Beverage Industry

Coca-Cola reports positive Q2 results

July 17, 2012

The Coca-Cola Co. reported solid second quarter and year-to-date 2012 results, with continued strong volume and revenue growth, as well as further volume and value share gains in total non-alcohol ready-to-drink (NARTD) beverages. Worldwide volume growth was 4 percent in the second quarter and 5 percent year-to-date, the company reported.

“We are pleased with our second quarter and year-to-date results,” said Muhtar Kent, chairman and chief executive officer of The Coca-Cola Co., in a statement. “We are delivering consistent quality performance in line with our 2020 Vision growth targets, despite a very challenging and increasingly unpredictable global economy. Notably, we continue to gain global volume and value share by giving our consumers what they are looking for: meaningful brand connections, wide-ranging product and package choices, greater information about our brands, and significant investments in programs that support healthy and active lifestyles, all at the heart of our brand values.”

Volume growth in the quarter was well-balanced around the world with solid growth in key developed markets, including 4 percent in Japan, and 1 percent in both North America and Germany. Key emerging markets also showed notable growth in countries such as India, Russia, China and Brazil at 20 percent, 9 percent, 7 percent and 6 percent, respectively.

Volume performance was soft in regions of Europe, such as Central, Southern and Northwest Europe as well as Nordic countries, which were down 5 percent in the quarter as a result of the ongoing economic slowdown and unfavorable weather, the company says.

Volume grew 8 percent in countries with lower per capita consumption (up to 150 8-ounce servings each year) of its portfolio of beverage products. In the second quarter, the Coca-Cola Co. grew global volume and value share in total NARTD beverages, with volume and value share gains across nearly every beverage category in which it competes, it stated.

The North America group's volume grew 1 percent in the quarter despite a shift of some Easter and July Fourth holiday volume out of the quarter when compared to the prior year period. Reported net revenues for the quarter increased 5 percent, reflecting volume growth of 1 percent as well as positive price/mix of 3 percent and a 1 percent benefit from structural change, primarily related to the acquisition of Great Plains Coca-Cola Bottling Co. Second quarter reported operating income grew 2 percent. Comparable currency neutral operating income was even in the quarter, a sequential improvement from first quarter 2012, reflecting the holiday shifts, higher commodity costs and timing of certain expenses, the company said.

Worldwide sparkling beverage volume grew 2 percent in the quarter and 3 percent year-to-date. The company grew volume and value share in global core sparkling beverages in the quarter.  Global Coca-Cola volume grew 2 percent in the quarter and 3 percent year-to-date, with growth in the quarter across diverse markets, including India, Russia, the Philippines, Brazil, Germany and Mexico at 35 percent, 23 percent, 7 percent, 4 percent, 3 percent and 1 percent, respectively.

In addition, worldwide Sprite volume grew 6 percent in the quarter and 5 percent year-to-date, and Fanta grew 4 percent globally in both the quarter and year-to-date, supported by continued innovation and reflecting a balanced portfolio approach to growth in the sparkling beverage category, the company said.

In North America, sparkling beverage volume declined 2 percent in the quarter with sparkling beverage pricing growth of 5 percent, as the company maintained the price increases put in place during the last year. Coca-Cola Zero volume grew mid single digits in its eighth year in the market. Fanta volume was up 6 percent in the quarter and Seagram's grew 4 percent in the quarter driven by the launch of Seagram's Sparkling Seltzer Water.

Worldwide still beverage volume grew 9 percent in both the quarter and year-to-date, with solid growth across beverage categories, including packaged water, juices and juice drinks, ready-to-drink tea and coffee, sports drinks and energy drinks.

Global volume and value share grew in total still beverages as well as across all still beverage categories in which the Coca-Cola Co. competes.
 
Ready-to-drink tea volume grew 13 percent in the quarter, with continued strong performance of key brands such as Gold Peak and Honest Tea in North America, Ayataka green tea in Japan, and Fuze Tea, which launched in Latin America during the quarter, the company stated.

Packaged water volume grew 10 percent in the quarter as the Coca-Cola Co. continues to focus on innovative and sustainable packaging and immediate consumption occasions, it said. Energy drinks volume grew 21 percent in the quarter driven by growth across its global portfolio of energy brands.

In North America, still beverage volume grew 8 percent in the quarter, led by continued strong Powerade growth of 13 percent with the new “Power Through” campaign as well as double-digit growth of Gold Peak tea and Smartwater. Juice brands grew 3 percent in the quarter, led by strong growth of the Simply brand and the launch of new flavors in the Minute Maid Light portfolio.