Coca-Cola sales miss estimates on flat North America growth

Tue Jul 22, 2014 3:43pm EDT
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By Anjali Athavaley

(Reuters) - Coca-Cola Co is still grappling with a problem even as sales of traditional Coke rise in North America: U.S. consumers are drinking less diet soda.

The world's largest soda maker said on Tuesday that global sales volume rose 3 percent in its second quarter, boosted by growth in sparkling beverages. Sales were helped in part by the fact that Easter fell in the second quarter this year.

But Coke reported lower-than-expected quarterly revenue as sales volume in North America, its biggest market, was flat

partly because of a decline in diet Coke sales. JP Morgan analysts had expected volume to be up 1 percent to 2 percent in North America, which accounted for 45 percent of total revenue in the second quarter.

Coke's Chairman and Chief Executive Officer Muhtar Kent said that while the drop in diet Coke sales had improved from the first quarter, "we recognize we have more work to do here."

Coke, like rival PepsiCo Inc, has been struggling with declining soda sales in developed markets like the United States as consumers become more health conscious.

In a conference call on Tuesday, the company attributed the slipping diet Coke sales to insufficient marketing, a shift toward natural sweeteners and consumer skepticism about the safety and quality of artificial sweeteners.

One bright spot in the quarter: Sales volume of regular Coke rose 1 percent in North America. Kent cited demand for smaller packages of the product, which Coke has found to have generated more "brand love."   Continued...

Coca Cola cans are seen at a concession inside the Dunas arena soccer stadium in Natal, June 12 , 2014.  REUTERS/Dylan Martinez