Coca-Cola reports 5% rise in quarterly organic revenue as low sugar drinks gain momentum

USA – The Coca-Cola Company reported a 5% increase in organic revenue in its third-quarter, thanks to growth in sales of its low sugar drinks offerings as consumers continue to draw their focus on healthier products.

While organic revenue, a measure of sales that excludes currency swings, acquisitions and divestitures, topped analysts’ forecast, net revenue rose about 8% to US$9.5 billion helping a 37% jump in profit to US$2.59 billion, up from US$1.89 billion posted in similar period last year.

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The beverage giant has over the past year been diversifying its portfolio aimed at blending in with the changing consumer needs, especially at a time when soda consumption in the US is declining.

This has seen Coca-Cola expand into coffee, tea, dairy and water as well as launch innovative products with lower sugar contents, Coke Zero Sugar being a major product in the company’s low sugar drinks cattery.

James Quincey, the company’s CEO said that the diet version, Coke Zero Sugar has grown 14% by volume globally so far this year while unit sales of the company’s 7.5 oz “mini cans” have increased 15% this year in the US.

In North America Coke Zero Sugar posted a double-digit growth while tea and coffee volume grew 4%. Sales of water, enhanced water and sports drinks grew 2% in the quarter. Minute Maid and juice brand Simply also saw strong performance in the US.

“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 told analysts.

Mr. Quincey noted that young adults who previously didn’t drink soda are now starting to embrace the drinks- which he linked to the new offerings such as Coke Zero Sugar.

The company is also rolling out a coffee-flavored variant called Coca-Cola Plus Coffee and a new coke branded energy drink called Coca-Cola Energy, available in more than 25 countries and expected to launch in the US in January.

“The rollout supports ongoing efforts to deliver more beverage options that meet changing preferences, lifestyles and tastes.

“It’s also an example of the company’s commitment to move quickly, bring more drinks to the shelf, and “lift and shift” innovations around the world,” the company said in a statement.

In January, Coke invested US$5.1 billion in the purchase of British coffee chain Costa Coffee. Mr. Quincey said that Coke is now talking to food-service customers in the US and is about to launch Costa’s coffee machines in the company’s home market.

The Coca-Cola boss, however, noted that sales in the UK have been hurt by a dip in consumer confidence amid Brexit worries.

On its 2019 outlook, the beverage giant said that it now expects at least 5% growth in organic revenue.  Coca-Cola said that it will continue to capitalize on opportunities for growth through expanded revenue growth management capabilities and improved execution

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