USA – The Coca-Cola Company has reported a 9% decline in its third quarter (Q3) net revenue but saw a reduced negative impact from the Covid-19 pandemic compared to in second quarter (Q2).

The company posted Q3 revenues of US$8.7 billion, as coronavirus continued to impact its away-from-home channels. Meanwhile, operating income declined 8% in the quarter.

However, the company’s third-quarter results marked an improvement on Q2, when Coca-Cola reported a 28% decline in net revenue and a 34% decline in operating income.

In Q3, unit case volumes of juice, dairy and plant-based beverages declined 6%, while sparkling soft drinks fell 1%, and water, enhanced water and sports drinks were down 11%.

“While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path.”

James Quincey – Chairman and CEO, Coca-Cola Company

Tea and coffee saw unit case volumes decline 15%, primarily driven by coronavirus-related pressure on Costa retail stores, along with some pressure on Coca-Cola’s Doğadan tea business in Turkey.

But the company topped earnings estimates, sending shares up nearly 2% in morning trading.

Excluding asset impairments, severance costs related to its restructuring plan and other items, the beverage giant earned 55 cents per share, topping the 46 cents per share expected by analysts surveyed by Refinitiv.

Net sales dropped 9% to US$8.65 billion, beating expectations of US$8.36 billion. Organic sales fell 6%, and unit case volume, which helps measure demand without the impact of pricing or foreign currency, declined 4%.

“Throughout this year’s crisis, our system has remained focused on its beverages for life strategy,” said James Quincey, chairman and CEO of The Coca-Cola Company.

“We are accelerating our transformation that was already underway, shaping our company to recover faster than the broader economic recovery. While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path.”

All four of Coke’s drink categories reported declines in unit case volume. Sparkling soft drinks was the least affected, with its volume falling only 1%. Demand for Coke Zero Sugar and trademark Coke drinks lifted the category, although overall it was hurt by the decline in the North American fountain business.

Juice, dairy and plant-based drinks saw volumes shrink by 6%, hurt by pressure in Asia Pacific and Latin America. Unit case volume of water, enhanced water and sports drinks fell by 11%.

Tea and coffee was the hardest hit, with demand dropping 15%, primarily due to the company’s Costa cafes. CEO James Quincey said that Costa cafe traffic is unlikely to recover in the near term.

The company noted quarter-over-quarter improvements in demand. While the pandemic continues to limit drink purchases at movie theaters, restaurants and office buildings, Coke said at-home demand is still elevated. Away-from-home volume fell by the mid-teens this quarter, an improvement from its nadir of 50%, helped by higher sales at fast-food restaurants and convenience stores.

Rival PepsiCo reported 3% organic sales growth for its North American beverage unit in its third quarter.

As it navigates the crisis, Coke is undergoing a transformation. It is slimming its portfolio, cutting drinks like Tab that haven’t sold well and don’t have much opportunity for growth.

The company recorded a US$160 million impairment charge this quarter tied to its Odwalla brand, which is also being discontinued. At the end of the process, it plans to slash the number of master brands by 50% to about 200.

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