Advancing Our Global Momentum

Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
Steve Cahillane, President and Chief Executive Officer, Coca-Cola Refreshments USA
CAGNY 2011
Bacon Raton, FL
February 23, 2011

Muhtar Kent:

Thank you, Bryan, and good afternoon, everyone. It's great to be back at CAGNY this year, and in the company of so many of our loyal investors, analysts, good friends, and colleagues. And for all of us who've been inundated with such an incredibly cold winter along the East Coast, it's especially nice to be down in warm, sunny South Florida.

I would also like to introduce my Coca-Cola Company colleagues who are here with me today, including:

•  Gary Fayard, our Chief Financial Officer,
•  Steve Cahillane, President and CEO of Coca-Cola Refreshments,
•  Sandy Douglas, President of Coca-Cola North America, and
•  Jackson Kelly, Vice President and Investor Relations Officer

Speaking of warm, sunny, safe harbors, here's some language I know you'll want to speed read.

Two years ago, when I was last here for CAGNY, I talked about how our Coca-Cola system was poised to come out of the global economic crisis from a position of strength. I talked about our efforts to accelerate innovation, leverage our geographic portfolio, and align our system around our vision for the future. I reiterated that our No. 1 priority was growing again in North America. And I said we would do just that.

Today, you're going to hear about a company and a system emerging from the gray clouds of a global recession from a position of real strength. I'll be taking you on a trip around the world, to share with you how we're advancing our global momentum and winning across geographies and across our portfolio. Steve Cahillane and I are also going to give you a look under the hood at the new powerful engine that is driving our business in North America. And, finally, I am going to show you how all of these developments are moving us closer to realizing our 2020 Vision.

So let me begin with our position of strength.

This year -- on May 8th to be exact -- we celebrate the 125th anniversary of one of the world's greatest consumer product innovations -- Coca-Cola. Over the past century and a quarter, we have built a global business system that is like no other in the consumer products world.

Today, consumers around the world reach for our beverages 1.7 billion times a day. You might recall that just two years ago, that figure was over 1.5 billion servings a day. If 1.7 billion servings sounds too large to comprehend, think about it this way -- around the world, we will sell another 70 million of our great beverages by the close of my presentation today. Every week, we proudly visit and serve 20 million customers with innovative, category-leading brands and services that deliver at the point-of-sale. Working with our nearly 300 strong global bottling partners, we've developed a powerful world-wide distribution system tailored to local markets, adapted to local conditions, and staffed by local leaders.

When you have a consistent vision... when you have a consistent belief in your brands and in winning... and when you have consistent execution -- the result is consistent, quality performance.

Since 2006, we've delivered unit case volume growth and operating income growth in line with or ahead of our long-term targets. This solid performance has resulted in our continued tradition of providing healthy returns to our shareholders. In fact, we've returned over $27 billion dollars to our shareholders since 2006. This year marks our 49th consecutive year of annual dividend increases. And this year, as we announced on our last earnings call, we are committed to buying back between $2 billion and $2 and a half billion dollars of shares.

Today, we are stewards of 14 billion dollar brands, including the world's most recognized brand, Coca-Cola. Just a few weeks ago, Minute Maid Pulpy emerged as our latest billion dollar brand -- a journey that began only five years ago in China. We've actually added 3 billion dollar brands in just the last four years... and stay tuned, as more are on the way.

Today, thanks to our shared 2020 Vision -- a vision that was co-created by leaders across our company and system -- we're more aligned with our global bottling partners than we have been in well over a decade. Coming together and crafting a shared vision has played a key role in advancing our system's momentum around the world.

And we are working closely together to leverage our combined scale to best manage our system wide procurement and commodity input costs. Speaking of commodities, I want to assure you that we are watching the recent rise in commodity costs closely and are actively taking the necessary steps and actions to manage this risk. And we will keep you well updated on our progress throughout the year.

All of our attributes:

•  a powerful system,
•  healthy brands,
•  strong financial performance, and a
•  clear vision --

have given us a position of strength from which to build upon as we push ahead to 2020.

Now, I'd like to begin our "around the world journey" to show you how we are advancing our global momentum.

