- Coca-Cola beat earnings estimates Tuesday for the fourth quarter at $0.38 per share, excluding some items, as the company saw the results of aggressive cost-cutting measures launched in 2014. Expectations called for $0.37 per share and fourth quarter revenue fell 8% to $10 billion, still beating analysts' estimates.
- The company was able to offset troubles in slowing markets abroad by increasing profits and pushing its smaller and more profitable package sizes. Coca-Cola saw 3% overall beverage volume growth both globally and in its key North American market. CEO Muhtar Kent said the company's annual performance in North America topped the last three years.
- The company also announced Tuesday it would speed up its refranchising plans for North American bottling territories with expectations of completing the initiative by the end of 2017, three years early.
As part of the cost-cutting measures, Coca-Cola reduced expenses, overhauled the company's bottling system, and debuted a variety of package sizes, particularly mini-cans and mini-bottles, to combat sales declines in the U.S. and other key markets. Lower commodity costs didn't hurt either, especially as Coca-Cola continues to battle currency headwinds that are impacting earnings.
Global soda volumes overall rose 2%, a positive result in the struggle to revive sales. Whether this is a turnaround is difficult to discern, but efforts like smaller packaging are helping.
Increased sales could come from convenience stores, which reported a 5.5% increase in nonalcoholic beverage sales last year, faster than rates at the grocery store, and c-store owners predict a 3.8% increase in soda sales in 2016. Companies like Hershey and General Mills have recognized the potential in c-store sales. These outlets could be an important factor for Coca-Cola as it seeks new ways to boost revenue and push its new package sizes.
Typical of diet soda across the industry, Diet Coke continues to struggle with a 5% global volume decline in the fourth quarter (though that was a slight improvement from past quarters' declines), but that was offset by 7% growth for Coke Zero. As for still beverage volume growth, packaged water ticked up 8%, RTD tea 6%, juice and juice drinks 5%, and 2% sports drinks. The still beverage growth overall at 6% for the quarter is in line with industry trends as consumers look to options other than soft drinks.
The industry is now looking at how the role Coca-Cola's latest "one brand" marketing overhaul — "Taste the Feeling" — will play in further increasing soda volumes by emphasizing characteristics of and experiences with the products rather than the loftier marketing messages of the past.