Beverage Industry

Positive Results?

March 1, 2008
Positive Results?

International sales and non-carbonated products resulted in positive showings for soft drink companies in 2007.
The Coca-Cola Co. reported net operating revenues improved 20 percent for 2007. Worldwide, Coca-Cola’s unit case volume increased 6 percent for the year, which added more than 1.2 billion case units in 2007. Acquisitions contributed 1 point of unit case volume growth for the year.
“By successfully executing our clearly defined strategies with our bottling partners, we delivered 6 percent unit case volume growth for the year and four consecutive quarters of double-digit earnings per share growth,” said Neville Isdell, chairman and chief executive officer of The Coca-Cola Co., in a statement.
“Importantly, this growth was balanced across our geographies and portfolio of brands. On a worldwide basis, sparkling beverage volume increased a solid 4 percent, and still beverages increased 12 percent.”
Coca-Cola’s sparkling beverage unit case volume weakened 2 percent for the year. Coca-Cola Zero, which launched in 2005, delivered growth for the company, increasing unit case volume double digits for the year. And the still beverage unit’s case volume increased 5 percent.
Good news globally
PepsiCo also reported many positive findings in its full-year results. Net revenue strengthened 12 percent and reported operating profit and core division operating profit both grew 10 percent.
PepsiCo grew worldwide revenue 12 percent for the year, which includes 4 percent in volume growth in beverages. PepsiCo International led volume gains with 8 percent beverage growth. Volume in PepsiCo Beverages North America (PBNA) was flat compared with the prior year.
Non-carbonated beverages also drove volume growth at PBNA. Beverage volume increased 1 percent in the quarter, which reflects high single-digit improvement in non-carbonated beverages and is partially offset by a low single-digit dip in CSDs.
The success story at PepsiCo is PepsiCo International’s double-digit growth in the Middle East, China, Brazil, Argentina, India and Russia. Overall, CSDs grew at a high single-digit rate, posting growth in each of the division’s four largest trademarks. Non-carbonates still led the division’s beverage volume growth, and posted double-digit gains.
Optimistic demerger
In March 2007, Cadbury Schweppes announced the separation of its confectionery and Americas Beverages businesses. Americas Beverages generates more than 80 percent of its revenues in the United States, and Cadbury Schweppes determined that the demerged Americas Beverages should be listed on the New York Stock Exchange as Dr Pepper Snapple Group (DPSG).
In its full-year results the company reported revenue increased 7 percent to $15.6 billion for all of Cadbury Schweppes. The figure includes a 16 percent gain in profits in the Americas Beverages unit due to the acquisition of the Dr Pepper/Seven Up bottling group.
Americas Beverages reported an increase of 4 percent in base business revenues, led by Sunkist and A&W. The company said that it continued to benefit from the trend away from colas to flavored CSDs. The company’s CSDs grew 1 percent in the United States, and its share of the CSD market rose by 40 base points, the company says. It marks the fourth consecutive year of share gains.
In February, Cadbury Schweppes also announced that Wayne Sanders will be the chairman of DPSG, following the demerger. Sanders spent 28 years at Kimberly-Clark where he served 11 years as chairman and chief executive officer before retiring in 2003.