Leverage Our Unique 24/7 Portfolio

Home , Costa Coffee, Hit (drink), Kinley

26 COCA-COLA HBC

GROWTH PILLAR LEVERAGE OUR UNIQUE 24/7 PORTFOLIO

KPIs Highlights in 2019

• FX-neutral revenue • Maintained high growth in the sparkling category, aided by the strong growth performance of sophisticated adult sparkling beverages • Volume growth • Achieved another year of double-digit revenue growth in energy drinks • FX-neutral revenue per case growth and expanded the energy portfolio with Coke Energy and Predator • Innovations supported overall growth, with 4.2pp of total volume growth in Stakeholders the year delivered by products and packages launched in the last 12 months Our consumers Priorities in 2020 Our customers • Continue expanding to become a 24/7 beverage partner, creating shared Shareholders value with our consumers and customers

The Coca-Cola • Consolidate the performance of product innovations by increasing Company distribution and repeat sales Risks • Continue driving growth in sparkling by leveraging light variants, flavour and pack architecture • Consumer health and wellbeing • Bring ready-to-drink tea back to growth through a strong plan for FUZETEA • Geopolitical and • Drive revenue growth in water by implementing our hydration portfolio strategy macroeconomic • Launch Costa Coffee in at least 10 countries • Strategic stakeholder relationships INTEGRATED ANNUAL REPORT 2019 27 SR

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Introduction As lifestyles and consumer habits change, Percentage the motivations and occasions driving of Coca-Cola beverage consumption are also evolving. HBC revenue Our category strategy We are unlocking growth potential in segments beyond our core sparkling portfolio, offering a wider choice of drinks to meet consumer needs at any time of the day. In line with growing societal concerns around environmental issues, consumers are looking for sustainably-sourced ingredients and responsible packaging. Technology, Sparkling Water Juice RTD tea particularly social media, is changing socialising occasions and the ways consumers interact with brands. Consumers are also more focused on making healthier Drive category Expand and premiumise choices. This all leads to demand for a value growth broader range of products, providing us with a number of new growth opportunities. In 2019 we sold 165 million cases of new product, flavour and package innovations, and 4.2 percentage points of our volume growth was attributable to these new launches. This is testament to how, working together with The Coca Cola Company, we are well placed to respond to market trends with Energy Plant Premium Coffee an ever expanding 24/7 portfolio. We have based spirits the right brands, packaging and categories to meet the evolving needs of our consumer base. Innovate Establish Unlock total Unlock total and expand right to win portfolio portfolio growth in growth in 2019 HoReCa At Work & Sparkling 1 HoReCa Water 8 uice 8 RD tea nergy lant based 1 remium spirits Coﬀee 1 28 COCA-COLA HBC

Leverage our unique 24/7 portfolio continued

Driving sparkling category growth Another high-value, high-growth segment we We are also focused on expanding our Our evolving sparkling drinks portfolio is are prioritising is the adult sparkling category, premium offerings in the juice and water proving popular with consumers across our which has revenue growth over three times categories. Within juice, we focused on territories and we are seeing strong growth that of the overall sparkling category. Adult product stratification during 2019 to capture from new variant and flavour launches. consumers with more discretionary income premium revenue opportunities. In Russia, Sparkling beverage volume grew 3.5% in are interested in superior products and where our juice business represents a 2019 compared to the prior year, fuelled by experimentation. When compared to core considerable proportion of our portfolio, we the double-digit volume growth of low- and sparkling products, this category commands have a track record of continuous innovation, no-sugar options, which is stimulating growth significant price premiums. which supports higher price points and increased revenue per case. Bringing these in the entire category. We launched the Royal Bliss brand in the adult juice innovations, and increased revenues, sparkling category in 2018, using the best Coca-Cola Zero grew 26.2% in volume during to other markets is a focus for 2020. the year, delivering 10 consecutive quarters practices developed with our Schweppes and of double-digit growth. This growth reflects Kinley brands. Our approach for this category Within the water category, our overall focus execution excellence and powerful assets involves premiumisation and segmented is on accelerating value share gains with an aim such as our Star Wars-themed activations. execution with hotels, restaurants and cafes. to double the pace of our market share growth We also delivered strong performance from We also support growth by fully leveraging in the next five years. We develop market- new, low- and no-sugar sparkling beverage partnerships with premium spirits. specific maps of diverse water segments and options such as Sprite Zero and Fanta Zero. price tiers, seeking to expand our market Our light variants had value growth over four Expanding value beyond sparkling share and capture higher revenue per case. times higher than the sparkling category beverage offerings This hydration portfolio strategy involves a average in 2019. In 2019, the share of In energy, one of the fastest-growing range of product offerings, execution tactics low- and no-sugar variants in our total segments of the beverage industry, our and route-to-market approaches. volume increased by 3.0pp to 16.1%. Monster brand products had another year We added to the premium water brands Innovations played a key role in our success of impressive growth with volume up 36% in our portfolio during the year with the for 2019. In 14 markets, we launched compared to 2018. In this category, we have acquisition of Acque Minerali S.r.l., owner Coca-Cola Plus Coffee, featuring a great pursued a segmentation strategy, launching and producer of Lurisia, an Italian natural coffee taste with more caffeine but zero a variety of brands at different price points mineral water and adult sparkling beverages calories for consumers on the go. This to target different types of consumers. company. This acquisition, which we made in innovative product has seen great initial For consumers seeking a new taste and a conjunction with The Coca-Cola Company, consumer engagement. In flavours, we taurine-free formula, we launched Coca-Cola was completed in December 2019. introduced Coca-Cola Zero Vanilla, Cherry Energy, a premium product, in 15 of our and seasonal flavours such as Cinnamon countries during 2019, attracting new users Building market share and Ginger in many of our markets. to the category. We also added the Predator The dramatic expansion of our product brand to our portfolio in five markets, offering portfolio includes products in new categories We are also driving packaging innovation energy at a more affordable price point for our business. Following initial product with smaller, more convenient packages, in two flavours. rollouts, we are continuing to take action to which also serve to expand revenue per case. build our market share. Single-serve packages comprised 48.5% of Our biggest system-wide launch in 2018 our sparkling sales volume in 2019, up 2.5% was FUZETEA, and we continued to build We entered a completely new category compared with 2018, with significant on the successful introduction of this fresh, in 2018 with AdeZ, our first plant-based, potential for additional growth. innovative, ready-to-drink tea in 2019. sugar- and dairy-free beverage. Thus far, we This fusion of sustainably-sourced tea have launched eight vegan-friendly flavours, extracts with fruit and herbal flavours has including plain for the breakfast occasion attracted strong competition in some and fruit flavours for snacking on the go. markets, impacting growth. With good We extended the distribution of AdeZ across activation and customer coordination, the all our channels in 2019, increasing our share multi-layered, contemporary tea taste of of the plant-based beverage category in the FUZETEA is winning over consumers. In Italy, 17 markets where it has been introduced. for example, FUZETEA doubled our market We have gained 6% market share in just over share. Our focus going forward is on adding a year since its launch in prioritised markets. differentiating flavours to attract more consumers to the category.

