Coca-Cola tops estimates as diet drinks drives 5% organic sales growth

USA – The Coca-Cola company has reported 5% growth in organic sales driven by consumer preference for healthier drink options such as Zero Sugar and Diet Coke, beating analysts’ expectations for sales and profits in the second quarter.

Reuters has reported that following the financials release, its shares rose 2.7%.

Positive earnings were attributed to its focus on globalizing its ‘health’ brands including stevia, dairy free, and low or no sugar range.

The company launched its dairy-free smoothie brand AdeZ in Europe, Coca-Cola Stevia No Sugar in New Zealand and it revamped its market campaign for Diet Coke in the UK after an initial launch in the US, all in a bid to boost sales.

Net income increased from US$1.37 billion in the previous quarter to US$2.32 billion while earnings from continuing operations rose 68% to 53 cents a share.

Global volume grew 3%, its strongest in five years pushed by strong performance of its trademark Coca-Cola brand, and Fuze Tea.

“We’re winning in the marketplace so far this year and our strategy’s on track,” Chief Executive Officer James Quincey said on a call with analysts.

“We’re getting strong first half overall revenue growth and volume growth with our Zero, Diet portfolio in the U.S., which is a part of our strategy to go forward. So good numbers, much better than before.”

Its water and sports drinks, which include brands like Powerade, grew 4%.

Organic sales growth was reported in Europe, Middle East & Africa and Latin America (7% and 11% respectively) while in North America, this dropped 1%.

Coca-Cola’s juice brands like Minute Maid weighed down volumes in the region having grown only by 1%.

Volume of Coke’s juice, dairy and plant-based drinks dropped 6% due to decline in part to its shrunken juice boxes in response to increased costs of packaging and orange juice imports.

During the quarter, the company has prioritized innovative product offerings and dropped some of its less profitable juice brands as it seeks to become a total beverage company.

“I think the juice thing will start to improve as we get into the back half. We’ll do better competitively. And I think the consumer environment will adjust to the new packaging in the new price points,” said Quincey to analysts.

Revenue fell 8% to US$8.93 billion, but the company saying this was anticipated following efforts to divest its low-margin bottling operations as it works on refranchising.

Coca-Cola anticipates a 4% growth in organic revenue and at least 9% growth in adjusted net income for the year 2018.

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