Strategic Report
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We launched our new climate 2 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 3 Strategic Report Governance and Directors’ Report Financial Statements Other Information strategy with a clear ambition to reach net zero greenhouse Performance gas emissions by 2040 t igh ghl indicators Key hi Financial Sustainability Revenue (€BN) Operating profit on a comparable basis* (€BN) Diluted earnings per share (EPS) Lost time incident rate % GHG emissions reduction across % sugar reduction in on a comparable basis* (€) (number per 100 full time equivalent employees) our value chain since 2010 and 2019 our soft drinks since 2015 12.0 1.7 2.53 1.14 VERSUS 2010 11.1 10.6 1.2 1.80 1.07 37.7 12.9 0.82 15.3 €10.6BN €1.2BN €1.80 VERSUS 2019(A) 11.9 Comparable volumes declined Comparable operating profit Comparable diluted EPS declined 0.82 15.3% by 10% reflecting the adverse declined by 29% reflecting the by 29% driven by the decline in Our people’s mental and physical Consumer habits are continually impact of COVID-19, particularly decline in revenue. This impact comparable operating profit. wellbeing remains our priority 11.9% changing. Working with The on immediate consumption and was moderated by a reduction This was partially offset by the during the ongoing COVID-19 Coca-Cola Company (TCCC) and the away from home channel. in variable expenses given lower return of approximately €130 million pandemic. By providing our We are committed to reducing other franchisors, we continue to This was partially offset by growth volumes, as well as the delivery to shareholders before the suspension people with a safe and healthy greenhouse gas (GHG) emissions, evolve our business and portfolio in the home channel supported of approximately €260 million in of our €1 billion share buyback work environment, we aim to to limit the global temperature to meet consumers’ demands by online grocery sales and discretionary operating expenditure programme in March 2020. work towards zero incidents. increase to 1.5°C above pre- for a greater variety of drinks, continued revenue growth (opex) savings as we ensured spend industrial levels and to protect the including low and no calorie options. In 2020, we continued to upgrade management initiatives. was limited to what was essential. future of our planet. In 2020, we and improve workplace equipment launched our new climate strategy By the end of 2020, the average sugar Revenue per unit case declined We leveraged the crisis as a catalyst and infrastructure and we saw our with a clear ambition to reach net per litre in our soft drinks portfolio by 1.5% driven by adverse channel, to accelerate our competitiveness lost time incident rate fall to 0.82, zero GHG emissions by 2040 and to had fallen by 15.3% compared with geographic and pack mix as a initiatives as we look for ways to a reduction of 23% compared reduce our GHG emissions across 2015. This represents a reduction result of COVID-19. become even more efficient and with the previous year. our value chain by 30% by 2030 of 19.8% since 2010. We’re achieving further reduce complexity. (versus 2019). these reductions by reformulating our recipes, and by providing In 2020, the GHG emissions within greater choice. our value chain had fallen by 11.9% compared to 2019 and had fallen by 37.7% compared to 2010 (previous target baseline year). Free cash flow* (€BN) Return on capital invested Water use ratio % PET from recycled PET (ROIC)* (%) (litres of water/litre of product produced) 1.1 10.3 1.61 27.6 0.9 7.6 Data legend 1.60 30.5 Data legend 1.57 41.3 €0.9BN 7.6% 2018 2019 Free cash flow generation continues ROIC declined by 270 basis 2019 2020 1.57 41.3% 2020 to be a core priority of our business. points driven by the decline in Climate change is altering weather Creating a circular economy for the Despite the impact of COVID-19 comparable operating profit. patterns around the world, causing packaging we use is important in and following continued investments This metric remains a high priority water shortages and droughts in helping to address the world’s plastic in our portfolio, digital capabilities * Please refer to Business for us and we will continue to focus some areas and floods in others. waste crisis. We are committed to and sustainability initiatives, and financial review on on driving profitable revenue As water is the main ingredient in ensuring that at least 50% of the we still delivered free cash flow page 54 for definition and FOR MORE ABOUT OUR SUSTAINABILITY growth and capital efficiencies. the majority of our drinks it’s critical material we use for our PET bottles of over €900 million, close to reconciliation of non-GAAP COMMITMENTS AND PROGRESS, that we use water sustainably and comes from recycled PET (rPET) by SEE PAGES 22–37 our