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What Drove Coca-Cola’s Volume Growth in the First Quarter?

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Improvement in volumes

After reporting flat unit case volume in the fourth quarter, Coca-Cola (KO) bounced back with 2% growth in its unit case volume in the first quarter. The company’s volume growth was driven by strength in key markets in Asia and Europe, partially offset by weakness in Argentina, the Middle East, and North America. The first quarter volumes were also adversely impacted by the timing of Easter.

Higher volumes and increased pricing led to a 5.2% increase in Coca-Cola’s reported revenue and a 6.0% increase in organic revenue in the first quarter.

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Volumes by category

Coca-Cola’s sparkling soft drink volumes increased 1.0% in the first quarter due to the strong performance of the Coca-Cola brand, particularly the original Coca-Cola line and double-digit growth in Coca-Cola Zero Sugar volumes. This was the sixth consecutive quarter in which Coca-Cola Zero Sugar’s global volumes increased by double digits.

Coca-Cola’s juice, dairy, and plant-based beverage volumes were flat on a year-over-year basis as higher volumes of the Del Valle brand in Mexico and Maaza in India were offset by lower volumes of the Rani brand in the Middle East. Coca-Cola’s water, enhanced water, and sports drink volumes grew by an impressive 6%. The category benefitted from higher volumes of smaller packages.

Tea and coffee unit case volumes were flat in the first quarter as the favorable impact of innovation and new product launches was offset by lower volumes in the Doadan tea business in Turkey.

Coca-Cola’s unit case volume in the North America region declined 1% in the first quarter. The company cited higher pricing, package initiatives, and the timing of Easter as the reasons for the lower volumes in this important region.

Rival PepsiCo (PEP) also faced disappointment in the North America region. PepsiCo’s Beverages North America division experienced a 2% decline in its volume in the first quarter due to a 4% fall in carbonated soft drink volumes. The segment’s non-carbonated beverage volumes grew 1% in the first quarter.

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