Coke fizzes with new offerings
Strong demand for Coca-Cola’s low-sugar Coke Zero, new orange-vanilla cola, and flavoured waters pushed the beverage maker’s quarterly sales and profit well above Wall Street estimates, sending its shares up almost 2%.
The world’s biggest beverage makers, Coca-Cola and PepsiCo, are responding to shifting consumer taste by tweaking ingredients and experimenting with new flavours that are focused more on health-conscious consumers.
These efforts have helped revive soft drink sales after a years-long slump. Its shares have now risen 13.5% in the past year.
Chief executive James Quincy said Coke Zero sales witnessed a double-digit percentage rise, while its new orange-vanilla Coke soda was also a hit.
Sales of the company’s carbonated drinks rose 1%, driven by strong performance of its Coke brand, while smaller, immediate consumption packages of its flavoured water and sports drinks drove a 6% sales increase in that business.
Mr Quincy is trying to make Coca-Cola a “total beverage company” by adding coffees, teas, smoothies, and flavoured waters to a portfolio that has traditionally offered aerated drinks.
It recently made a big bet on coffee with its $5.1bn (€4.5bn) acquisition of Costa Coffee and is preparing to launch ready-to-drink Costa products in stores soon.
They’re making progress with innovations in general... it is still early for a lot of these innovations, but we do like the increased focus that the company is bringing to its core brands and also its coffee products,” said Edward Jones analyst John Boylan.
Coke’s organic sales, which exclude the impact of currency swings and acquisitions, rose 6%, driven by price hikes and partly benefiting from bottlers stocking up more products due to Brexit uncertainty.
Revenue rose 5% to $8.02bn, and the company earned 48c per share on an adjusted basis.
Analysts had forecast earnings of 46c per share on revenue of $7.88bn, according to Refinitiv Ibes.
For the second quarter, the company projected a 6% boost in comparable revenue from acquisitions and divestitures, but continues to see an impact from a stronger dollar. It maintained its core sales growth forecast for the full year.
“We are impressed with Coca-Cola’s ability to deliver a strong topline, suggesting that its refranchising (and) portfolio transformation are paying off,” said Wells Fargo analyst Bonnie Herzog.