We'll start first in Latin America, a region that continues to be among the strongest performing of all our geographies. Latin America's incredible love affair with our sparkling beverages is unequalled anywhere in the world.

For the past 10 years, our Latin America Group has added 175 million unit cases each and every year. That's the equivalent of adding a business nearly the size of Brazil - which is Latin America's second largest business - in just the past decade. Across the region, our volume share is up 3 percentage points since 2006 to 63 percent, while our value share is up 2 percentage points, to 68 percent.

As you can see, our still beverage business is also booming. Granted, it starts from a smaller base, but it is nevertheless growing at a very healthy clip. Our still beverage volume has grown nine-fold over the last 10 years!!

Two of our biggest growth stars are Jugos del Valle and Matte Leao, two recent strategic acquisitions. Del Valle is now the leading juice brand in the region, while Leao commands the number one position in the important Brazilian ready to drink tea category. Leao, a popular matte drink in Brazil, is also expanding to other nations in Latin America. We believe it has great potential across the region and even in other farther geographies.

Brazil, as you know, is a market of major importance to Coca-Cola. With Latin America's...
largest population,
largest cities,
strongest teen demographics
and most robust economy -- Brazil is simply a "must win" market.

Our System's investments in Brazil -- which continued during the country's financial crisis -- are paying off. Last year, our business in Brazil grew to 1.9 billion unit cases. Brazil is now our fourth-largest market globally. Per capitas are at 229, up over 70% from 132 in 1998. And we've grown our business 2.3 times faster than the nation's GDP since 2005. Most importantly, we've taken a leadership position across all major categories in Brazil. We're now over three times larger than our nearest competitor.

Now, let's move to the Pacific, one of the most dynamic and populous regions of the world. In the past few years, we've continued to invest aggressively across the region in

•  new plants,
•  R&D,
•  sales,
•  marketing and
•  infrastructure.

These investments are paying off as we experience strong sparkling and still beverage growth across many nations. In fact, over the last four years, we've seen our total beverage portfolio grow at a compounded annual rate of 15 percent in China... 14 percent in Vietnam... mid-single digits in the Philippines and Thailand, and 1 percent in Japan.

A great example of the progress we've made with our Still beverage portfolio in the Pacific Group, is the addition of our 14th billion-dollar brand -- Minute Maid Pulpy. This brand is unique to our portfolio of billion dollar brands in at least one important way. It was our first billion dollar brand launched from an emerging nation -- China.

What's equally impressive here is that it took just five years to achieve its billion-dollar status and continues to grow very rapidly.

Pulpy is also a great example of fast and effective innovation-transfer as it has spread from China and is now a premier juice drink brand in 16 countries around the world... and counting. Let me show you how we are marketing Minute Maid Pulpy with a diverse set of consumers through our television advertising. Please take a look.

I hope you will take the opportunity to try one of our Minute Maid Pulpy beverages during an upcoming break, so you can discover which type of Pulpy consumer you are.

Now, let's look at the main economic growth engine of Asia -- China. For the past seven years, we have outperformed the non-alcoholic ready to drink beverage industry in China. Today, we are two and a half times bigger than our nearest international competitor in China.

Since 2003, we have generated consistent growth, expanding our business by at least 100 million incremental unit cases each year. Despite this success, it's important to remember that China is a long-term growth story... and a long-term play for us. Our per capitas are 34, well below our global average.

We believe China is now in another phase of meaningful transition, and we are adapting our in-market strategies to ensure we remain well positioned to win in China between now and 2020. This past year we added over 150,000 new coolers, bringing our total cooler count in China to nearly 1 million. During the same time period, we grew our number of customer outlets by more than 330,000, bringing our total outlets to nearly 2.7 million by the end of 2010.

And, as the Chinese consumer demands increasingly varied and sophisticated offerings, we are innovating and introducing a wider variety of package choices that will drive increased transactions and build brand equity.

Not too long ago, people were trying to tell us that our business in Japan was drying up, and that sparkling beverages, in particular, had run their course of growth. That's clearly not the case. For the past four years, Trademark Coca-Cola has experienced 7 percent annual growth, driven both by Brand Coca-Cola, up 2 percent, and Coca-Cola Zero, up 27 percent. In addition, we are deepening our connections with Japanese consumers in the coffee segment, with offerings in standard, low-calorie and black coffee.

