Good morning, and thank you for being here this morning. 132 years ago, exactly on May 8, 18, 86, next month, the very first Coca Cola was poured, was sold and was enjoyed only a few blocks from right here. And from that first moment, that magic moment, our business, your business has grown to touch the lives of people in shining cities, large and small, in towns, in humble villages across more than 200 nations around the world. Why is that? It's because we sell simple, affordable moments of delicious refreshment and togetherness.
And from the start, from the very first beginning, we've been writing a story of refreshment, a story of increasing long term value for you, our shareowners, and those connected also to our business, other stakeholders. In fact, what you saw just now, you saw one of the ways that we're sharing this story in that video that just played. Last year in 2017, we also added another chapter, exciting chapter. James Quincy, our President and CEO, will share more about our strategies and more about our successes. But before he does that, I'd like to just spend a few minutes discussing how our approach, that inclusive approach, to long term value optimizes shareowner value over time.
This inclusive approach to value creation is nothing new, but it's never been more important than now. Today, people increasingly choose our brands not only for the quality refreshment in each bottle, each can, each cup, but also for the long term value model, which ensures that we create value for a host of stakeholders, starting with our employees, going on to our consumers, our customers, our suppliers, our bottlers, other business partners, non profit partners, public agencies, civil service organizations, communities and the governments that host us in 207 nations around the world. And we follow this approach. We opt to optimize long term value creation for you, our esteemed shareowners. And it is for the same reason, it is for the same reason that we often describe how we not only manage this business for the next quarter, but how we manage it also for the next quarter of a century.
This morning, let me just touch on each of these vital stakeholders that I mentioned. But first, let me start with you, our shareowners. In fact, if you are a shareowner, please stand up and give yourselves a yourselves a round of applause. Thank you. Shareowners, we know that we are working for you.
And every day, we look at our people, we look at our assets, we look at our brands, we look at various relationships and we make choices, hard choices to create shareowner value. And over the past decade, 10 years, we delivered more than $120,000,000,000 of share owner value with continued annual dividend increases and growth in our share price. We're also creating more value for people that reach out for our brands 1,900,000,000 times a day as we improve our portfolio, as we improved our packaging, innovate equipment, marketing and consumer engagement. And you can see this in consumer focused innovations like Coca Cola Freestyle, like Smartwater, like mini cans, aluminum bottles, Fairlife, Coca Cola Zero Sugar, which was embraced in more than 20 new markets just last year. And to optimize this value creation, we need a fantastic group of people making this business tick and work every single day.
And we do, we do have that. We're fortunate. We have a strong workforce, a diverse workforce of individuals contributing in their unique ways in their with their unique insights, experiences and know how. As leaders, we all need to help our people grow and compensate them in ways that reward and retain them. So I invite all our outstanding associates of our company to stand and be recognized for all that you do every single day, our associates.
Thank you. And since that critical year 18/99, we've had a critical symbiotic relationship with our bottling partners all across the world. Our success relies on their success and, of course, vice versa. And in recent years, we've been on a journey to reshape, reenergize our bottling system for optimal value creation, optimal value creation. In 2017, last year, we completed the U.
S. Refranchising process and now have a strong, well aligned bottling system right here in our flagship market. From late 2016, last quarter of 2016 through 2017, we also helped create larger, stronger bottling partners in 3 other critical geographies: Japan, China and Western Europe. This morning, here, we're honored to have with us a longtime senior leader from Swire, a great bottling partner with a distinguished long 146 year history, that company. In 2017, Swire expanded here in the United States and now they serve 13 states in the United States.
And in China, we have also they have also expanded. And now in China, in that critical market, we have 2, no longer 3, but 2 strong and well aligned franchise bottling partners in both Swire and Costco. So please welcome the Managing Director of Swire Beverages, Pat Healy. Pat, where are you? Thanks for being here.
Today, we're also very pleased to have with us a career system leader from Coca Cola European Partners, our largest revenue bottler in the world, Coca Cola European Partners, formed, as I said, towards the end of 2016. And Coca Cola European Partners, in short, CCEP, posted its 1st full year of operations in 2017, and they exceeded initial guidance in all key metrics. So please join me in congratulating the Chairwoman of Coca Cola European Partners, who is with us today, Sol Dorelle. Sol? Going on to our really other important stakeholder group, customers.
We want to we want the value growth. We want the value growth from of our brands to outpace other products and outpace other menu items with our customers. Because when we deliver more value, more incremental value, we open up new opportunities for our customers and for ourselves. Today, we're very proud to be joined by 2 iconic customers of North America Foodservice. Incidentally, North America Foodservice Division won our highest most esteemed team award in 2017, the Woodruff Cup.
I'll start with one of our oldest and best customers in our Atlanta neighborhood, The Varsity. Everyone knows The Varsity. We have been growing together with Varsity for the last 90 years, 9, 0. And since that it's amazing that it's been 90 years since that famed drive in was founded by Frank Gordy back in 1928. No wonder there's a popular belief actually here in Atlanta that there's a pipeline that actually carries Coca Cola Syrup from our headquarters just here all the way to the varsity.
And today, I can confirm that that story is absolutely not true. So please welcome Varsity President, Gordie Muir and Vice President, John Brown. They're both here. Thank you for being here. Thank you.
For 50 years, 5 decades, another Atlanta based restaurant has been serving up the meat to people looking for something different and something delicious. And in 2017, they made a critical decision. They chose to make the move to Coca Cola. And we couldn't be more excited to begin refreshing diners across 3,200 RVs locations. So please welcome the leader of this terrific new customer, Paul Brown.
