Coca-Cola’s Still Beverages Deliver Strong Volumes in 3Q15



Volumes in 3Q15

Coca-Cola’s (KO) overall unit case volume rose by 3% in 3Q15 on a year-over-year basis. The third quarter, which ended on October 2, 2015, witnessed a 2% growth in sparkling beverage volume and a 6% rise in still beverage volume.

Growth in sparkling beverage volumes was driven by higher volumes from trademarks Coca-Cola, Sprite, and Fanta. However, Diet Coke volumes fell by 8%. The 3Q15 still beverage volume growth was a result of 4% growth in ready-to-drink tea, 5% growth in sports drinks, and 11% growth in packaged water.

Article continues below advertisement

Still beverages continue to rule

The preference for still beverages is rising around the world, reflecting consumer preference for healthier beverages and the growing aversion to carbonated soft drinks. Coca-Cola’s peers are also experiencing a higher growth rate in their still beverage volumes. In 3Q15, PepsiCo’s (PEP) North America Beverages segment’s volumes rose by 3%, as a 10% rise in still beverage volume was partially offset by a 2% fall in soda volumes. Dr Pepper Snapple Group (DPS) reported a 2% rise in its 3Q15 bottler case volume driven by a 4% rise in still beverage volume and a 2% rise in carbonated soft drink volume.

Volume growth by segment

3Q15 volume growth based on beverage category in Coca-Cola’s segments was as follows:

  • Eurasia and Africa: sparkling (up 3%), still beverages (up 6%)
  • Europe: sparkling (up 2%), still beverages (up 12%)
  • Latin America: sparkling (up 1%), still beverages (up 6%)
  • North America: sparkling (down 1%), still beverages (up 7%)
  • Asia Pacific: sparkling (up 3%), still beverages (up 6%)

The portfolio holdings of the iShares S&P Global Consumer Staple ETF (KXI) have a 5.0% exposure to Coca-Cola.

Article continues below advertisement

Growth avenues

Coca-Cola is looking for various options to boost its still and sparkling beverage volumes. In August 2015, Coca-Cola (KO) bought ~30% stake in Suja Juice, a California-based manufacturer of organic juices. The popular Suja Juice brand will enhance Coca-Cola’s still beverages portfolio. In its 3Q15 conference call, Coca-Cola’s chairman and CEO (chief executive officer) Muhtar Kent revealed that the company recently received regulatory approval for the acquisition of the beverage business of China Culiangwang Beverages Holdings, a producer of plant-based protein drinks. Coca-Cola had initially announced this transaction in April 2015.

Coca-Cola’s strategic deal with Monster Beverage (MNST) will help the company take advantage of the high-growth energy drinks market. Through a strategic deal with Keurig Green Mountain (GMCR), some of Coca-Cola’s brands will be available through the at-home carbonation Keurig Kold system, which was launched in September 2015.


More From Market Realist