A great example of this connection is the advertising recognition received by Georgia Coffee as among the Top 10 most memorable of all advertising campaigns in Japan. It's the only beverage brand to be cited among the Top 10.

Another true barometer of a healthy business is the appetite for investment among our bottlers. In Japan, our system continues to invest for growth -- with our bottlers having already announced their intention to invest more than $700 million in capital expenditures in 2011 alone.

Now, let's turn to our business in Eurasia and Africa. Our broadest geography, with 89 countries, is experiencing strong sparkling momentum across the board, with Coca-Cola volume up 10 percent and Sprite volume up 15 percent for the Group in 2010. South Africa, Nigeria, Turkey and India are all posting strong growth.

One of the most exciting sparkling developments in the Eurasia and Africa Group is Russia's recent success with Brand Coca-Cola. Our flagship brand grew 26 percent in 2010, the largest ever single-year incremental volume growth for Brand Coca-Cola in that great big geography of Russia.

What's driving it?

•  Creative activation and commercial leadership.
•  Strong leverage of our FIFA sponsorship.
•  And better economic conditions.

Russia's success is really a model for growing Brand Coca-Cola and other sparkling beverages in markets throughout Eurasia and Africa. Let me show you a recent commercial for Coca-Cola in Russia that speaks to how we are connecting with a whole new generation of Coca-Cola consumers.

On the still beverage front, we're building a winning juice model through a strategy of new innovations... new extensions... new launches as well as new acquisitions. New innovations like Cappy Sherbet are fueling our still beverage business in Turkey. The beverage was recently awarded the best innovation in juice at the World Juice Awards.

Our success with Maaza in India is another great example of our extension strategy. Maaza now commands a 40 percent share of the fruit-based beverage market in India... the world's second most populous market. Its brand preference and brand love scores are the highest in India and among the highest in the world.

We've also introduced Minute Maid Pulpy, Minute Maid Nectars and Juice Drinks and Cappy Nectars to the continent of Africa. And we're very excited about our acquisition of Nidan and the growing juice market in Russia.

Building on the strong momentum of our sparkling portfolio and Maaza, India experienced double-digit compound annual volume growth over the past 5 years and 17 percent growth last year. In that same time, we've nearly doubled per capita consumption, to 11. And today, in India, we have four of the five top sparkling brands.

Now think again about those still very low per capitas and India's population of 1.2 billion consumers. Compare that to our global per capitas of 89. The runway ahead is enormous.

One of the most exciting developments for our company and system this past year was South Africa's hosting of the 2010 FIFA World Cup. Our World Cup sponsorship was a huge boost to Coca-Coca this past year, not only in South Africa, but in many nations around the world. We launched the biggest integrated marketing campaign in the history of The Coca-Cola Company -- one global campaign that we executed flawlessly in over 160 markets. We brought the FIFA trophy to 84 countries around the world... we commissioned K'Naan, the African-Canadian hip hop artist to create a World Cup anthem. We integrated music, social media and special events to celebrate the largest sporting event in the world. It had a viewing audience equivalent to 10 Super Bowls a day for 30 days and provided a tremendous brand building platform for us to engage effectively with our consumers.

We're building on that momentum to fully leverage UEFA, Europe's largest sporting event, next year, and then of course we are looking forward to the FIFA World Cup in Brazil in 2014 -- which will be a massive sporting event for Brazil and Latin America.

Let me show you a video that captures the magic and passion of the FIFA World Cup and its unique and powerful association with Coca-Cola.

Now, let's head into Europe. Like Japan, Europe was cited by many cynics not too long ago as a place of diminishing returns for sparkling beverages. Again, the reality is just the opposite. Even in the worst economic recession since the Great Depression, Trademark Coca-Cola is growing, driven by new recruitment strategies for Brand Coca-Cola... new innovative packaging designs and marketing for Coca-Cola Light... and the continued momentum of Coca-Cola Zero.