Thank you, Paul, for being here. I told Paul this morning that it's the first time I've seen him since he's made that decision. So thank you. Thank you again. As we grow, we also create more value for others who help us succeed from fruit farmers to coffee growers, ad agencies, suppliers, packaging suppliers, other suppliers.
We also work with many partners beyond business. We work with the Olympics, with Special Olympics, to public agencies, foundations, universities and more. Our work together brings a new shine to our brands as we celebrate the inclusive spirit of sport, protect the environment and advance the well-being of communities, which we proudly serve around the world. And today, we're joined by an important partner, an NGO partner that's helping us in many ways to drive our drive to replenish, our goal to replenish 100% of the water we use and reach our goal. Actually we've achieved our goal 5 years ahead of schedule in 2015.
So now we're not only water neutral, but we are water positive. So please welcome from the World Wildlife Fund, Sheila Bonini and Judith Hochhauser Schneider. Thank you for being here. Thank you. Thank you for being here.
We also know that we can't have a strong business that's growing unless we're serving strong growing communities. And much of the public good we do comes from the economic value that we create. We also generate community value by improving access to medicine, access to education, to sterile and clean drinking water and also access to job opportunities around the world. And one such signature program is 5 by 20, to create 5,000,000 women entrepreneurs in the world by 2020, the largest program of its kind undertaken by a commercial enterprise in the world. And our decade long commitment is to enable the economic empowerment of those 5,000,000 women entrepreneurs.
That commitment goes from 2010 to 2020 with training, with mentoring and also giving them access to microcredit. And we've now reached 2,400,000 women, and we're on track to create 5,000,000 women entrepreneurs by 2020. And we couldn't do this without partners. And today, we're joined by a partner that we've been privileged, I've been privileged, we've been privileged to work with on 5x20 and other efforts to empower women. Please join me in welcoming Milan Ambassador Milan Gervir, my friend, Ambassador Milan Gervir.
Another such effort is the Coca Cola Scholars Foundation, created by our bottling partners here in the United States and the Coca Cola Company in 1986, at the time of our centennial. And to date to this date, that program has provided more than $70,000,000 in scholarships to 6,000 exceptional young students. Last week, James and I visited with the 30th class of Coca Cola Scholars and we couldn't have been more proud to see the excitement in the faces of the young scholars going to university and also what those young people and all they're doing to make the world a better place. So please welcome the Scholars Foundation President, Mark Davis, who's with us here and also the incoming President, Jane Hale Hopkins. Thank you again, Mark, for all your efforts and congratulations and best wishes for continued success, Jane.
Thank you. We also have 3 amazing scholars who've graduated some time ago, and they are holding very important positions today. There's with us Napoleon Rutledge, who's now the Senior Vice President of Finance at Genuine Parts Company. We have Jamlik Omare Johnson, who is the Chief of Radiology and Imaging Sciences at Emory. And we have Katina Sagares, who is a professor at Emory University Hospital.
Please, would you head up so we can recognize you? Three scholars, and look at where they are today. Again, we really sincerely appreciate all the wonderful partners that are here with us today. Thank you again for coming. Let's give them all another round of applause.
Esteemed shareowners, on behalf of our Board of Directors, thank you for your investment in The Coca Cola Company. We remain steadfastly committed to long term sustainable value creation for you and all those that are connected to our business. And lastly, I want to mention one other noteworthy accomplishment, last year's smooth and successful CEO transition. James has hit the ground running as we knew he would, and I'm committed to supporting him in every way possible as Board Chairman. Now speaking of James, ladies and gentlemen, please welcome the President and CEO of The Coca Cola Company, James Quincy.
Thank you, Mutar. Thank you, everyone, for being here today. Just a legal note, the few slides that I'm going to use today have been posted on the Annual General Meeting website. So over $120,000,000,000 of shareholder value in the last 10 years. That truly is the power of the Coca Cola system.
And, and we're still growing. As you may have heard in the earnings call yesterday, organic revenues were up again. Unit case volume was up 3%, led by trademark Coca Cola with a healthy 4% globally. Our evolved approach to Coca Cola 0 Sugar delivered double digit revenue growth last year. We've lifted, shifted and scaled some of our most successful brands like Smartwater and Fuze Tea to capture potential around the world.
We've acquired new brands like Topo Chico, premium sparkling water, because we know what people want are more drinks that reflect local tastes. So we even recently introduced Coca Cola with California Raspberry and even hometown Coca Cola with Georgia Peach. There may even be a few around in the building. We've also put some strong leaders in. We've put some new business metrics in place, including on sustainability to ensure we're doing business the right way, not just the easy way.
One example of that is a world without waste, which is our goal to help recycle one bottle or can for every one we sell by 2,030. It's simply the right thing to do for the world and for our business. These are just some of the actions we've taken in response to a changing world. And there are, frankly, many more to come. As we look forward, the pace and the magnitude of change means we must continue to adapt even more quickly than before.
So with that in mind, let me perhaps share with you a glimpse of what 130 years of change and opportunity have looked like with this short video. So, in fact, a lot has changed. Some of the dress sense, perhaps for the better. But remember when the Jetsons were the future. I mean this is now our reality.
Today we video chat, we pay bills, we even buy groceries with our smartphones. George Jetson frankly would have been jealous. This new world though expects more of us. Consumers expect more of us. Investors expect more of us.
Our associates expect more from us. And our business has always been at its best when we have created shared opportunity and driving growth. We are in a very attractive industry, an industry that ultimately is full of opportunity. And there's much more room to grow for those that are willing to evolve and adapt. Our industry enjoys strong growth rates relative to other consumer products businesses.
