Coke sodas fizzle in key markets
Coca-Cola saw the popularity of its namesake sodas decline in key markets around the world during the first quarter, reflecting a mix of changing tastes, challenging economic conditions and a shifting business strategy.
The world's biggest beverage maker said on Wednesday that sales volume for sodas like Diet Coke and Cherry Coke that bear its name collectively declined in North America, Europe and the unit, including the Middle East and Africa.
Total sales volume rose two per cent, helped by performance of other sodas like Fanta and strength in non-carbonated drinks like bottled water and sports drinks.
The slip in Coke's namesake drinks comes as big soda brands are being pressured in the United States and elsewhere by a proliferation of competition. Soda is also an ongoing target for public health advocates, who blame the drinks for fuelling weight gain. Diet Coke has been fading in popularity domestically as well.
As people keep moving away from big sodas, Coke has retooled its strategy to focus on attractive packaging like glass bottles and mini-cans that can fetch more money. Even if people are drinking less soda, the idea is that they will spend more when they do indulge.
James Quincey, Coca-Cola's president, also noted on Wednesday that the economies of emerging markets have been hit harder than developed markets. Since Coke tends to sell more sodas than non-carbonated drinks in those markets, he said that affects the company's global soda sales.
To keep up with changing tastes, Coke and Pepsi have also been retooling their offerings to put more marketing behind options like premium water, bottled teas and juices. Even as Coca-Cola continues to diversify, however, the company is trying to burnish its flagship drink.
This week, Coca-Cola unveiled new cans and bottles of Diet Coke and Coke Zero that include more red and make them more reminiscent of regular Coke. By uniting them under a single brand, the company says it will help give the drinks a more impactful presence on stores shelves and maximise advertising dollars.
When asked whether the new look could lead to confusion, Quincey noted that the company has already tested the concept in some markets and found that it worked well.
The new cans are rolling out in Mexico next month and will spread to other countries this year and next. Coca-Cola said it was still testing its options in the US and that no changes are planned for 2016.
The Atlanta company is also slashing costs as it faces challenges at home and abroad, and refranchising territories back to bottlers, who take charge of manufacturing and distribution.
For the quarter ended April 1, Coca-Cola said its profit fell 5 per cent to US$1.48 billion, or 34 cents per share, as it was hit by a strong dollar and refranchising charges.
Excluding such one-time items, the Atlanta company earned 45 cents per share. That was a penny more than expected, according to Zacks Investment Research.
Net operating revenue fell 4 per cent to US$10.28 billion. Organic revenue, which excludes divestitures and currency fluctuations, rose two per cent, the company said.
Shares of Coca-Cola Inc dropped US$2.05, or 4.4 per cent, to US$44.55 in midday trading. Its shares are up more than 9 per cent over the past year.