Coca-Cola: Separating Volume and Revenue
ATLANTA — While crowing about global sales volume growing 3% and North America volume up 1% during the third quarter, Coca-Cola Co. continues to get put on the spot about soft carbonated-soft-drink sales, which dipped 1% in North America during the quarter.
“As I look at the syndicated data for carbonated beverages in the United States, it does look like the category is softening a bit,” analyst Vivien Azer of Cowen & Co. said during Wednesday’s earnings call after Coca-Cola CEO Muhtar Kent referred to a healthy nonalcohol beverage business in the United States. “I think your revenues were down three out of the last four months.”
But Kent sees things differently.
“We’re able to generate revenue growth, both in the sparkling category, very much so, as well as in the still side,” he said. “That’s what my comment referred to. This is not just one quarter. This is multiple quarters. And at the same time, that LRB (liquid refreshment beverage) category is showing very good resilience in terms of both price elasticity, price discipline, approach with customers, generating value for our customers.”
Kent said this is the 22nd consecutive quarter of Coca-Cola Co. gaining value share in North America.
“The mix is really working for us, in terms of generating the marketing,” he said. “The North American market is the first market where we’ve started employing incremental marketing, better marketing, [aid it] is generating positive results for us in terms of the revenue growth, purely from sparkling, as well as from the still side of the business.”
Added chief operating officer James Quincey, “if you take a look at how we’re driving the sparkling business, you can look at the transaction packages, which represent about 15% of the volume. They’re growing again this quarter into double digits. So, we’re very pleased with the marketing.”
During the quarter, overall Coca-Cola co. unit-case volume in North America grew 1%, while sparkling beverages dipped 1% and still beverages grew 7%.
Globally, net revenue declined 5%, and organic revenue grew 3%. Global volume grew 3%.