It's highly diversified across sales channels. And frankly, that's an advantage. As industry leader, we're in the best possible position, not just to weather the storms, but to capture the growth that's ahead. To do this, we built the 5 strategies that I shared with you last year. And we're confident that these five strategies are the right ones for the changing world.
1st and most important, our business has to start with a passion for understanding what people want and giving it to them. It's that simple. Whether people want drinks with less sugar, more organic ingredients or fully recyclable containers. What people want is at the heart of our strategy to succeed. But knowing what people want is only the beginning.
We must also have the discipline to turn that knowledge into brands that people love, brands they come back to again and again, brands they share and remember. So to do that, we've developed the discipline of building these brands that will turn many of our beverages into household names. To grow each brand to its fullest potential, we've segmented our beverages into a portfolio of places where we're exploring, places where we're challenging and those that are leaders. Each brand will have a different strategy to make it succeed depending on where it is in its unique lifestyle. This is what will set each one apart.
This is what will bring people back again and again. We're working to become part of people's everyday routines. Throughout the day, we want more people to choose our brands more often. And we've developed a proven model for building and scaling brands globally. So frankly, we're not reinventing the wheel each time.
So for example, if Brazil has figured out how to build a great brand, let's see whether that approach works in other places. Let's move fast, test and learn, test and learn even more until we get it right. So in addition to passion for consumers and unbeatable brands, we actually also have something else. We have the Coca Cola system advantage. At the heart of that advantage is our world class bottling partners and our deep customer relationships.
These are the things that put our brands in the hands of more people than anyone else can do. And with more than 500 brands and operations in nearly every country on earth, our total average advantage, it lets us lift, shift and scale successfully from one country to another with speed. I mentioned earlier a few of the recent examples: Smartwater, Fuze Tea. Let me add Ades, which is a plant based drink from Latin America. In 2015, Smartwater became one of our $1,000,000,000 brands, and yet, it was only in 3 countries at the time.
We've gone from those 3 countries to 17 already this year with more on the way. That brand's global potential is truly immense. Fuze Tea. Fuze Tea has gone from 49 countries at the end of last year to 86 countries today. The single day launch of Fuze Tea in Europe was executed on a scale perhaps unprecedented in our history.
Also making its way across the Atlantic, we've taken Addis, a plant based drink company, to Western Europe, And we're tailoring the brand and the products within them to fit each country's local tastes. We know. We know these are the right strategies for the changing world we face, yet none of this would be possible without tapping into the passion of our people. So to do this, we're building an inclusive culture of curiosity and empowerment so new ideas can become a reality quickly. We strive for progress, not perfection.
And we will reward those who contribute most to the work that matters most. The results of this strategy for disciplined growth in a changing world are top line revenue growth, increased opportunity and shared opportunity for all. Today, we talked about our work on water leadership, women's empowerment, reducing sugar and a world without waste. Shared opportunity also means creating local jobs and economic advancement, showing compassion in times of crisis, giving people the brands they love from a company they trust, creating sustainable long term value for our bottlers, customers and you, the share owners. Being ultimately a company where people who want to make a difference come to work.
Shared opportunity is the key to unlocking the growth we know this great company is capable of. That's our commitment to you. So welcome to the rest of the Annual General Meeting, and thank you.
Ladies and gentlemen, the business portion of our meeting will now begin. So will you please welcome back Chairman of the Board, Muhtar Kent.
Now I would like to formally open the business meeting. Today, we will address 3 business items that are detailed in your proxy statements. And following that, I will conduct a question and answer session in which we will address questions about any of these items, the 3 items or other business issues that you may wish to raise. Let me first welcome the people joining me on the dais this morning. James Quincy, President and Chief Executive Officer, whom you've already met Kathy Waller, our Executive Vice President, our Chief Financial Officer and President of Enabling Services Bernard Gutfeld, our Senior Vice President and General Counsel and Jennifer Manning, Associate General Counsel and our Corporate Secretary.
And now I extend a special welcome to our Board of Directors who have joined us this morning here. Bios for all Director nominees are included in your proxy statements beginning on Page 19. I will ask each of our directors to stand as I mentioned them, and I will ask you please to hold your applause until they are all introduced. I'm going to start with Herbert Allen. Please hold your applause.
Ron Allen no, no, please stay standing, please. Ron Allen, Mark Boland, Richard Daley, Barry Diller, Helene Gale, Alexis Herman, Bobby Kotick, Mel Lago Massino, Sam Nunn and David Weinberg. And I'm very pleased to welcome our newest Director nominees, Carolyn Tsai and Chris Davis. This is a very capable group of directors and I believe they are a model for dedicated and effective Board leadership. They provide company leadership with thoughtful guidance, always with the highest integrity.
We are thankful for their service and dedication to our company and to you, our shareowners. We also have representatives from our independent auditing firm Ernst and Young here today, who I will ask to stand now. Please give them a hand. Thank you. Finally, I know we have many of our long term shareowners as well as employees and alumni here with us.
I extend once again a very warm welcome to all of you. Before we begin with today's business, I welcome you, our shareowners, to stay and enjoy the world of Coca Cola today with our compliments. This wonderful facility here will open up to you shortly after the conclusion of today's meeting this morning. Now on to the voting matters. In the packet on your seat, you will find an agenda for the meeting and our proxy statement.
These will serve as your road map to the business items we will be discussing today. Also in the packet are our meeting procedures and also rules of conduct. Here's how the meeting is going to flow. Our Corporate Secretary, Jennifer Manning, will present each of the 3 proposals, the management proposals. After each proposal is presented, I will present our Board's point of view and recommendation.
