Coke shares hit all time high as new drinks win customers
Cola maker's coffee products and low-sugar sodas give its bottom line a boost
Coca-Cola shares hit a record high after the company upped its full-year revenue expectations and said it’s winning customers with new drinks like low-sugar sodas and iced coffees.
Shares of Coca-Cola Co. rose 6% to close at US$54.33 Tuesday. Coke’s shares first rose above $50 in early June.
Chairman and CEO James Quincey said product innovation was helping the company gain global market share. New and reformulated products–such as Coca-Cola Plus Coffee and lower-calorie Simply juices–now account for 25% of the company’s revenue, up from 15% two years ago, Quincey said.
The world’s largest drink company also sees plenty of room for growth. Quincey said 80% of the world’s population lives in developing markets like Africa, India and China, where commercial beverages make up just one-quarter of drink consumption. In developed markets, commercial beverages account for three-quarters of consumption.
“That’s a huge opportunity in front of us,” Quincey said. “We’re seeing good growth this quarter and have been seeing it for a while.”
Coke posted second quarter earnings of $2.61 billion, or 61 cents. Earnings, adjusted for one-time gains and costs, came to 63 cents per share, which is a penny better than expected, according to analysts surveyed by Zacks Investment Research.
Revenue was US$10 billion, also beating expectations.
The Atlanta company projected organic revenue growth of 5% for the year. That’s equal to its growth in 2018 and better than the 4% organic revenue growth the company initially forecast in January.
Coke said it still expected full year earnings growth between 1% and negative 1%.
Coke said its first energy drink, Coca-Cola Energy, launched in Europe during the quarter and saw some sales success. The company plans to expand sales of the new product to 20 markets by the end of this year.
Coke’s acquisition of British coffee shop chain Costa Coffee–which was completed earlier this year–is also paying off. New drinks like Coca-Cola Plus Coffee and chilled, low-sugar Costa Coffee beverages saw growth in the April-June period.
Soft drink sales rose 3% in the quarter, thanks to double-digit growth of Coca-Cola Zero Sugar and new products like Coca-Cola Orange Vanilla.
Coke recorded some softness in older products like Dasani bottled water and Minute Maid juices. But in those cases, higher sales of premium products like Smartwater and Simply juices made up for some of the shortfall.
Overall volume was up in every market but North America, where it fell 1%. Quincey said a transition to smaller can sizes–which command higher prices–is one reason for the decline. Pricing rose up 4% in the region.
Shares of Coke’s rival PepsiCo are also trading near record highs as consumers transition to healthier drinks and snacks that command higher prices. Pepsi’s second-quarter earnings and revenue also beat Wall Street’s forecasts earlier this month.