3Q15 segment revenue
In 3Q15, Coca-Cola’s organic revenue (KO) from international segments fell primarily due to the impact of currency headwinds. However, excluding the impact of currency fluctuations, organic revenue of all segments, except for Asia Pacific, rose in the quarter.
Coca-Cola’s Eurasia and Africa segments’ organic revenue rose by 2% on a year-over-year basis, driven by a 4% rise in concentrate sales that were partially offset by unfavorable geographic mix. The segment experienced strong performance in Africa, which offset the deteriorating conditions in Russia and volatility in the Middle East.
The Europe segment reported organic revenue growth of 3%, driven by a 2% growth in concentrate sales, mainly in the still beverage portfolio. Coca-Cola’s business in Central and Southern Europe delivered strong performance in 3Q15 due to investments in media, positive changes in the company’s price and package architecture, and favorable weather.
The Latin America segment’s organic revenue growth came in at an impressive 14% as strong business in Mexico offset adverse conditions in Brazil. This growth resulted from a 1% rise in concentrate sales and a favorable 13-percentage-point impact of pricing and mix. However, the segment’s reported revenue fell by 14% as organic growth was offset by an unfavorable 28-percentage-point impact of currency headwinds. Other beverage companies’ revenue is also being impacted by currency fluctuations in the Latin America region. PepsiCo (PEP) drew 14% of its 3Q15 revenue from Latin America. Dr Pepper Snapple Group’s (DPS) Latin America business accounted for 7.9% of its 3Q15 net sales.
Coca-Cola’s North America segment’s organic revenue rose by 3%, primarily due to favorable pricing and mix management. The bottling investments segment delivered 3% organic revenue growth, led by operations in Germany, India, and Vietnam.
The Asia Pacific region reported a 1% fall in organic revenue as the positive impact of pricing and product mix was offset by a decline in concentrate sales.
Segmented revenue approach
Coca-Cola is following a segment revenue approach to drive revenue growth. The company is following a price-realization strategy in developed markets like the United States. It is pursuing a volume-led strategy in high-growth emerging markets. For developing markets, the company is pursuing a balanced volume and price realization strategy.