FOR CONSUMERS SEEKING A NEW TASTE AND “ A TAURINE-FREE FORMULA, WE LAUNCHED SUPER-PREMIUM COCA-COLA ENERGY IN 15 OF OUR COUNTRIES DURING 2019, ATTRACTING NEW USERS TO THE CATEGORY.“ INTEGRATED ANNUAL REPORT 2019 29 SR

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One of our biggest growth opportunities is Responsible marketing SI in the coffee category. We announced in Our advertising and promotions reach mid-2019 that we will launch Costa Coffee, millions of consumers. While this is a core a brand recently acquired by The Coca-Cola driver of our business, we take steps to Company, in at least 10 countries during ensure that marketing is responsible as well 2020. We believe this launch will address a as effective. As part of the Coca-Cola broad range of consumer and customer System, we adhere to The Coca-Cola UN Sustainable needs across multiple occasions, particularly Company’s Global Responsible Marketing Development Goals for the hotels, restaurants and cafes policy and, together with other members (HoReCa) and At Work channels. We are We serve our consumers with of our industry, we are also signatories of the pleased to be the first Coca-Cola bottler to a broad range of high-quality European Soft Drinks Industry Association undertake such a launch in close partnership products. In doing so, we (UNESDA) commitments. with The Coca-Cola Company. Our create value by contributing well-established infrastructure, processes In the EU and Switzerland, we do not offer to global goals for good health and capabilities around coffee mean that we soft drinks in primary schools or offer and wellbeing, innovation, are well positioned to hit the ground running added‑sugar beverages in secondary responsible production and with this exciting opportunity. schools. We plan to gradually expand this consumption and partnerships. approach to all our markets over the coming We also benefit from the highly years. Further, we avoid engaging in any complementary premium spirits category, direct commercial activity in primary schools, which is now available in 19 of our markets. except when requested by school authorities. We leverage premium spirits to create a compelling offering for HoReCa. This Product quality provides us with strong cross-selling Product quality is a critical priority for our opportunities for our core beverage portfolio business, highlighting the importance of in new, lucrative outlets. maintaining consumer trust. The freshness Health and nutrition of our products in trade, a key measure of quality, remained at the same level in 2019 As a company we are continuously evolving compared to the prior year, while we our portfolio to help create a healthier food introduced approximately 1,000 new SKUs environment. We’ve already reformulated across Coca-Cola HBC. many of our drinks to contain less sugar and fewer calories. To give consumers more Our low rate of consumer complaints options, we’re also offering more diet, light also demonstrates the high quality of our and zero-calorie drinks in our portfolio. beverages and the trust consumers and customers place in our products and brands. Key nutritional information is visible on all of The number of complaints declined by 5%, our bottles and cans. Guideline Daily Amount to 18 complaints per 100 million bottles sold. labels provide at-a-glance information on This meets our 2019 target of no more than calories, as well as on sugar, fat, saturated fat 18 complaints per 100 million bottles sold. and salt content. In several of our markets, For 2020, we have set a target of no we are trialling new front-of-pack labels more than 17 complaints per 100 million which use the current European-wide bottles sold. Reference Intake (R.I.) monochrome model, disclosing the nutrient content per 100ml We offer the highest quality beverages in of our drinks for sugars, salt, fat and saturated all markets by applying end-to-end quality fat through a simple ‘traffic-light’ colour and food safety standards and maintaining scheme of red, amber and green. a strong focus on quality and safety throughout our value chain. To minimise The World Health Organization recommends quality risks in our supply chain, in 2019 we that no more than 10% of total energy/calorie continued to collaborate with suppliers of key consumption come from added sugars. primary ingredients and packaging materials. To help tackle consumption of added sugar This collaboration helped us eliminate quality we support UNESDA’s pledge. In this context, incidents related to suppliers in 2019. we have committed to reduce calories per 100ml of sparkling soft drinks by 25% In 2019, we continued our strong focus between 2015 and 2025, across all of our on enhancing our training and capabilities markets. The reduction we achieved in 2019 in regard to product quality and food safety. compared to the 2015 baseline was 12%. As the result of best-in-class industry benchmarking, each of our markets has developed tailored plans to support and further develop our quality and food safety culture.