Coca-cola says weather cooled earnings
NEW YORK — Coca-Cola, the world’s largest beverage maker, Tuesday blamed a confluence of factors including unusually bad weather for its disappointing secondquarter financial results.
It cited cold, wet conditions at home and flooding in parts of Europe for weak volume growth globally. Profit declined 4 percent.
The temporary setbacks added to the challenge the company faces in the U.S. and other developed markets, where soda consumption has been declining for years amid criticism that sugary drinks fuel obesity rates.
In the latest quarter, for example, Coca-Cola said soda volume for North America fell 4 percent. But the figure has declined in four of the past five quarters, including a 2 percent slide a year ago. It was flat in the
other quarter.
Still, executives expressed confidence they’d be able to return to growth with greater investments in marketing, new packaging and other tactics.
“I hate to use the weather, but a lot of it was the weather,” Chief Financial Officer Gary Fayard said in an interview on CNBC, apparently acknowledging the frequency with which companies cite the weather when they deliver disappointing results.
When asked whether people drink less soda when it’s cold and wet outside, Fayard said that was the case.
Coke’s shares fell 78 cents, or 1.9 percent, to close Tuesday at $40.23. During the past year, the company’s stock is up more than 7 percent.
Looking ahead to the second half of the year, executives expressed confidence that the weather would even out and that business would improve, including in key markets such as India, China and North America.
In the meantime, Coca- Cola and rival PepsiCo Inc. have been trying to come up with a soda that uses a natural, low-calorie sweetener to reverse the slide in U.S. soda consumption. The challenge is that such sweeteners often have a bad aftertaste. Notably, Coca-Cola has yet to roll out a mid-calorie version of Fanta and Sprite using the sweetener stevia that it began testing last summer.
To hit back at critics, CocaCola also began a TV ad campaign earlier this year addressing obesity for the first time. The ad noted that weight gain is the result of consuming too many calories of any kind, not just soda.
Similar ads have since been rolled out, with a focus on cable news channels where CocaCola believes viewers are more influential in shaping public opinion.
Coca-Cola, based in Atlanta, has also been relying on its bottled teas, water and sports drinks to improve sales. It sold more uncarbonated drinks in North America for the three months that ended June 28, but not enough to offset the decline in sodas.