Coca-Cola expects sales growth to slow in 2019
Beverage maker posts a profit as revenue was boosted by demand for tea, coffee, water
Coca-Cola Co. reported slightly stronger-than-expected revenue in its latest quarter, boosted by demand for tea, coffee, water and sports drinks, but the beverage company expects sales will slow down this year.
The company said organic revenue, which excludes currency swings, acquisitions and divestitures, will grow about 4% in 2019 compared with 5% growth last year.
Coca-Cola Chief Executive James Quincey said the company tempered its expectations after seeing a slowdown in emerging and developing markets at the end of 2018. “We think we have a great plan, we’ve got good momentum, but we’re being realistic and cautious on the global outlook,” Mr. Quincey said in an interview.
Organic revenue increased 5% in the fourth quarter from a year ago, helped by strong sales of Coca-Cola Zero Sugar and lowand no-calorie versions of Sprite and Fanta. Sales volume was flat from a year earlier.
Tea and coffee sales volume rose 3% in the quarter, driven by the growth of Fuze Tea in Europe and a new line of ready-to-drink coffee in Japan. Water, enhanced water and sports drinks grew 1%. Soda declined 1% while juice, dairy and plant-based beverages fell 2%.
In the quarter, North America soda sales volume took a 1% hit from price increases, despite higher demand for Coca-Cola Zero Sugar and Sprite.
The company has been focusing on higher margins over volume gains.
Soda sales have been sliding for much of the past decade as consumers have turned to bottled water and flavored seltzer.
Overall, net revenue for the beverage company dropped 6% to $7.1 billion for the quarter, as a result of the refranchising of company-owned bottling operations and foreign-currency headwinds. Analysts polled by Refinitiv had expected sales of $7.03 billion.
The Atlanta-based company posted a profit for the fourth quarter of $870 million, or 20 cents a share, compared with a loss of $2.75 billion, or 65 cents a share, a year earlier. On an adjusted basis, the company earned 43 cents a share, in-line with what analysts expected.
Coke projected adjusted earnings this year to fall 1% or grow by 1%.
Coca-Cola brands include Dasani bottled water, Minute Maid juices, Powerade sports drinks, Honest Tea and Zico coconut water.
Last week, Coca-Cola said it was introducing the first new flavor in more than a decade for its namesake cola. Orange Vanilla Coke and Orange Vanilla Coke Zero Sugar will go on sale across the U.S. on Feb. 25.
The move follows a revamp last year of Diet Coke with several new flavors, including Ginger Lime and Zesty Blood Orange, which helped spur a rebound in demand for diet cola.
“Some people love it. And of course you always get a few that go, ‘No I don’t like it,’” Mr. Quincey said of Orange Vanilla Coke. “It’s all about bringing some interest to the brand and the category and having a bit of fun with it.”