Then after all three business items have been presented, we will conduct a Q and A session and address as many questions as time will allow. Jennifer, would you please bring us the Secretary's report?
The notice for this annual meeting and its related proxy statement were mailed beginning on March 8, 2018, to all shareholders of record as of February 26, 2018. Our inspectors of election from Computershare Trust Company N. A. Advised that we have a quorum represented by 86.94 percent of the total shares eligible to vote. The polls are now open.
There are 3 matters to be voted on. On Page 7 of the proxy statement, you will find a roadmap of the voting matters. If you need a ballot, please raise your hand now. But remember, you do not need a ballot if you have already voted. The polls will be open until the end of the Q and A session, at which time ballots will be collected.
Jennifer, would you now please present the first matter to be voted on?
The first matter is the election of directors. The company's bylaws require that every director stand for election each year. Therefore, all of the director nominees listed in your proxy statement are nominated for election for a 1 year term expiring in 2019.
Thank you, Jennifer. As I said earlier, our knowledgeable and engaged Board is one of the best in the business world. Our director nominees are highly qualified to represent the interest of our shareowners. The governance section beginning on Page 14 of your proxy statement provides detailed information about this item, including each director nominees qualifications. There is a recommendation to vote for each director nominee.
As I explained, I will take questions on this and also any other matter during the Q and A. Now, Jennifer, could we go to the next item?
On Page 45 of your proxy statement is item 2, which is an advisory vote to approve executive compensation. As required, the company seeks a non binding advisory vote from share owners to approve the compensation of the Company's named executive officers as described in the compensation discussion and
We take the say on pay vote seriously, very seriously and regularly engage with shareowners on this topic as part of our long standing shareowner outreach program. The compensation committee will continue to consider the outcome of the advisory vote when making future compensation decisions. The Board of Directors recommends a vote for executive for approving executive compensation. Jennifer, would you present please the 3rd item?
Our Audit Committee has appointed the firm of Ernst and Young LLP to serve as the company's independent auditors for the 2018 fiscal year, and this item seeks ratification of this appointment. The Audit Matters section of our proxy statement, which includes this proposal, begins on Page 84.
The audit committee and the Board believe that our auditors Ernst and Young serve the company and shareholders well and therefore recommend a vote for the ratification of its appointment. Since now all voting matters have been presented, that concludes the business portion of our meeting today. The polls will officially close at the end of the Q and A session. If you have completed a completed ballot, please raise your hand and someone will come and collect it. Before we begin our Q and A session, I will ask Jennifer for the preliminary voting report.
Jennifer?
Thank you. The following vote is preliminary. If you are voting here today, your vote will be tallied this afternoon and included in our final vote. And as Muthar said, the polls will close after the Q and A. The inspectors of election report that each nominee for election as Director has received at least a majority of the votes cast in favor of their election.
Therefore, all of the director candidates have been elected to serve as a director until 2019. The advisory vote to approve executive compensation has been approved with an affirmative vote of 96%. The management proposal on the ratification of Ernst and Young as auditors has been approved with an affirmative vote of 97%. That concludes the preliminary vote report.
Thank you, Jennifer. And we will now turn to the Q and A session. I will take questions from the floor and also questions that are submitted in advance on our website. Microphone attendance will help me select attendees wishing to address our meeting. The microphone attendants have numbered paddles for each section.
Can we have paddles? There they are. When the Q and A session begins, if you have a question, please raise your hand, but please remain seated. Please wait for the microphone attendant to call on you before proceeding to the aisle at the end of your row because this will avoid too many people standing and blocking the view of those behind you. Produce please your admissions cart for the attendant who will introduce you or the share owner that you are representing.
At that point, please proceed with your question. Please direct all questions to me as Chair of the meeting and either James and I will answer your questions. Questions will be limited to 2 minutes each. We are using a clock to keep us all aware of the time. You'll hear a chime when your time is up.
If you go over your allotted time, I'm going to ask you to please finish your remarks and sit down. And if you disrupt the meeting, I will ask you to leave the facility. Those are the meeting procedures. We welcome questions or comments about any of the voting items we just covered or the general business affairs of the company. Please again keep your questions and limit your questions to 2 minutes.
So I'll go for the first question to yes.
Mr. Chairman, this is Jack Arougheti. Good morning, Mr. Chairman. Good morning,
Jack. It's good to
see you again, sir.
Good to see you.
I'm a long time shareholder of the company and I've always been very impressed and frankly proud of the Board of Directors of The Coca Cola Company. Proud of you because of your success in business both inside and outside the Coca Cola Company and even prouder because of your societal contributions in public service all around the world. And that goes for the impressive 2 new Board members as well. Congratulations to each of you. There is a higher calling with everything that is Coca Cola.
My question, sir, has to do with the size of the Board of Directors. This year, there'll be 16 Board members. In 1985, I believe that number was 14. In the year 2000, I believe the number was 12. Why is 16 the right number for this year?
And do you anticipate any change or what could change that going forward? And then lastly, if I may, I'd like to thank you, sir, for your continuing service, commitment, performance and dedication to The Coca Cola Company and in fact,
the global Coca Cola system. Thank you, sir.
Thank you. Thank you, Jack. Thanks for being here. Thanks for being a shareowner. I think there is no right number, first.
It's a constant evolution. If you look at the last few years, there's been 10 new directors that have been elected. There's been rotation of the Chairs of committees. As you mentioned, there's 2 new directors joining the Board now. We've had a new independent lead director again over the last few years.
The tenure has gone down from double digits to single digits now, high single digits. So it's a constant evolution. And there is no magic number. And that's really what I would say. The most important thing is that we have a group of highly capable, very knowledgeable and engaged directors.
