Coca-Cola has long touted its broad geographic reach and ability to make up for sluggish sales in one market with increases in another.
Second-quarter results show there is a limit to that trick, especially when Mother Nature and global economic forces refuse to co-operate.
Second-quarter profit at the world’s largest beverage company declined 4% amid constrained sales around the globe. Unseasonable weather from India to America hurt consumption, as did slowing economic growth in China, struggling consumers in Europe, and changing beverage tastes in the US.
“This was a confluence of events,” CEO Muhtar Kent said yesterday.
“The portfolio effect of our global business did not work in our favour in this particular case.”
To counter slower growth, Kent said he is speeding up efforts in China and other emerging markets to expand Coca-Cola’s reach by adding smaller, more affordable package sizes.
He said the firm has not pulled back on marketing and advertising to blunt losses.
“This is more of an anomaly, we should not see this as a trend or a systemic issue,” Kent said.
In India, for example, monsoons swamped sales, especially given unusually high growth one year ago after the monsoon season came late, Kent said. In Brazil, consumer spending was depressed by a credit crisis, he said.
Net income fell to $2.68bn (€2.03bn), or 59c a share, from $2.79bn, or 61c, a year earlier, Atlanta-based Coca-Cola said yesterday in a statement. Excluding some items, profit was 63c a share, matching the average of 16 analysts’ estimates compiled by Bloomberg.
Global sales volume grew 1%, less than the 3.3% average of four estimates compiled by Bloomberg.
Europe sales volume slid 4% because of the weak economy and flooding in Germany. China’s volume was little changed after a 7% gain a year earlier.
North America volumes fell 1% amid unseasonably cool weather.
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