITZIDAKIS
REGION DIRECTOR +2.8%
Emerging markets
Emerging segment volume growth accelerated VOLUME VS. 2017
+4.3%
in 2018 as ongoing strong momentum from the
medium-sized countries in the segment was
boosted by a return to growth in Russia. Nigeria
was the only country in the segment where
volume declined. We saw another year of good
currency-neutral revenue per case expansion CURRENCY-NEUTRAL
despite the headwind of lower premium spirits NET SALES REVENUE
sales in Russia. PER CASE VS. 2017
KEITH SANDERS
REGION DIRECTOR +2.4%
2018 INTEGRATED ANNUAL REPORT 85
SR
CG
FS
We continue to make good progress towards our 2020 targets. of currency-neutral revenue growth above the 4-5% target range SSR
Our revenue growth management initiatives, strong in-market combined with good margin expansion. The excellent execution
execution with greater sales capability and a record number of new across our markets is a testament to the dedication and hard work SI
product launches, supported by favourable economic conditions of all our people.
in most of our markets, resulted in the second consecutive year