medium-term objective of figures to GAAP figures. protect local water resources 2023, and we’ll aim to reach 100% generating at least €1 billion a year. for future generations. recycled or renewable plastic by the This highlights the strength of end of the decade. We continue to The amount of water we use to make make progress in increasing recycled our free cash flow generation, our products has reduced by 13.7% (A) 2019 data restated. plastic in our packaging. For more information see page 26. supported by our disciplined capital compared with 2010, to 1.57 litres of expenditure (capex) and working water per litre of product produced. In 2020, 41.3% of the PET we used capital improvement initiatives. to make our PET bottles was rPET, up from 30.5% in 2019. 4 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 5 Strategic Report Governance and Directors’ Report Financial Statements Other Information Our portfolio HYDRATION We work closely with our franchise partners to offer The hydration category is typically heavily consumers a wide range of popular drinks, with or reliant on immediate consumption – with consumers buying and consuming our without sugar and in a range of pack sizes and materials. hydration brands on the go. As a result of We continue to expand our portfolio into areas we COVID-19 restrictions and less immediate believe will drive significant growth in the coming years. consumption, 2020 saw a 34% volume decline. COCA ‑COLA® Our Coca-Cola brands come in a range of variants that offer consumers a great choice of flavours, with or without sugar. This includes Coca-Cola Classic and Coca-Cola Zero Sugar, and Diet Coke/Coca-Cola Light for a lighter and refreshing taste across a number of flavour variants. Coca-Cola Zero Sugar was the number one soft drinks brand for absolute value growth across our markets, according RTD TEAS, RTD COFFEES, to Nielseniq. JUICES AND OTHER DRINKS 2020 saw the expansion of Costa Coffee to Germany, following the introduction of Costa Coffee ready to drink (RTD) in GB in 2019. We also created a dedicated team, led by a new senior leadership role in Coca-Cola European Partners (CCEP), to oversee our expansion into coffee. We continue to invest in Fuze Tea, with new flavours and pack sizes coming in 2021 to drive momentum. FLAVOURS, MIXERS AND ENERGY In the fourth quarter of the year, Capri-Sun saw solid growth in GB and France. Flavours, mixers and energy are an important part of our portfolio of drinks. Fanta continued to be a In partnership with TCCC, we introduced Topo Chico focus in 2020 supported by a significant Halloween hard seltzer – Coca-Cola’s first brand in the alcohol marketing campaign and new flavours like raspberry category in Europe. zero sugar. Monster performed strongly in 2020 – with volume growth of 15.5%, supported by new flavours such as Pacific Punch and a broader multi-pack offering in markets such as GB. Monster is now the number one energy brand in Spain and Portugal. We also introduced a new cherry variant for Coca-Cola Energy. 2020 BRAND CATEGORY We’re building our portfolio of adult mixers, led by (B) Schweppes(A), Royal Bliss and Coca-Cola Signature VOLUME (ROUNDED) Mixers. In 2020, Schweppes gained value share in a competitive GB market. 5.0% RTD TEAS, RTD COFFEES, (A) In Great Britain (GB) only. JUICES AND OTHER DRINKS (B) We report comparable volumes for our Coca-Cola trademark drinks; flavours, mixers and energy drinks; hydration; and RTD teas, RTD coffees, juices and other drinks. 6.5% HYDRATION 66.0% 22.5% COCA ‑COLA® FLAVOURS, MIXERS AND ENERGY 6 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 7 Strategic Report Governance and Directors’ Report Financial Statements Other Information Our operations We are a local business. We invest, employ, manufacture and distribute locally. We want to create a great 9 experience for everyone we interact with – whether they are a customer, partner, supplier, stakeholder, member of our local community or part of our great team. 8 We are investing in key areas of our business, 7 to make the experiences we provide even better. READ MORE ABOUT HOW WE ARE SUCCEEDING IN A CHANGING LANDSCAPE ON PAGES 18–19 REVENUE BY GEOGRAPHY(A) NO. OF EMPLOYEES(B) Map legend 1 Iberia (Spain, Portugal and Andorra) 20.5% 4,012 Production facility 6 2 Germany 3 2 21.5% 7,061 2 2x Production facilities Shared service centre 3 Great Britain 21.0% 3,329 2 2 Where we operate 5 4 France (France and Monaco) 16.0% 2,570 SEE OUR INTERACTIVE MAP ON 5 Belgium and Luxembourg WWW.COCACOLAEP.COM 8.5% 2,135 /ABOUT‑US/PLACES 4 6 Netherlands 5.0% 765 7 Norway es or 4.0% 549 z A Bulgaria 8 Sweden ira 3.0% 679 de a 1 t ligh M igh h ds ey 9 Iceland lan K 0.5% 164 Is y r a n a 10 Bulgaria 842 C Sweden became our first 100% rPET market in 2020 and the (A) Revenue shown is percentage of total revenue as at 31 December 2020.