The Coca-Cola Co., Atlanta, reported continued momentum in its business for 2018, with strong financial results for the third quarter. Although reported net revenues for the quarter declined because of refranchising, the company delivered broad-based organic revenue (non-GAAP) and volume growth across all operating groups, while gaining value share globally, it reports.
Strong organic revenue (non-GAAP) growth in the quarter was driven by continued innovation and revenue growth management initiatives within sparkling soft drinks, as evidenced by double-digit volume growth of Coca-Cola Zero Sugar across all groups, the company states. In addition to sparkling soft drinks, the company saw strong performance for brands like Fuze Tea and smartwater.
Coca-Cola also announced several strategic actions, including a number of acquisitions and investments, and continued to lift, shift and scale brands around the world. The company's disciplined growth strategies and an ongoing focus on productivity led to double-digit profit growth for the quarter, it states.
"We continue to be encouraged by our performance year-to-date as we accelerate our evolution as an even more consumer-centric, total beverage company," said James Quincey, president and chief executive officer of The Coca-Cola Co., in a statement. "The recent leadership appointments are intended to help accelerate the transformation of our company."
For the quarter, net revenues declined 9 percent to $8.2 billion, impacted by a 13-point headwind from the refranchising of company-owned bottling operations. Organic revenues (non-GAAP) grew 6 percent, driven by concentrate sales growth of 4 percent, which benefited from the timing of shipments, and price/mix growth of 2 percent. Additionally, unit case volume grew 2 percent, led by trademark Coca-Cola. The company also reported that it continued to gain value share in total non-alcoholic ready-to-drink (NARTD) beverages.
In North America, unit case volume grew 1 percent in the quarter. Volume performance was led by 1 percent growth in sparkling soft drinks due to double-digit growth in Coca-Cola Zero Sugar and solid performance for Sprite as well as strong performance across premium waters, including Topo Chico and smartwater, in addition to double-digit growth in Powerade Zero. This was partially offset by a decline in juice, largely due to package downsizing across the juice portfolio, and a decline in tea, which was impacted by deprioritizing low-margin tea products. The company also gained value share in total NARTD beverages along with sparkling soft drinks and maintained value share in the juice, dairy and plant-based beverages cluster, it states.
During the quarter, the company announced the expected acquisition of Costa Ltd., which will provide the capabilities to build a global coffee platform. Costa also will give the company strong expertise across the coffee supply chain, including sourcing, vending and distribution, which will complement and leverage existing capabilities within the Coca-Cola system, it states. The acquisition is expected to close in the first half of 2019.
The company continues to lift, shift and scale leading brands around the world, including the ongoing expansion of smartwater. With more than 20 markets launching in 2018, smartwater will be present in 32 countries by the end of this year. In its flagship U.S. market, smartwater announced two innovations: smartwater antioxidant and smartwater alkaline. These offerings will help meet the needs of U.S. consumers who continue to reach for more enhanced hydration options.
During the quarter, the company announced a strategic relationship with BODYARMOR, one of the fastest-growing beverage trademarks in the United States. BODYARMOR distribution will complement the Coca-Cola system's growing hydration portfolio, including Powerade, vitaminwater, smartwater and Dasani. The company also announced the addition of other brands with an edge in the market, including MOJO in the fast-growing kombucha category in Australia and Tropico fruit-flavored beverages in France.