The Coca-Cola Co. reports Q1 2014 results
Media investments help drive brand growth
Atlanta-based The Coca-Cola Co. reported worldwide volume growth of 2 percent as well as volume and value share gains for its non-alcohol ready-to-drink (NARTD) beverages portfolio during the first quarter of 2014.
"Our growth momentum is steadily improving in line with our expectations, as we delivered sequentially stronger volume growth of 2 percent in the quarter while gaining global volume and value share in non-alcoholic ready-to-drink beverages,” said Muhtar Kent, chairman and chief executive officer of The Coca-Cola Co., in a statement. “While we are making meaningful progress across our five strategic priorities to restore our momentum, we are firmly committed to further advancing our growth trajectory through 2014 as we are accelerating marketing investments in our brands and focusing relentlessly on marketplace execution in partnership with our bottling partners around the world.
“In the near term, we are committed to delivering on our performance goals and generating increased shareowner value through improved productivity efforts and targeted investments,” he continued. “All of us at The Coca-Cola Co. remain confident in our ability to deliver on our strategies while further strengthening our foundation for profitable and sustainable long-term growth toward our 2020 Vision."
The company reported that volume in developed markets declined 1 percent, impacted by the shift in the Easter holiday from the first quarter in 2013 to the second quarter in 2014; however, volume increased in some key developed markets, including Japan and Australia. North American volume was even in the quarter.
In developing and emerging markets, volume increased 12 percent in China and 4 percent in Brazil because of strong marketing campaigns centered around holiday programming and the FIFA World Cup, as well as a system-wide focus on execution, the company says. India and Russia both grew volume by 6 percent while gaining NARTD volume and value share.
Worldwide sparkling beverage volume declined 1 percent in the quarter, largely impacted by the late Easter holiday, but the company gained value share and maintained global volume share in the category. The company also experienced growth in markets where it invested in specific marketing campaigns. For example, following its Chinese New Year campaign in China, the company experienced double-digit transaction growth. Similarly, in North America, Sochi 2014 Olympics and Super Bowl advertising drove a sequential improvement in Coca-Cola brand volume.
For still beverages, the company grew worldwide volume 8 percent in the quarter, with solid volume growth across multiple beverage categories, including juices and juice drinks, ready-to-drink teas, packaged water, sports drinks and energy drinks. The company also gained global volume and value share in total still beverages.
The company’s North America group delivered even volume versus the prior-year quarter while gaining value share and maintaining volume share. Price/mix for its sparkling business increased 2 percent, reflecting the further implementation of its new pricing strategy, while overall price/mix for the group was even.
While North American sparkling beverage volume declined 1 percent in the quarter, volume for the Coca-Cola brand was even in the quarter, benefiting from Super Bowl and Sochi 2014 Winter Olympics programming. Among its other flavored sparkling brands, Fanta was up 3 percent in the quarter, and Sprite was up 1 percent.
In the still beverage portfolio, volume grew 3 percent in the quarter, with balanced growth and volume and value share gains across most still beverage categories. This marks the 16th consecutive quarter that the company’s still beverage portfolio has either maintained or gained both volume and value share. Powerade continued its growth trajectory in the quarter, with its 9 percent growth coming from both the base business and the new Powerade Zero Drops. The Coca-Cola Co.’s juice and juice drinks business also continues to grow volume, led by its Simply brand, which was up 10 percent in the quarter following significant media investments.
Reported operating income for the North America group increased 25 percent, which includes items impacting comparability, principally net gains/losses related to economic hedges. Comparable currency neutral operating income declined 8 percent in the quarter, reflecting one less selling day in the quarter, the shift in the Easter holiday, and the timing of operating expenses, the company says.