Thank you for your question. One over here.
Mr. Chairman, this is Bud Bolan.
Hi, Muhtar. Hi.
I've read about your new products in Japan that contains alcohol. And it seems particularly noteworthy given that it is our first move into an alcoholic product. One analyst called it more evolutionary than revolutionary. And I understand that it is still a test product, but are there broader implications?
Thanks for the question. Japan is a very special market. It's a market where probably the portfolio has grown to a very large number and a diverse portfolio of brands and products before anywhere else in the world. And James often talks about Japan. You're referring to the product Chu He that was recently introduced there.
And I'll ask James to comment further on that introduction and your question.
Yes, thanks. Great question. Yes, as we've gone from 1 original product to 3,500 or so products now, We've clearly ended up with some that are mixed with adult beverages. And in the case of Japan, we started to experiment because in the end, we are trying to follow the consumer. And in the case of Japan, this is a relatively well developed segment of low alcohol.
Also in the context of Japan, the people we compete with are not just non alcoholic beverage players, they also compete in these low alcohol categories, actually they were also brewers. So the competitive spectrum, the customer channels, the drinks are sold through, and ultimately where the consumer is, is part of the makeup of the Japanese business. So we decided to experiment. I think the best way to take it is of a more bold approach to experiment on the periphery of happiness in this, not that that necessarily will become the majority, but it will help us better define what are the biggest opportunities for us.
Thank you. Thank you, James. Any other questions?
Mr. Chairman, Ron Oswald.
Yes. Good morning.
Good morning.
Good morning, James. I represent, as you know, a federation of workers present in 128 countries and territories and thousands of Coca Cola System workers. Since 2,005, we've worked with the company very closely to remedy human rights issues throughout that system and pleased to do so. And it's sad in a way that I'm here for the first time publicly to raise some issues at the shareholders meeting. We're even mentioned in the Human Rights report, the first stand alone report you released last year.
And that standalone report begins, I think, with the statement that James makes in the forward about our 800 factories and our 700,000 plus people. On Page 8, however, it becomes clearer that more than 90% of those 700,000 people are not directly covered by the report. They work in fact in the system. So the report is a little misleading, if I may say, at times. But you have great leverage on that system.
You have to concentrate the marketing equity, sometimes significant investment, €500,000,000 in Indonesia, for example. And with that leverage on the system comes great responsibility. And I think it's in that area that we feel that we need to raise with the company the need for it to pick up its game just a little. In Indonesia, for example, the company is complicit in its bottle of support for a legacy structure inside the company that is a legacy structure from the repressive regime of Suharto. In Haiti, there are some real issues.
In the Northeast USA also there's some issues around access to rights. And in those circumstances, it's as though kryptonite has fallen from the heavens and the company becomes enfeebled and unable to exercise the leverage that it has and it should exercise. So my question today is how and when will those 90% of the 700,000 workers have access to the admirable words in the Human Rights Report? And how and well will the company come up to the plate and ensure that they do. Because for now, for those 90% of workers too often, access to the rights in your report are like jam or as you would say in this country, jelly on the elbow.
They can see it in the report, they can smell it in your pronouncements. But like jam on the elbow, they cannot frankly taste it. Thank you.
Thanks, Ron. First, thanks for being here together with your colleague, Burju. And first, let me just say we have enjoyed working with you, collaborating with you over the many, many, many years. And I want to congratulate you on your recently announced transition. Welcome to the club.
And before I ask James to respond, let me just emphasize how much we respect human rights and workplace rights. I want to state that categorically. And also to say that we are one of the largest private employers in the world as a system with our bottling partners, some of who are represented here today, 700,000 plus employees across 207 Nations and always striving to be not just a large employer, but a good employer, one of the best employers in the world. We strive very much every day to be that. So in related to don't think we can address specific issues at our AGM here.
I know we're working and discussing with you those matters, but I'll ask James to continue to comment.
Yes. Thanks. Good to see you again, Ron. Yes, I mean, we're aware of some of the labor issues that you've mentioned, including Indonesia. And I know some of them or all of them are going through various channels towards resolution as they should do.
Muhtar mentioned, it would probably be inappropriate to discuss each one specifically in the Annual General Meeting. I think it's worth also saying a couple of things. We work very closely with our bottling partners. We have influence. We use our influence.
Our position on human rights and workplace rights is very clear. The bottling partners share the sentiment. Ultimately, we can't dictate to them their decisions. I know sometimes we disagree. They disagree with the outcome of certain things and that's what the arbitration and the resolution processes are for.
But let me again underline, we understand the problems. We hope to continue to work with you and the bottling partners towards resolution. But let me finish by saying we're absolutely committed to human rights and workplace rights.
Thank you. And let's get this fixed.
Thank you. Thanks. Thanks very much. Number 3.
Mr. Chairman, this is C. K. Hoffler.
Thank you, Mr. Chairman, President Quincy, members of the Board, members of the Executive Committee on the dais and the shareholders. I'm C. K. Hoffler.
I'm a trial lawyer. I'm representing Reverend Jesse Jackson. Reverend Jackson couldn't be here today because he's at another shareholders meeting in Charlotte, he wanted to bring his greetings and he was very specific in the message that he would like me to deliver, which is always, as you know, a message of inclusion. I've been Reverend Jackson's attorney for 30 of the 31 years that I've been in practice as well as Rainbow Push. He has three comments.
