Net revenues for The Coca-Cola Company declined 16% to $7.6 billion during the first quarter, which beat analyst forecasts of $7.34 billion, according to CNBC. Sales continued to be impacted by the company's refranchising of bottling facilities, but North American sales grew, thanks to the company's recent Diet Coke relaunch and its newly acquired U.S. rights to the Topo Chico premium sparkling water brand.
The beverage giant reported 5% organic sales growth for the quarter. Tea and coffee sales were up 5%, sparkling soft drinks grew by 3% — with double-digit increases for Coca-Cola Zero Sugar, Smartwater and Dasani sparkling products — while enhanced waters and sports drinks were up 2%. Sales of juice, dairy and plant-based drinks dropped 2% due to focusing away from lower-performing juice brands and package resizing, the company said.
First-quarter total case volume was up 3%, and 2% in North America. "We're encouraged with our first quarter performance as we continue our evolution as a consumer-centric, total beverage company," James Quincey, president and CEO, said in a release. "We have the right strategies in place and remain confident in our ability to achieve our full year guidance."
This first-quarter earnings report indicates that Coca-Cola's recent attempts to reinvent itself — from rebrands to Arctic Coke to plans for a low-alcohol beverage in Japan — are showing some success. Soft drink makers have been fighting slumping sales for some time as consumers favor better-for-you beverages over sugary sodas. As a result, bottled water became the largest U.S. beverage category by volume in 2016.
Coca-Cola's relaunch of Diet Coke in January — with an updated design, taller and slimmer cans and four new flavors — is a hit so far with consumers, boosting first-quarter sales.
The company also recently acquired the rights to distribute the Topo Chico Mexican brand of sparkling water in the U.S., which expands their offerings in the popular sparkling waters market and strengthens its competitive position with longtime unit leader LaCroix, as well as PepsiCo's bubbly product and Nestle's new lineup of sparkling spring water.
Tea and coffee also turned in a strong performance for the company, as its Fuze Tea herb- and fruit-infused product debuted in 37 more European countries.
While the earnings report doesn't mention recent U.S. staff reductions, Coca-Cola has reduced mostly management staff in its Atlanta headquarters by 250 to 350 positions as part of an ongoing reorganization. The company has said that it is still hiring, but is shedding some jobs, re-orienting others and creating some new ones at the same time. Overall, Coca-Cola has more than 100,000 employees worldwide and about 8,000 in the U.S.
President and CEO James Quincey has promised to transform Coke into a "total beverage company," and one way he's doing that is by investing in smaller, diversified beverage companies. So far Coca-Cola has entered the cold-processed juice, drinking vinegars and kombucha markets through partnerships with Suja Juice, Honest Tea and Fairlife dairy.
Wells Fargo analyst Bonnie Herzog saw the first-quarter earnings report as encouraging. "Overall, we were impressed with [Coke's] ability to deliver a strong & balanced topline suggesting that its refranchising & portfolio evolution efforts are paying off," she wrote.
How Coca-Cola's results stack up against its competitors will likely be seen this week as PepsiCo and Dr Pepper Snapple are expected to release their earnings reports.