Coca-Cola Co is maintaining its leadership in the global soft drink market by growing its global reach to target emerging markets and adding smaller drink sizes to its product offering.
The company reported better-than-expected results for first quarter 2012, recording 8% net profit growth. Volume was also up 9% in Russia, India, the Middle East and Africa. North America was slightly behind, with volume growing 2%.
Coca-Cola’s CEO Muhtar Kent told reporters: “We still believe North America is a growth market for our business, despite the competition and market saturation.”
Bottled Water, Energy Drinks Up
Coca Cola also reported solid growth for its non-soda brands as calorie-conscious consumers contributed to an increase in global volume, with bottled water up 15% and energy drinks seeing a 25% increase.
In fact, North America’s modest volume was chiefly driven by the popularity of company’s Powerade sports drinks, Dasani bottled water and zero-calorie Vitamin Water.
Success for Smaller Sized Drinks
Coca-Cola is offsetting rising commodity costs by introducing new, smaller drink sizes. Four years ago, it rolled out a 20-ounce on-the-go bottle, and has since put out 14-ounce, 12.5 ounce, 12-ounce, and even a 7.5 ounce “mini-can.”
Besides attracting consumers focused on reducing their intake of sugar, parents are big fans of the smaller sizes, with “moms buying the mini-cans; they love it for their kids,” according to Kent.
Coca-Cola’s first fiscal quarter, which ended March 30, saw total revenue at $11.14 billion, which was above analyst-predicted numbers of $10.82 billion. The company’s latest figures show a 6% increase from $10.52 billion a year ago.
Kent told reporters: “Our first quarter results underscore The Coca-Cola Company's resilience and a long-term focus on quality growth in every region of the world. Despite a continued mixed global environment, our hardworking teams achieved broad-based volume and value share gains in nonalcoholic ready-to-drink beverages globally, with volume growth across every geographic operating group and revenue growth ahead of our long-term growth target.”
Key Statistics - Global Soft Drink Market (source: MarketLine)
- With an expected CAGR of over 3% over the course of 2010–2015, the global soft drinks market is expected to increase rapidly – with market value predicted to be $586 billion by the end of 2015.
- Generating total revenue of over $204 billion in 2010, the global soft drinks market’s most profitable segment was carbonates, which represented nearly 41% of the market's total value.
- As the leader in the global soft drinks market, Coca-Cola accounted for almost 25% of the market's volume.