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Why Coca-Cola’s Revenue Continued to Fall in 1Q17

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Apr. 28 2017, Updated 9:38 a.m. ET

Higher-than-expected revenue

Soda giant Coca-Cola (KO) delivered revenue of $9.1 billion in 1Q17. The company surpassed Wall Street analysts’ revenue estimate of $8.9 billion. However, the company’s revenue fell for the eighth straight quarter.

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Headwinds in 1Q17

Coca-Cola’s revenue fell 11.3% YoY (year-over-year) in 1Q17. Acquisitions, divestitures, and structural items related to the company’s refranchising of bottling territories had a 10.0% impact on its 1Q17 revenue. Currency headwinds had a 1.0% impact on Coca-Cola’s 1Q17 revenue. The 11.3% decline in Coca-Cola’s 1Q17 revenue was larger than the 5.9% revenue decline seen in 4Q16 and the 4.0% decline in 1Q16.

Excluding the impact of currency fluctuations and acquisitions, divestitures, and structural items, the company’s organic revenue was even. Although it saw 3.0% price and mix growth, this was offset by a 3.0% fall in concentrate sales. Also, two fewer days in 1Q17 had a two-percentage-point impact on the company’s organic revenue growth. Coca-Cola added that the timing of concentrate shipments and the shift of the Easter holiday into 2Q17 also had an unfavorable effect on the first quarter’s top line.

Peers perform better

In contrast to Coca-Cola, which reported a double-digit revenue decline in 1Q17, peers reported improved top lines. In 1Q17, PepsiCo’s (PEP) revenue rose 1.6% to $12.0 billion, driven by higher pricing. Dr Pepper Snapple Group’s (DPS) net sales rose 1.6% to $1.5 billion in 1Q17, with its Bai acquisition contributing 1.0 percentage point to net sales growth. Coca-Cola continues to expect 3.0% growth in its organic revenue in fiscal 2017. We’ll discuss Coca-Cola’s volumes in the next part of this series.

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