Coca-Cola raises forecast on new coffee and cool-drink offerings
Soft-drink company responds to changing consumer tastes by moving beyond traditional fizzy drinks
Bengaluru — Coca-Cola beat second-quarter earnings expectations and raised its organic revenue forecast for the full year, betting on its new ready-to-drink coffee business and demand for zero-sugar fizzy drinks.
The world’s biggest beverage maker said on Tuesday it now expects organic revenue to grow 5% for the whole of 2019, up from its previous projection of a rise of about 4%.
Coca-Cola has been responding to changing consumer tastes by moving beyond traditional sodas and offering drinks that are lower in sugar or come in new flavours.
As a part of CEO James Quincey’s plan to create a “total beverage company”, the group bought Britain-based Costa Coffee for $5bn in a deal announced in 2018 and finalised in 2019. It recently rolled out ready-to-drink coffee in cans in the UK and a coffee-based soda in several markets.
This push comes as beverage makers, including rival PepsiCo, look to expand into coffee, tea, juices, bottled water and energy drinks in the face of falling soda sales.
Coca-Cola expects Coke coffee, a beverage that blends coffee and its trademark soda, to be available in more than 25 markets globally by end-2019. The beverage has slightly less caffeine than a normal cup of coffee but more than a can of the soda.
A ready-to-drink Costa Coffee in three variants also hit European markets earlier in 2019.
The share price of the Atlanta-based company, a Dow Jones Industrial Average index component, rose nearly 4% before the bell.
Wells Fargo analyst Bonnie Herzog said Coca-Cola’s improved revenues suggest its refranchising and portfolio transformation are paying off.
In the second quarter, a 4% volume growth in traditional Coca-Cola and its zero-sugar version helped net revenue rise 6.1% to $10bn, a touch above analysts’ estimates.
Net income attributable to Coca-Cola rose 12.6% to $2.61bn.
Excluding one-time items, it earned 63c per share, 2c above Wall Street’s estimates, according to Ibes data from Refinitiv.
Organic revenue, a keenly watched metric that gives sales growth excluding acquisitions and currency fluctuations, rose 6%.