Firstly, he would like to congratulate The Coca Cola Company for its ongoing efforts to enhance the numbers of bottling partners that you have. He particularly references the success story in South Africa. He wants to continue this trend. But as usual, as always, he does want to applaud the company for the good things that are done. And so he wants to applaud the company again for their efforts internationally and domestically and enhancing the numbers of bottlers that are black and brown, as Reverend Jackson likes to say.
Secondly, the second point he wanted to make, he would like to encourage The Coca Cola Company to enhance the number of professional service industry individuals that are Black and Brown as a message of inclusion, encouraging The Coca Cola Company to work more with minority Black and Brown in particular, professional services professionals, if you will, such as financial industry individuals, legal community, accountants and others. That's a very, very important point that Reverend has asked me to make. We spoke at 6 o'clock this morning. And the third point that Reverend Jackson would like to make is we like the company to encourage the fairness with its employees within the company. And as it relates to the last two points, if you could comment on the company's actions or plans to address those issues?
Thank you.
Thank you very much, Ms. Hoffman. And first, let me just state by saying how much we respect and admire Reverend Jackson. And I just want to last time, we spent a lot of time traveling in Africa together to Rwanda and other countries, and I always learn from him when I'm with him. And those are important points for us.
Diversity in our bottling partnerships And with the refranchising of the United States, we've partnered with some African American partners, new here in America. We're proud of that. We have we always strive to be fair and be inclusive and with diversity in terms of suppliers and service providers always. And we often also get guidance from yourselves in this area. And fairness in terms of employees, always, we strive.
We're not always perfect, and we're always ready to improve and learn. But we strive for that all the time. And in terms of Africa, yes, we are committed to Black Economic Empowerment in our new Africa joint venture. We've partnered and committed to certain thresholds in that respect with the government of South Africa when James was down there. I know he had those discussions and commitments made.
And we are on the path to refranchising that portion of that large portion of geography as we speak, and we will make sure that we adhere to our commitments or surpass them in that area. And if James wishes to add anything
in this area? Maybe just a couple of comments. Firstly, in terms of multicultural or minority procurement here in the U. S, I mean, globally, we seek to be inclusive in the supplier base that we get either inputs from or services from. And we have a very specific program here in the U.
S. For our North American into the servicing. So that's an ongoing program. I'm sure one of our people can talk to you about that. The second one is in terms of the workforce itself, particularly in a number of parts of the world, including the U.
S, inclusion and diversity is something that is very clear that we need to make further progress. We track it carefully. We have clear metrics. We have made further progress here in the U. S.
Over the last few years in terms of both multicultural and in terms of gender. We're not where we want to be. We know we're ahead of the market, so to speak, in the benchmarks, but we're not where we want to be. And there's more work to be done.
Okay. Thank you so
much.
I think now what we'll do is take a question submitted in advance via our Annual Meeting website. Jennifer, could you read the question that was submitted in advance?
This question was submitted by Bradley Hale. I would like to ask Mutar if he thinks the trade issues are normalizing and if there are still issues with aluminum or other commodities that may be a problem for Coke?
Yes. Volatility is the name of the game. That's what the environment we find ourselves in, and that's how as a company and James and his leadership team operates, control what you can and keep going forward. And I think everything we read right now, we're in a situation where things are not as bad as we read them to be and things are not as good as we would hope them to be. I think that's the kind of environment that we're in.
And I think the commodities environment remains to be pretty it's not as benign as it was maybe a year and a half, 2 years ago, but it's still controllable and we have many contracts and many supplier partners in place that give us confidence that we can continue with our bottling partners to operate in a fairly sane way forward. I wish I would I knew what the next month or 2 or 3 will give us and tell us about the trade environment or the commodity environment, it is one of or the currency environment is one of constant volatility. But I can assure you that we have we're one of the global companies that do the best we can to operate in this environment. Thank you. Number 6 in the back there.
And then there was a question upfront here too, right? We'll come to number 2. Yes. After that, we'll come to number 2. Yes.
Mr. Chairman, this is Nikky Ford.
Hi. My name is Nikky Ford, and I'm speaking on behalf of People For the Ethical Treatment of Animals' Founder and President, Ingrid Newkirk, a longtime Coca Cola shareholder as well as PETA's 6,500,000 supporters. Coca Cola's continued sponsorship of the Iditarod is indefensible. Whether this supports originates on a local level is irrelevant since the endorsement reflects poorly on Coke's entire brand. More than 150 dogs have lost their lives to this deadly spectacle.
And that number does not include the countless others who have died during training or were chained up outside in extreme weather or who were killed simply because they were not deemed fast enough. Dogs used in the Iditarod are forced to run approximately 100 miles a day days on end. Their feet often get cut on ice and become bruised, bloodied and raw. Many pull muscles, incur stress fractures, develop pneumonia or suffer from viruses or bleeding ulcers. Up to half dogs who start in the inhumane race didn't finish.
Just this year, at least 350 were dropped from the event likely as a result of illness, exhaustion or injury. One of them, blond, died later of aspiration pneumonia, meaning that he probably choked to death on his own vomit, a common cause of death in this type of race. 5 dogs died last week as a result of last year's race. Major brands including Costco, State Farm, Wells Fargo, Maxwell House, Neste, Pizza Hut, Rite Aid and Safeway have cut ties with the Iditarod because supporting such an obviously cruel industry is both unethical and bad for business. Consumers don't know the difference between Coke the corporation and its independent bottlers.
When members of the public see Coke as an event sponsor, they associate the brand with the Iditarod's cruelty. My question is, when will Coke stop supporting the abuse of dogs and withdraw its sponsorship from the deadly Iditarod? Thank you.
