Coca Cola Reports 4 Percent Volume Gain In Second Quarter

Coca-Cola 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 nonalcoholic ready-to-drink (NARTD) beverages.

Muhtar Kent, chairman and chief executive officer, said in a prepared statement, “We are pleased with our second quarter and year-to-date results. 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.

“As we complete the 10th quarter of our 2020 Vision, we remain passionately focused on offering a portfolio of brands that refresh and hydrate our consumers while bringing them simple moments of happiness. Together with our system bottling partners, our long-term growth plans remain on track and our commitment to enhance the well-being of the consumers, customers and communities we serve around the world is as strong as ever.”

The company reported strong worldwide volume growth of 4 percent in the second quarter and 5 percent year-to-date. Volume growth in the quarter was well-balanced around the world, with solid growth in key developed markets, including Japan (4 percent), North America (1 percent) and Germany (1 percent), as well as strong growth in key emerging markets such as India (20 percent), Russia (9 percent), China (7 percent) and Brazil (6 percent). Volume performance was soft in regions of Europe such as Central and Southern Europe and Northwest Europe and Nordics, both down 5 percent in the quarter, as a result of the ongoing economic slowdown and unfavorable weather. Volume grew 8 percent in countries with lower per capita consumption (up to 150 eight-ounce servings per year) of our broad portfolio of beverage products.

In the second quarter, we grew global volume and value share in total NARTD beverages, with volume and value share gains across nearly every beverage category in which the company competes. Brand health remains strong, with continued improvements in favorite brand scores and growth among consumers who enjoy at least one product from the broad portfolio of beverage brands per week. Through the occasion-based brand, package, price and channel segmentation strategy, the company remains closely connected to consumers with a dual focus on recruitment and affordability. The immediate consumption beverage volume continues to grow, up 4 percent globally in the quarter and 5 percent year-to-date.

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. Worldwide brand 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 (35 percent), Russia (23 percent), the Philippines ( 7 percent), Brazil (4 percent), Germany (3 percent) and Mexico (1 percent). In addition, worldwide Sprite volume grew 6 percent in the quarter and 5 percent year-to-date and global Fanta grew 4 percent 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.

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. The company grew global volume and value share in total still beverages as well as across all still beverage categories in which we compete. 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 was launched in Latin America during the quarter. Packaged water volume grew 10 percent in the quarter, as the company continues to focus on innovative and sustainable packaging and immediate consumption occasions. Energy drinks volume grew 21 percent in the quarter driven by growth across the global portfolio of energy brands.

The North America Group's volume grew 1 percent in the quarter despite a shift of some Easter and July 4th 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.

During the quarter, North America gained value share in total NARTD beverages as the company continues to provide consumers greater variety and choices in beverage packaging. In addition, the company gained volume and value share in still beverages, with volume and value share gains across multiple still beverage categories, including juices and juice drinks, sports drinks, energy drinks and ready-to-drink tea. 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 over the past year.

Coca-Cola Zero volume grew mid single digits in its eighth year in the market, reflecting the company's commitment to sustainable innovation. 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.

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 in Trademark Simply and the launch of new flavors in the Minute Maid Light portfolio. 

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