Bottles of Coca-Cola
Coca-Cola expects continued growth in the non, alcoholic, ready-to-drink category.

The Coca-Cola Co., Atlanta, expects continued growth in the non-alcoholic, ready-to-drink category to help out as the company strives to reach its 2020 Vision goals. Doubling system revenues by 2020 is one goal while becoming a global leader in sustainable water use, packaging, energy and climate protection is another.

Coca-Cola had fiscal-year 2014 net operating revenues of $46 billion, which was up from $36.1 billion in 2010 but down from $46.9 billion in 2013. For positive revenue news in fiscal-year 2015, smaller packaging has returned sparkling beverage to volume growth for Coca-Cola. Future acquisitions may bump up still beverage sales.

Coca-Cola executives believe the global non-alcoholic beverage category, due to such macro trends as increasing urbanization and a growing middle class, will have a compound annual growth rate of 5% between now and 2020, said Muhtar Kent, chairman and chief executive officer, on Feb. 20 at the Consumer Analyst Group of New York Conference in Boca Raton, Fla.

Muhtar Kent, Coca-Cola
Muhtar Kent, chairman and c.e.o. of The Coca-Cola Co.

“The point is we see tremendous growth opportunity in both the sparkling and other still categories,” he said. “This is why we remain confident, as the industry moves back to more historical growth trends, both sparkling and still will benefit in similar ways.”

James Quincey, named president and chief operating officer of Coca-Cola in August, addressed still beverages in a Sept. 9 presentation at the Barclays Global Consumer Staples Conference in Boston. Mr. Quincey said The Coca-Cola Co. has created some still beverage brands from scratch and turned them into $1 billion brands, but that practice alone will not be fast enough to meet company goals.

“We are going to need to do some volume acquisitions,” Mr. Quincey said. “They come up opportunistically. Sometimes people (are) selling, want too much money, and we shouldn’t do them. When the price is right, whether that’s a full acquisition or a stake, then it is something we should explore.”

The Coca-Cola Co. and Monster Beverage Corp. on June 12 closed the deal on a partnership first announced in 2014. The Coca-Cola Co. now owns about 16.7% of Monster. The Coca-Cola Co. transferred ownership of its worldwide energy drink business to Monster. Monster transferred its non-energy business to The Coca-Cola Co.

In sparkling beverages, Coca-Cola reported volume growth of 1% in the second quarter ended July 3, led by 1% growth in brand Coca-Cola, 6% growth in Coca-Cola Zero, 3% growth in Sprite and 2% growth in Fanta. Diet Coke, however, suffered a 7% decline.

“While sparkling unit case volume grew 1%, transactions increased 2% due to strong growth in smaller packages, which are on trend with consumer preferences, such as our mini cans, which grew volume double-digits during the quarter,” Mr. Kent said in a July 22 earnings call.

For the six months ended July 3, Coca-Cola companywide had net income of $4,677 million, or $1.06 per share, which was up from $4,231 million, or 95c per share, in the same time period of the previous year. Net operating revenues of $22,867 million were down 1% from $23,150 million.