Thank you, Ms. Ford. First, let me just say our bottlers have a history around the world of supporting activities that reflect pride and heritage of local communities. We are a global and local business at the same time. And in Alaska, the specific issue you mentioned, we've the local distributors have sponsored the race that you mentioned for many years in compliance with our animal global animal welfare policy.
Now this requires event organizers to provide ready access to quality veterinary care and to establish their own policies and ensuring humane treatment of animals. So that's what I can say. James, you want to add anything? No. And we strictly the distributors strictly do this on a local basis and they are in compliance with that policy that I have mentioned to you.
And it is clearly a very, again, local event just for those communities few communities in Africa in Alaska, I'm sorry. Please.
Mr. Chairman, this is James Cook.
Good morning. Good morning, Mr. Cook.
The Coca Cola Company's name is a well established respected brand. That's been created after many years of hard work. I just want it to be possible to have the name of The Coca Cola Company appear on all of its products where it can be easily seen. I see products every day in the stores that I know are made by Coke, but it's not obvious to me the name is there. One that comes to mind seems to be Minute Maid.
I don't see Coke's name on that very easily. That's just one. And one comment to the gentleman over here that said this was our first venture into alcoholic beverages. I would just like to correct that I'm old enough to remember the Taylor Wine Company. So this is not the first venture.
Thank you.
Thank you, Mr. Cook. Thanks for being here. Thanks for being a shareholder for so many years, and thanks for your question. James, do you want to address the question on the name?
Actually, it is on the Minute Maid, but I agree it's pretty small. What we do around the world in each country and in each brand, we make a consideration of what information needs to be put on to the product. Clearly, the number one objective is to represent the brand that's in the bottle and to do justice to that brand and the connection consumers have to that brand, plus all the legal information required in whichever country. So there is a consideration of aesthetics going on here. And then in some countries, in all honesty, they want to they need to stamp a seal of quality to put product to the Coca Cola Company on it.
In other countries, it doesn't have so much relevance to consumers. So we work out what is it that's going to optimize the connection with the consumer for that product in each of the countries. So you see different treatments in different places now. Technically, they all say product of the Coca Cola Company is somewhere on them because that's part of the legal information. But how visibly on the front it is, is a question of the aesthetics in a country and for a product.
And yes, I didn't mention that we were in the wine business earlier, but it was a while ago.
Thank you. Let me at this stage ask if there's a question from the overflow room. Can we determine if there's a question?
Mr. Chairman, we have no questions from the overflow room at this time.
Okay. Then maybe, Jennifer, you want to ask go ahead and read the second question that was submitted through the web?
This question was submitted by Bertram Davis. How fast can a business as big as Coke's truly move in terms of broadening its portfolio?
Well, first, the better part of the 1st century, a one product company, now 3,500 products, that's change. That's rapid change. But I'm sure that change that rapid change will be nothing compared to the change that we will see. We have to continue to be ahead of trends. And I think the key is to grow all products and all categories at the same time.
It's not one or the other, it's and. Grow all categories, sparkling, juices, juice containing beverages, coffees, teas, dairy, all waters, all the different categories. I think that's really important. And James, as I mentioned before, talks about how Japan was considered an exception in the past and now it may be a lot of places in the world, including here in the United States, look more like Japan. And if you want to continue to comment on how fast the portfolio can grow?
Yes. I think firstly, just to underline one of Muuto's points that we need to grow in each category. Actually, we grew in each of our category clusters again in the Q1 of this year. So we've demonstrated we can grow volume and revenue in each of the category clusters. Maybe it won't happen every quarter of every year, but it's absolutely possible.
We've also set out and reaffirmed our long term growth model that you as shareholders should expect from us, including how fast we believe the top line revenue of the company can grow, which is the 4% to 6% and then we can turn that with some leverage into faster profit growth. So absolutely, the enterprise can keep growing. It's running at a rate consistent with that. Now it's not a digital business whereby every incremental unit is both free and easy to do. It's still a physical business.
The drinks have to be made. They have to be produced somewhere. They have to be distributed. We have to engage with some of the 25 +1000000 customers around the world we work with. That is a great strength, but also means that there is a physicalness to the business that provides us both with an opportunity and a boundary in some extent as to how fast to expand.
But it is expanding. That's the good news. And it can expand much longer. At the end of the day, our share of global non alcoholic ready to drink beverages is only 25%. There's much more for us to aspire to.
Great. Great opportunity ahead. I just see now there is now a question in the overflow room. So could we have that question?
Yes. Mr. Chairman, we have Mr. Julian Martinez.
Good morning, Mr. Chairman.
Good morning.
My name is Julian Martinez, and I am representing Sarah Jones for Progress National. For the past 53 years, SARE has assisted Hispanic community prepare for and find economic opportunities. We currently serve over 1,300,000 people a year. I would like to take this opportunity to thank the Coca Cola Company for all their contributions to the Hispanic community and especially for providing resources to Cerro Mujer, program we operate which provides financial literacy, entrepreneurship and business development to minority women. The online mobile app allows an endless number of women to access entrepreneurship training.
I would also like to thank Coca Cola for being part of the Hispanic Association For Corporate Responsibility, Corporate Inclusion Index. Coca Cola ranks at the highest levels. Finally, I would be remiss if I did not thank Coca Cola for the many years that Coke employed Rudy Becerra, your former Vice President of the Office of Latin Affairs. He represented your company well and always exhibited the best in professionalism. We are looking forward to working with Peter Villegas, his replacement.
Peter has been very active in the Latino community and we have worked with him many years. I'm sure Peter will continue to represent Coca Cola as Trudy has in the past. The American dream is alive and well. Hispanics born in the country are more highly educated and earn higher incomes than their immigrant parents. The Latino population grew 57% between the year 2000 2014 and accounted for 43.4% of the job growth between 2,009 and 2013.
