Still beverages perform well
Coca-Cola’s (KO) still beverages outperformed the company’s sparkling or soda beverage portfolio in 2Q15. The unit case volume of the company’s global still beverage portfolio grew 5%, helped by strong demand for ready-to-drink tea, packaged water and value-added dairy. However, the volume of the juice and juice drinks category declined by 1% due to higher prices and softness in certain markets.
The company reported 1% growth in its global sparkling beverage volume in 2Q15 ending July 3, 2015, primarily driven by the Coca-Cola, Coca-Cola Zero, Sprite, and Fanta brands.
Still beverage volume across regions
Coca-Cola’s still beverages posted a 7% rise in volume in the Eurasia and Africa segment while the sparkling beverage portfolio grew 3%. The significant growth in still beverage volume in the region was driven by juice and juice drinks and packaged water. The Asia Pacific segment posted a 5% rise in still beverage volume and 1% growth in sparkling beverage volume.
The Europe and Latin America segments also posted strong growth rates of 7% and 5% in their still beverage volumes, respectively. However, the sparkling beverage volume for both the regions remained unchanged in 2Q15 compared to the corresponding quarter of the previous year.
North America sparkling beverage volumes improve
The North America segment reported a 4% growth in still beverage volume driven by double-digit growth in smartwater, Gold Peak, and Honest tea. The segment showed some hope, with 1% growth in its sparkling beverage volume helped by increased pricing and the demand for smaller packages.
Soda beverages have been under pressure in the United States. According to Beverage Digest, US soda volumes declined for the tenth straight year in 2014. Based on data provided by Beverage Digest, US soda volumes for Coca-Cola and PepsiCo (PEP) declined by 1.1% and 1.4%, respectively, in 2014. Soda volumes of Dr Pepper Snapple (DPS) were unchanged from the prior year. Monster Beverage (MNST) volumes increased by 7.0% in 2014 as energy drinks continue to resonate with consumers. Coca-Cola makes up 0.4% of the portfolio holdings of the iShares MSCI ACWI ETF (ACWI) and 0.9% of the iShares Core S&P 500 ETF (IVV).
Consumers are particularly showing aversion to the diet versions of soft drinks. The next part of this series discusses this trend.