And no question, Coca-Cola Zero has had a transformative effect on our sparkling business across the European landscape. Coca-Cola ZERO was launched in Europe in 2006 across Germany, Spain, UK and France. The brand expanded quickly and is now in 35 countries in Europe.

And what was the impact? Over 40 percent of our volume growth in Europe over the past five years has been a result of Coca-Cola Zero's dynamism. About one third of Coca-Cola Zero's consumers are exclusive to the Trademark. This means that we added 8 million consumers to Trademark Coca-Cola in 2010 alone!

Our energy drink offerings are generating strong growth across Europe, up 25 percent this past year, driven by the performance of Burn. New extensions like Double Energy and Burn Juice have proven to be hits with consumers.

One of the brightest stars in our European still portfolio has been our RTD smoothie and juice brand -- Innocent. This past year, Innocent grew volume 13 percent, and gained share versus our primary competitor. This great brand - originating out of the UK -- is spreading across Europe as we expand smoothie beverages in France, Austria, Switzerland, Denmark and Netherlands. We are building on this momentum with the introduction of new packaging, including carafe packages, borrowing from our successful Simply brand strategy in North America.

Germany, of course, is a very important market for us in Europe. Our efforts to put Germany back on a sustainable growth trajectory have begun to bear fruit. Last year, we grew total volume, gained share across a broad range of NARTD categories, and saw solid improvements in both concentrate and bottling profits. These encouraging results follow the 2007 consolidation of the German franchise system within our Bottling Investment Group. We are also encouraged to see our Coca-Cola trademark brands extend their user base, growing at a time when Germany is still in the early stages of its macro-economic recovery. We are focused on recruiting the next generation of consumers with our new entry-pack offerings, all while managing double-digit growth in new brand offerings that cut across categories. There is no doubt, in Germany we are on a clear path of building brands, improving productivity and customer service while creating higher returns on our invested capital.

Now, let's turn our attention to our flagship market, North America -- a market which over the next 10 years and beyond will have some of the world's most attractive demographics. By 2020, the U.S. will add nearly 31 million people, and its teen population will also be around 31 million people, behind only China and India. When you factor in this growing, young, diverse and vibrant consumer base coupled with an innovation and entrepreneurial -based economy -- you can see why we remain very bullish on North America.

About 10 months ago, we began executing one of the largest vertical integrations in U.S. business history. Amid this huge effort, our North America Group delivered positive organic growth for each of the last three quarters of 2010. On a full-year basis our North America volume grew 1%, after excluding the benefit of new cross-licensed brands. We continue to grow volume and value share. Preference for our brands is increasing. And we are seeing stronger share in the very important Immediate Consumption channel.

Our plan for continued growth starts with our strong brands. Our focus is on accelerating growth and share within the Sparkling category, led by our flagship Trademark Coca-Cola. At the same time, we're moving aggressively to increase the value of our still portfolio, particularly in fast-growth categories. And we're beefing up our innovation pipeline to build and enhance our brands, packaging and equipment. Our success in growing our Sparkling category today depends on our ability to grow and connect with teens, the generation of tomorrow. Just as important, we will continue to talk with moms every day and remind them that our products go well with food, and that we have brands for every occasion and choice.

We will also continue to initiate promotions that resonate with consumers and motivate them to purchase our brands. For example, we will:

•  Own the 125 days of summer
•  Continue to remind our Diet Coke drinkers to "Stay Extraordinary"
•  Expand Coke Zero availability to build on our 19 consecutive quarters of double-digit growth, and
•  To grow multicultural teen loyalty with Sprite and Fanta
•  Looking at our still beverages in the U.S., our focus is on sustainably building industry-leading brands. We are also investing in capabilities to build a #1 position in categories of high future growth.
•  This strategy is already paying off. In 2010, our Simply brand grew 23 percent.
•  And since we acquired glacéau in 2007, our glacéau and Powerade businesses have worked in concert to consistently gain share. Today, Powerade has gained share for 9 consecutive quarters while vitaminwater is clearly positioned as the enhanced water category leader.
•  I hope you've had the chance to try our most recently launched vitaminwater flavors, Stur-D and Rhythm, available in our coolers in the lobby. And if you decide to head to the gym later today, I recommend taking a Powerade or Powerade Zero bottle with you to help replenish your body, regardless of what stage of exercise you happen to be in.
•  Now let me welcome Steve Cahillane, who will tell us a bit more about how we are leveraging our new integrated platform in North America to accelerate our leadership in this " must-win" market.

