Coca-Cola gets a lift from diet drink rebound

JENNIFER MALONEY
DOW JONES
A rebound in demand for diet cola lifted Coca-Cola Co’s core soft drinks business in the latest quarter, as consumers turned back to the zero-calorie drinks they once spurned.
The company’s global soda volume grew 2 per cent from the same quarter a year ago, led by rising demand for Diet Coke and Coke Zero Sugar, a reformulation of Coke Zero that tastes and looks more like original Coke, with a red circle on the cans.
“Coke Zero Sugar is on a roll,” with sales growth worldwide in the high-teen percentage points, chief executive James Quincey said in an interview.
Diet Coke even eked out gains in the US, where its sales volume had been sliding for more than a decade as consumers turned to bottled water and flavoured seltzer. Low- and no-calorie Sprite and Fanta also helped boost sales, except in a couple of Central American countries where the company changed the recipes too sharply and consumers were unhappy, Mr Quincey said.
“We’ve course-corrected” in those markets, he said. “Where we’ve gone down in stages in the sugar reduction, we’ve seen good consumer acceptance.”
The soft drinks giant in January launched four new flavours of Diet Coke, including Ginger Lime and Zesty Blood Orange, packaged in new slim cans.
Low single-digit percentage price increases on Coke products in North America, implemented after the US placed tariffs on Chinese imports, didn’t seem to dampen demand. Organic revenue, which excludes currency swings, acquisitions and divestitures, increased 6 per cent from a year ago. Sales volume grew 2 per cent from a year earlier.
Coca-Cola replaced Coke Zero with Coke Zero Sugar in the US. last year. The company has been aiming to cut sugar from its products and diversify beyond soda as more countries implement taxes on high-calorie beverages to combat rising rates of obesity and diabetes, and as consumers switch to healthier beverages.
Overall, net revenue for the beverage company dropped 9 per cent to $US8.25 billion, as a result of the refranchising of company-owned bottling operations. Analysts polled by Refinitiv had expected revenue of $US8.17 billion.
The Atlanta-based company posted a profit for the third quarter of $US1.88 billion, or 44 cents a share, up from $US1.45 billion, or 33 cents a share, a year earlier. On an adjusted basis, it earned 58 cents a share, beating the 55 cents a share analysts expected.
For 2018, the company maintained its guidance of at least 4 per cent growth in organic revenue and comparable adjusted earnings per share from continuing operations of a 8 per cent to 10 per cent growth versus $1.91 in 2017.