uploads///KO Volume

Could Coca-Cola’s Volumes Increase in 1Q17?

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Dec. 4 2020, Updated 10:53 a.m. ET

Disappointing volumes

Coca-Cola’s (KO) revenue has been weak over the past several quarters for multiple reasons including weak volumes. Weakness is mainly noticed in the sparkling beverage category’s volumes. In 2016, the company’s worldwide unit case volume rose 1.0%. The company’s sparkling beverage volumes were flat in 2016, while still beverage volumes rose 3.0%. Coca-Cola’s sparkling beverages accounted for 72% of the company’s 2016 worldwide unit case volume. Such huge exposure puts the company in a weak spot. Consumers are looking for healthier beverage options and shifting away from soda.

PepsiCo’s (PEP) North America Beverages segment experienced a 2.0% rise in its fiscal 2016 volume due to a 7.0% rise in its non-carbonated beverage volumes, partially offset by a 1.0% fall in soda volumes.

Dr Pepper Snapple’s (DPS) 2016 volumes rose 1.0%. Carbonated soft drinks and non-carbonated beverage volumes generated 1.0% growth.

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Growth in the still category

As you can see in the above graph, Coca-Cola’s still beverages delivered higher volume growth than the company’s sparkling beverages in recent quarters. Coca-Cola’s still beverage portfolio includes beverage options like ready-to-drink tea, ready-to-drink coffee, bottled water, and juices. The company’s still beverage portfolio has many popular brands including Dasani, Minute Maid, and Gold Peak.

To address consumers’ growing need for better beverage choices, Coca-Cola is expanding its still beverage offerings through internal innovation and strategic deals. On March 28, Coca-Cola announced that it finalized the acquisition of AdeS, a plant-based beverage, from Unilever (UL). Coca-Cola’s other strategic acquisitions include minority stakes in Suja Juice, Nigeria’s Chi Limited, and Aloe Gloe.

Coca-Cola is also taking several steps to improve its soda volumes. The initiatives include aggressive marketing campaigns, expansion of sugar-free options, product reformulations, and offering smaller pack sizes.

In the next part, we’ll look at Coca-Cola’s earnings expectations.

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