Coca-Cola Sales Rise, Lifted by Higher Soda Demand--Update

Date : 10/18/2019 @ 2:13PM
Source : Dow Jones News
Stock : Coca Cola Company (KO)
Quote : 53.22  0.14 (0.26%) @ 12:59AM
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Coca-Cola Sales Rise, Lifted by Higher Soda Demand--Update

Coca Cola (NYSE:KO)
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By Jennifer Maloney 

Coca-Cola Co.'s carbonated soft drinks are making a comeback.

The beverage giant over the past few years has expanded into coffee, tea, dairy and water as consumers shifted away from sugary sodas. But in the latest quarter, CEO James Quincey said, the company's sales rose in large part thanks to variations on its namesake cola -- including some that contain less sugar.

A diet version called Coke Zero Sugar has grown 14% by volume globally so far this year, Mr. Quincey said. And the company's 7.5 oz "mini cans" have increased 15% this year in the U.S. Meanwhile, the company is rolling out a coffee-flavored variant called Coca-Cola Plus Coffee and a new energy drink called Coca-Cola Energy, available in more than 25 countries and expected to launch in the U.S. in January.

"It's a reflection of how we've adapted our strategy to what needs to be done to help people moderate their sugar," Mr. Quincey said Friday in an interview.

The energy and coffee drinks are also available in diet versions.

Coke cleared a legal hurdle earlier this year with Monster Beverage Corp. to launch its new energy drink in the U.S. Monster, which counts Coca-Cola as a distribution partner and a significant shareholder, had sought to block the sale of Coke's energy drink citing a noncompete agreement.

Mr. Quincey said he hopes Coca-Cola Energy will appeal to people who don't currently buy energy drinks: "people who perhaps didn't come into the category because of the flavor profile that tends to be pretty strong.... It's an easier way into the category."

After launching the drink in Europe, the company is tweaking the recipe for the U.S. launch to make it taste more like original Coke, he said.

The beverage giant in January spent $5.1 billion to buy British coffee-shop chain Costa Coffee. Sales in the U.K. have been hurt by a dip in consumer confidence amid Brexit worries, Mr. Quincey said. Coke is now talking to food-service customers in the U.S. about bringing Costa's coffee machines here, he said.

Coke is also eyeing the competitive seltzer market. The Atlanta-based company in 2017 bought a sparkling mineral water from Mexico called Topo Chico, which has a cult following in Texas. Rival PepsiCo Inc. then launched a flavored seltzer called Bubly that has taken share from market leader LaCroix.

"I think we have to see what we do next," Mr. Quincey said.

Coca-Cola on Friday reported higher quarterly profit and sales, extending a recent streak of growth after several years of sluggish demand for sugary drinks.

Coke's organic revenue, a measure of sales that excludes currency swings, acquisitions and divestitures, increased 5% from the same time a year ago. By that measure, the company now forecasts at least 5% growth for the full year.

PepsiCo, which also has a large snacks business, reported organic revenue growth of 4.3% for the latest period as it ramped up advertising for its biggest brands.

Coke reported a profit of $2.59 billion, compared with $1.89 billion a year ago. Net revenue rose about 8% to $9.5 billion.

Global unit case volume grew 2% in the quarter. In North America, unit case volume rose 1%, driven by a 3% increase in Coca-Cola and double-digit growth in Coke Zero Sugar.

Sales of water, enhanced water and sports drinks grew 2% in the quarter. Tea and coffee volume grew 4%.

--Patrick Thomas contributed to this article.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

 

(END) Dow Jones Newswires

October 18, 2019 09:58 ET (13:58 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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