WATER OVER COLA

Coke’s earnings drop as consumers’ tastes shift away from the fizzy stuff,

Coca-Cola customers are thirsty — for bottled water.

The company’s first-quarter earnings report out Wednesday pointed to the steady shift taking place within its customers’ diets as they increasingly opt to sip on water, tea, coffee and energy drinks over carbonated sodas.

Revenue fell 4 per cent to $10.28 billion (U.S.) from $10.71billion in the year-ago quarter. That came in above analyst estimates for revenue of $10.24 billion, according to S&P Global Market Intelligence.

Coke grew unit-case volume, a measurement of litres sold, by 2 per cent, primarily due to a 7-per-cent increase in still beverage volume. Coke’s still portfolio includes brands such as Dasani and Minute Maid, which continue to gain traction with customers at the expense of sodas.

Coke’s premium brand, Smartwater, is growing even faster than Dasani, too, CEO Muhtar Kent said on a call with media.

Sparkling beverage volume was flat, as Coke deals with the decline in soda consumption, particularly in the U.S.

Trademark Coke volume fell in almost every market, which the company partly attributed to expected softness at the start of the year. Coke saw significant upticks in bottled water, sports drinks and ready-to-drink tea.

Not all of its soda brands are deflating, though. In the U.S., Coca-Cola grew volume for its Sprite and Fanta brands, as well as juice, sports drinks, ready-to-drink tea and water. And trademark Coke volume still grew in Asia, by 3 per cent.

Still, overseas markets proved to present a challenge for the business due to a strong U.S. dollar and declining demand in some areas. Coke’s profit took a hit from foreign currency fluctuations and concentrate sales fell in the Eurasia and Africa market and Europe.

Coke reported first quarter earnings of $1.48 billion for the quarter ended April 1, a 5-per-cent decline from $1.56 billion in the year-ago quarter. Earnings per share came to 34 cents, or 45 cents adjusted for one-time costs. The results beat analyst expectations for earnings per share of 44 cents, according to S&P Global Market Intelligence.