Steve Cahillane:

Thank you, Muhtar. It's great to be here today to talk about how we will advance our momentum in North America. I'm energized by our opportunities: Opportunities inherent in what is a growth market now and in the future. We are confident we have the brands, the operating model, the plan and the people to create sustainable and profitable growth both for us and our customers.

How will we do this? We will:

•  Grow our strong brands, as Muhtar just discussed
•  Translate this brand value into customer value
•  Develop an advantaged go-to-market approach
•  Earn pricing and grow share, and
•  Live Positively in all we do
•  Any conversation about growing our business, has to start with growing brand value. But that is not enough. We must enhance our ability to translate the value of our brands into value for our customers.
•  The integration of Coca-Cola's North American business allows us to build a more focused, value-driven selling process that takes our strong brands to market in the right way.
•   For example, we are creating more national customer teams that will provide "One Coca-Cola Voice" to our top customers and create clear accountability for results. Each team is cross functional, sells the entire Coca-Cola portfolio and is fully equipped to handle the ever-changing needs of our customers better than ever.
•  We also are creating "One Coca-Cola Experience" that we believe will better leverage our scale and represents an integrated point of view through joint planning and visibility to commercial strategies.
•  Imbedded in the "One Coca-Cola Experience" is a category advisory approach. This allow us to more systematically and consistently leverage best practices, drive deeper shopper insights and provide 365 days of value-added programming. Our vision is to create a customer experience they can't get anywhere else.

So we are growing our brands and translating brand value into customer value. But that falls short if we don't have the capabilities to deliver world-class customer service and in-market execution. Here again, we are investing in our capabilities; implementing best practices from our global businesses; and creating a disciplined, proven execution approach to create a distinct competitive advantage. This is allowing us to put more feet on the street, enhance our on-premise capabilities, and improve the commercialization of our new package architecture, among other things.

All of this is supported by a World Class End-to-End, Demand-Driven Product Supply System where consumers are the starting point. We believe our Product Supply System will unleash tremendous growth because, instead of having to weigh one benefit vs. the other, we are now seeing the power of "AND." Here's what I mean: We believe we can have:

•  Inventory Reduction "and" On-Time In Full deliveries
•  Cost Control "and" Superior Quality
•  Successful Launches "and" Decreased Breakage, Damage and Loss
•  Sustainability Improvement "and" Lower Cost
•  Supplier Quality "and" Greater Efficiencies
•  Associate Engagement "and" Operational Excellence

Executed well, this will help drive productivity across our system -- eliminating waste, driving increased returns on our capital and delivering better product supply planning and execution. And getting this right will help us capture at least $350 million in annual synergies by 2014. We expect to make significant progress by capturing $140-150 million of cost synergies in 2011.

As we focus more on brand value, customer value and customer service, we earn price realization. We believe a long-term strategic pricing/package approach is a critical way to drive both brand and customer value. It is part of a disciplined commercial strategy that ensures value translates through to overall category health -- with balanced volume, value and pricing growth.

As you see here, our strategy is working -- we are leading pricing up in North America while also growing both volume share and dollar value share. Now to be clear, traditionally, when we speak about share swing gains versus our primary competitor in North America, we refer to our performance across all channels, not just measured channels. After all, measured channels represent less than 40% of our North America business. However, the charts on both this and the next page are taken straight from Nielsen data to conform with how others in our industry have chosen to talk about this topic in recent weeks. But let me assure you, when taking a Total Market view, the trends you see on these pages tilt even more in our favor.

And regardless of what view you take, Nielsen or Total Market, what is undisputable is that we are growing Sparkling in both the Future Consumption and Immediate Consumption channels. That's because we understand the importance of creating strategic, segmented and occasion-based price/package strategies by category and channel.