U. S.-letina purchasing power was $1,300,000,000,000 in 2014, a gain of 100 and 45%. Again, thank you Coca Cola all that you do and for
the Latino community. Thank you. Mr. Martinez, I will thank you for your comments. Thank you for speaking today and thank you for your comments.
Any other questions? There's one over here in the middle. Gentlemen, could you give him a microphone? Yes, please. Thank
you. Mr. Chairman, this is Randall and Carolyn Collins. Mister Chairman, my wife and I, like many Americans, are very concerned with
the gun violence in our public schools and public places. And the question I have is,
does the Coca Cola Company support or have a relationship with the NRA in any form?
Not to my knowledge. And we if we have supported it, it would not be through The Coca Cola Company. Do you James? Not as
far as I'm aware. Yes.
Over here too again.
Mr. Chairman, this is Daniel Conway.
First of all, thank you to the Board and all the executive team. Certainly, over the course of generations, Coca Cola has created a lot of tremendous amount of shareholder value for generations. But if you look at the stock price over the last 5 years, if you exclude the dividend, Coca Cola's stock price is pretty much right where it was 5 years ago. The dividend is great. And obviously, Coke is a mature company.
But where do you see opportunities going forward? Do you need to be more have in the U. S? Would you create an alcoholic product here in the U. S?
Would you be open to an M and A acquisition with regards to something like that? Yes.
Let me just make a couple of comments and then ask James to comment also. First, as I mentioned in my opening, we manage this business for the next quarter, but also for the next quarter of a century. It is a long term value creation model that is working for us. And I think the important thing, therefore, is to take the 10 year period and look at the $120,000,000,000 of value created in this business. And I think that's what you need to keep focusing on the long term.
And we really very much admire and thank our long term holders of our stock and our retail holders in Georgia and all around the world. So I think that's what is really important to keep in mind, the long term approach of value creation, not just for optimization for shareowners, but also for the broad based stakeholders because that's when we do create value for those stakeholders, that's when we actually optimize long term value for you, our shareowners. I think that's the really important piece to keep in mind. As regards M and A and anything else on the stock, James? No.
An additional thought on
the stock price. As we make more than 75% of our profits internationally outside of the U. S, we are somewhat exposed to the exchange rate of the U. S. Dollar versus all the other currencies.
And then every now and again, there's some cyclical changes where the dollar gets stronger, which is partly what's happened in the 5 year period you talked about. So that's not a permanent feature of our business when seen over 10 or 20 or 30 years. And I think unfortunately that was a particularly strong period of dollar strength that obviously hurt the translation of our earnings into U. S. Dollars.
But over the long run that washes out And that's why I think we're comfortable with our long term growth model of seeing earnings grow into the future. So I just wanted to make that one. With regard to mergers and acquisitions, we constantly look at the changing nature of the beverage industry that we're in. And in the end, we do make a number of acquisitions generally each year. They tend to be what we would call bolt ons, so relatively at the smaller end.
But anything that we look at has to make strategic sense, financial sense, and then it has to be available. So we do have an ongoing program of thinking of how M and A can help us achieve our objectives. And then finally, as it relates to alcohol, just a couple of thoughts. Firstly, it's unlikely in the U. S.
The U. S. Beverage industry works very differently to many other parts of the world where there is a legally enforced separation of the industry and of production versus distribution versus retail, which makes it unlikely you'll see conglomerates do all of the above, unlike the Japanese case where actually everyone's in everything. And that's kind of part of the regulatory structure of the U. S.
Having said that, as I think about what are the opportunities around the world, it's kind of back to one of my favorite sayings, which is, do you know why the Bond movie is called Never Say Never Again? And the answer is, the previous movie Sean Connery said, I'm never making another James Bond movie. But of course they persuaded him. And then as a joke they called the movie Never Say Never Again. So we don't rule things out.
But on the basis of probabilities, there are some things that are much more likely than others. And alcohol in the U. S. Is on the unlikely end of the spectrum.
Thank you. We're going to take one last question because we've come up to the end of our Q and A session. 1 in the front here.
Mr. Chairman, this is Judy
Blank. What was the last name?
Blank. Thank you. I'm just curious on the
the media talks about the deterioration of the middle class and how the rich get richer and the poor get poorer and everything. Have you guys ever had discussion about reducing the top level or increasing bottom level to reduce that gap?
Could you ask the question again?
The pay gap between the worker bees and the boss bees are is growing and growing according to the media. So has there been discussion about trying to reduce that gap of pay?
Well, as we talked about, Blake, in our compensation discussion, the compensation committee looks at all of those matters and looks at also the achievements and takes decisions that are based on performance. And we have very clear, open, transparent methods of determining the compensation for executives that you just mentioned and also in our and certainly, in the first time it was published now, we are certainly not in the very high echelons of the list, and we will continue to strive to make the compensation committee will continue and the Board will continue to make the appropriate decisions as it goes forward to the benefit of the company and making sure that everything is transparent and open. Thank you. I think basically that concludes our meeting. So what I'd like to say is the polls are now closed.
If you have a ballot, again, please do raise your hand so it can be collected. And if not, hand them also to an attendant as you exit. For those of you that plan to visit our world of Coca Cola as our guest today, I hope you have a fun and memorable time here. And before you do, let me once again express my gratitude for your investment and for your support. As your fellow shareowner, I could not be more excited today about what lies ahead, exciting and very bright future for our business.
Thank you very much, and have a great day. Thank you.