Cold weather chills Coca-Cola’s Q2
ATLANTA — Coca-Cola says slow economies in Europe, Asia and Latin America and cold weather conditions across multiple regions affected consumer spending as well as its overall nonalcoholic ready-to-drink beverage performance.
Coca-Cola reported worldwide volume growth of 1% in the second quarter ended June 28, and 3% year-to-date. It also grew global volume and value share in total nonalcoholic ready-to-drink (NARTD) beverages as well as in sparkling and still beverages for the quarter. But volume growth in the quarter was below the company’s expectations.
Coca-Cola Americas grew volume 1% in the quarter and 2% year to date, with North America volume down 1% and Latin America volume up 2% in the quarter. Coca-Cola International grew volume 2% in the quarter and 4% year to date, with second quarter Eurasia and Africa volume up 9%, Pacific volume up 2% and Europe volume down 4%.
“Our second quarter volume results came in below our expectations, reflecting an ongoing challenging global macroeconomic environment and unusually poor weather conditions in the quarter,” said Muhtar Kent, chairman and CEO of the Coca-Cola Company. “While we are not happy with our performance, we did gain global volume and value share in total nonalcoholic ready-to-drink beverages as well as in sparkling and still beverages in the quarter. Despite the headwinds in the quarter, we are committed to improving upon our results, with current dynamics leading us to believe that our performance will be better in the second half of the year. We remain confident in our 2020 Vision and our system's ability to execute with precision around the world. In this context, we remain firmly focused on investing alongside our global bottling partners to strengthen our system for the future, to deliver the brands and beverages that consumers love and to achieve our long-term performance goals.”
Worldwide sparkling beverage volume was even in the quarter and up 2% year to date. Despite unseasonably cold and wet weather and continued volatile macroeconomic conditions in many markets around the world, the company grew global volume and value share in sparkling beverages in the quarter, led by marketing campaigns such as Share a Coke in Europe and Coca-Cola Open Summer in North America. Worldwide brand Coca-Cola volume grew 1% in the quarter and 2% year to date, with growth in the quarter across diverse markets, including Thailand (+24%), India (+18%), Nigeria (+15%), Russia (+11%), Argentina (+7%) and the Philippines (+7%).
Worldwide still beverage volume grew 6% in both the quarter and year-to-date, with solid volume and value share growth across beverage categories, including packaged water, juices and juice drinks and ready-to-drink tea. Excluding the impact of acquired volume, primarily the Aujan partnership in the Eurasia and Africa Group, still beverage volume grew 4% in the quarter. Ready-to-drink tea volume grew 10% 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 across multiple markets worldwide. Packaged water volume grew 6% in the quarter, as the company continues to focus on innovative and sustainable packaging and immediate consumption occasions that help drive value share growth ahead of volume share growth. Energy drinks volume grew 5% in the quarter driven by growth across its global portfolio of energy brands. Juices and juice drinks volume grew 4% in the quarter, with growth across all geographic operating groups.
Coca-Cola’s North America Group's volume declined 1% in the quarter and was even year-to-date, cycling 1% growth in the prior year quarter. Volume was under pressure due to unseasonably cold and wet weather and the timing of the Easter and Fourth of July holiday periods as well as weakened consumer spending that has impacted the overall NARTD beverage industry in North America. Reported and comparable currency neutral net revenues for the quarter declined 1%, reflecting a 1% decline in as reported volume and even price/mix, including positive 1% price/mix for sparkling beverages.
During the quarter, North America maintained volume share and grew value share in total NARTD beverages as the company continued to focus on its core strategies of building strong brands, creating value with customers and enhancing system capabilities. In addition, the company gained volume and value share in both sparkling and still beverages, with volume and value share gains across every still beverage category except sports drinks. Sparkling beverage volume declined 4% in the quarter with sparkling beverage price/mix growth of 1% and value share growing ahead of volume share. Still beverage volume grew 5% in the quarter, led by strong performance across both the ready-to-drink tea and packaged water categories with brands such as Gold Peak, Smartwater and Dasani leading the way. Further, our volume and value share gains in the juices and juice drinks category were driven by 4% volume growth for Simply and 3% growth for Minute Maid.