We also understand that our pricing strategy can't stand alone. We will only drive sustainable and profitable growth when we think about enhancing brand and customer value holistically, through things such as:

•  Great marketing
•  Packaging innovation like our contour 2L bottle and our mini cans
•  Equipment innovations like Freestyle
•  Occasion-based bundles
•  Outstanding in-market execution
•  And of course, healthy and sustainable pricing

Let's look at our Still category and recognize what can happen when we build a leading portfolio of strong brands. Take Simply, for example. With Simply, we are able to leverage the strength of the brand to grow volume and value share. That's because it has great marketing support behind it, it's a product consumers love, and it's in a unique package consumers want. We are using this package innovation to build category value and grow our share profitably.

Our ability to grow value in both Sparkling and Still is only part of the story. Since 2006, we not only grew our business, but we helped raise the tide for the entire industry. In fact, looking back at the last five years, we can confidently say that our system drove total market Non-Alcoholic Ready-to-Drink consumer retail spend at almost twice the industry rate.

Let me be clear about one thing -- our price/package strategy isn't new, and none of this reflects a strategic change over the last several years. We are simply even more intent on executional precision. We are focused on great brands, capabilities and our customers because flawless execution drives sustainable results. And when I talk about flawless execution, I'm talking about things such as increasing cases on display, enhancing promotion activation in-stores, and more successfully getting the right packages into the hands of the right consumers at the right time. When we do this right, we earn price, not take it.

Our Product Supply System is not only a key driver of our business internally, it's the connection points to hundreds of communities across North America. To help promote our brands at the local level and protect what we call our social license to operate in the face of unfair legislation, our more than 60,000 employees in our more than 600 facilities across North America are actively engaged in their communities supporting local causes and events.

Through our Live Positively platform, Coca-Cola is establishing leadership as a corporate citizen as we strengthen our relationships with our communities. Just as importantly, Coca-Cola is dedicated to reaching important environmental objectives related to water stewardship, energy and climate protection and package sustainability.

Speaking of sustainability, this morning we announced a strategic partnership that will enable Heinz to use our breakthrough PlantBottle™ packaging technology. We believe PlantBottle™ will revolutionize food packaging the world over and is representative of the many sustainability initiatives we are focused on today. We wish our friends at Heinz the best of success with this innovative packaging.

North America is an important market for The Coca-Cola Company as we progress towards our 2020 Vision. I'm energized by our business here because we have the leading brands and the right customer-focused commercial capabilities and go-to-market approach that we believe will generate sustainable and profitable growth for Coca-Cola and our customers.

Before I hand it back over to Muhtar, I want to show you what we are doing with our Freestyle innovation. As you'll see, we are leveraging the outstanding innovation of Freestyle to grow brand value and create an exciting, compelling and unique consumer experience that is providing real value for our consumers and our customers. In fact, just this morning we learned that the National Restaurant Association named Coca-Cola Freestyle as one of its 2011 Kitchen Innovation award recipients. We are honored to receive this recognition and are excited about the future of Freestyle. Take a look at the short video about this innovation.

Muhtar Kent:

Thank you, Steve. And if you haven't already, I encourage all of you to visit our Freestyle dispenser in the main lobby out in the corridor. I am sure that within the 106 flavors available to mix and choose from, you will find a new favorite.

I hope by now you're getting a picture of a business, a company and a system on the move, both in North America and around the world.

This momentum has been influenced and guided by the same underlying assumptions we made when we first began our strategic renewal journey with our 2020 Vision.

As the world continues to prosper... as the global middle class continues to expand... as people continue to migrate to urban centers and lead highly mobile lifestyles -- we feel very good about the opportunities to provide the world with new moments of pleasure... for cents at a time... billions of times each day.

In fact, the trend line here for per capitas can only go one way. There are huge opportunities ahead of us in the emerging world as well as in more developed markets. Ladies and gentlemen -- we're only getting started!

So, as we mark the 125th anniversary of Coca-Cola, we see a company and a dynamic system defined by its youth and not its age. We are a growing company in a growth industry, with incredible opportunities. We see one unified global system, guided by the world's best people, aligned behind one solid and focused vision... and inspired by the greatest brand the world has ever known.

Thank you for your time and attention. Thank you.