ATLANTA — While bottled water, sports drinks and other beverages remain a focus for the Coca-Cola Co., its diet soft drinks were the sales stars in the second quarter ended June 29. The Atlanta-based company posted 5% retail value growth in its sparkling portfolio.
“Let me start by saying and underlining that we’re winning in a dynamic and vibrant industry,” said James Robert B. Quincey, president and chief executive officer, in a July 25 earnings call. “The global beverage industry is growing faster than last year, driven by better results in the emerging and developing markets and also sparkling soft drink category.”
Coca-Cola’s unit case volume in the quarter grew 2%, led by the Coca-Cola brands, including continued double-digit growth for Coca-Cola Zero Sugar.
“The interesting thing is that the success and the turnaround of Diet Coke, or at least the work in progress of the turnaround of Diet Coke, is not coming at the expense of Coke Zero Sugar,” Mr. Quincey said.
Second-quarter net income of $2,331 million, or 54c per share on the common stock, was up 70% from $1,372 million, or 32c per share, in the previous year’s second quarter. Net revenues of $8,927 million declined 8% from $9,702 million as a 15% headwind came from the refranchising of company-owned bottling operations.
Unit case volume grew 2% led by 2% growth in sparkling soft drinks and 4% growth in water, enhanced water and sports drinks.
Unit case volume was down 2% in juice, dairy and plant-based beverages and 1% in coffee.
In North America, 7% retail value growth came in the company’s no-sugar sparking soft drink portfolio, driven by Coca-Cola Zero Sugar and Diet Coke. Price/mix declined 3% for the quarter. Low single-digit pricing in the market was offset by 1 point from increased freight costs, 1 point from the timing of deductions and about 2 points from business mix.
“We’re taking pricing actions alongside our bottlers on our sparkling beverage brands and expect to see positive price/mix in the second half across the portfolio in aggregate as our package downsizing and our marketplace pricing actions are fully implemented and the timing items reverse,” Mr. Quincey said. “These factors, along with the continued execution of our strategy, will result in stronger financial performance in North America in the back half.”
Second-quarter operating income of $684 million for North America was down 10% from $755 million in the previous year’s second quarter in North America. Second-quarter revenues rose 7% to $3,117 million from $2,903 million.
In Europe, Middle East and Africa, unit case volume grew 1%. Operating income was up 2% to $1,095 million. Net operating revenues grew 7% to $2,170 million. Coca-Cola launched AdeZ, a premium offering that will expand the company’s presence beyond beverage into on-the-go snacking, in more than 10 European markets in the second quarter. AdeZ should be in 19 European markets total by the end of the year.
In Latin America, strong price/mix in Mexico, Brazil and the South Latin business unit drove price/mix growth of 12% in the quarter. Operating income, at $593 million, was up 6%. Net operating revenues rose 8% to $1,031 million.
In Asia Pacific, strong performances in China and India drove unit case volume growth of 5%. Operating income dipped 1% to $705 million. Net operating revenues increased 1% to $1,517 million.
Companywide for the six months ended June 29, Coca-Cola reported net income of $3,731 million, or 86c per share on the common stock, which was up 46% from $2,553 million, or 60c per share, during the same time of the previous year. Six-month net operating revenues of $16,553 million were down 12% from $18,820 million.