The Coca-Cola Company announced Friday that net revenues declined 20% to $7.5 billion during the fourth quarter. Sales continued to be impacted by the company's refranchising of bottling facilities, which the company said is now complete. However, Coca-Cola's revenue beat analyst forecasts of $7.36 billion, CNBC reported.
Some of the beverage giant's new products — including Smartwater, ZICO coconut water and Appletiser — showed positive growth during the quarter. Sales of waters and sports drinks were up 2%, and tea and coffee beverages also increased 2%. Overall, Coke posted 6% organic revenue growth for Q4.
Total case volume was flat for the fourth quarter and also for the full year, the company said, while volume in North America was up 1%. The Atlanta-based beverage giant was also hit by a one-time $3.6 billion charge due to changes in the corporate tax laws. "We achieved or exceeded our full year guidance while driving significant change as we continued to transform into a total beverage company," Coca-Cola CEO James Quincey said in the company release. "While there is still much work to do, I am encouraged by our momentum as we head into 2018."
Like its competitors in the soda business, Coke has been feeling the pinch as consumers flock to less-sugary drinks such as sparkling waters, sports drinks, tea and coffee. But the beverage company has been tapping into those markets, which has helped bolster its bottom line. Its recently reformulated Coke Zero has done well, although sales of some new products — such as the four new Diet Coke flavors it introduced during the fourth quarter — haven't yet had time to show a positive impact.
CEO James Quincey has promised to transform Coke into a "total beverage company," and one way he's approaching this goal is by investing in smaller, diversified beverage companies. Coke has so far entered the cold-processed juice, drinking vinegars and kombucha markets through partnerships with Suja Juice, Honest Tea and Fairlife dairy, and is exploring more M&A activity outside the U.S.
In a research note, Bonnie Herzog, managing director of equity research for Wells Fargo, said that Coke continues to do a good job staying relevant with consumers through innovation.
"While flat unit case volume growth remains a concern, we are encouraged by positive momentum in many international markets," she said, adding that she expected a stock boost following the earnings report.
Coke's shares were up 3.8% to $46.47 in early trading Friday morning, Bloomberg reported, after dropping 2.4% from the beginning of the year until the close on Thursday.
Coke is in a somewhat similar situation as PepsiCo, which has also been seeing relatively flat soda sales, while Dr Pepper Snapple just posted a small sales increase for 2017. With new products, packaging and diversification into other beverage and snack products, all three companies are striving to maintain market share in a challenging consumer environment.
It will be interesting to see the effect that Dr Pepper's merger with Keurig Green Mountain has on the U.S. soda market, with the $19-billion deal scheduled to close during the second quarter. That major repositioning in the industry could very well pressure Coke and PepsiCo to explore even more new avenues.