The world's largest soft-drinks manufacturer Coca-Cola Co. is seeing sales in China, one of the world's fastest-growing consumer markets, slow in the third quarter.
Sales in China have grown by only 2% this past quarter, marking a slow down compared to 11% growth one year ago and 7% during the second quarter.
The majority of Coca-Cola sales come from outside the US, and China has been a major force driving company growth.
Muhtar Kent, chief executive of Coca-Cola, says: "Consumers across the globe are still feeling the effects of the prolonged uncertainty in Europe, the ongoing cooling of the economy in China, and a mild recovery in the United States. We believe these global macro-economic pressures will extend through 2012 and likely into 2013."
Kent went on to say he believes China’s slowdown will be short term, and that China will continue to drive growth for Coca-Cola in the future.
Sales also were hurt by the strength of the US dollar, which lowered net revenue by 5% and operating income by 7%.
Coca Cola Sees Growth Worldwide
Despite the slowdown in China, Coca-Cola saw growth worldwide. Sales volumes for the company’s most popular drink lines rose 4%. Coca-Cola manufactures not only Coke but Sprite, Dasani, Minute Maid, Fanta and Honest Tea.
Sales volumes in Europe were hurt by the debt crisis and rose by only 1%; sales grew the most in Central and Eastern Europe where prices are lower.
In North America, sales grew by 2%, which is lower than the 5% growth registered in 2011. Sales in the Pacific region were up 3%, 5% in Latin America, and some 11% in Eurasia and Africa.
Overall, Asia is key to the company’s growth, and India appears to have taken China’s place as the largest market. In early 2012, Coca-Cola announced plans to invest $5 billion in India over the next eight years. Sales volumes for the third quarter grew by 15% over last year.
However two markets that did not fare well include the Philippines, where sales were stagnant, and Japan, where sales fell by 5%.
Key Statistics - Carbonated Soft Drink Industry in China (source: MarketLine)
- In 2011, the carbonated soft drinks market in China generated revenue totaling over $10 billion. Between 2007-2011, this represents a compound annual growth rate (CAGR) of nearly 7%.
- During the timeframe 2007-2011, market consumption volumes for the the carbonated soft drinks market in China increased with a CAGR of nearly 6%. In 2011, the market reached 11.8 billion total liters.
- For the five-year period 2011-2016, market performance is predicted to decelerate, with a CAGR of nearly 4%. By the end of 2016, the market is expected to be valued at close to $12.5 billion.