Coca-Cola Sees Progress to Recovery on Coffee Mix Beverages
April 21 - 2021
Coffee Geography Magazine
Coca Cola with Coffee and Coca-Cola with Coffee Zero Sugar, available in many markets globally, were introduced recently in the United States. The products aim “to give consumers a refreshing and reinvigorating reset to their daily routine,” Coca-Cola said.
The company said the United States became the 50th market globally to launch the coffee product.
The products had been expanding in Latin America and Europe. Despite the innovation, unit case volume in North America fell 6% in the first quarter, relative to a year earlier.
“This was more than offset by continued coronavirus-related declines in the fountain business, along with a decline in the hydration category primarily due to cycling the consumer stocking in the prior year driven by coronavirus-related uncertainty,” the company said.
Adjusted operating income in the first quarter in North America (excluding currency effects and other items affecting comparability) was up 24%, boosted by pricing and “effective cost management,” Coca-Cola said.
Numerous positive signs emerged at Coca-Cola Co. for the company’s business during the first quarter of 2021, but “the path to recovery remains asynchronous around the world,” the company said. Prospects at Coca-Cola for the balance of the year will be highly reliant on progress in the battle against the coronavirus pandemic and the associated ending of lockdowns, the company said.
“Global unit case volume trends remain closely linked to consumer mobility, driven by vaccination rates in different markets and related improvements in away-from-home channels,” Coca-Cola said.
The company said volume trends improved each month during the quarter, which ended April 2.
“We saw mid-single-digit volume declines through mid-February, trends have improved since then,” James Robert B. Quincey, chairman and chief executive officer said in an April 19 conference call with investment analysts. “We’re pleased to say that March marked a return to volume levels seen in March of 2019 prior to the pandemic.”
James Robert B. Quincey, chairman and chief executive officer
Still, he cautioned recovery from the virus is anything but smooth sailing.
“The breaking news today is the weekly new cases of COVID has hit an all-time peak,” Mr. Quincey said. “So whilst vaccinations are rising in many countries, US, UK, etcetera, the flip side is there’s actually a new high in terms of cases. Obviously, a number of developing markets, but also Continental Europe as well.”
Where infections rates are high, lockdown rates generally are high, too, weighing on Coca-Cola’s away-from-home business, Mr. Quincey said.
“Conversely, as markets start to open, It’s worth remembering it's not an on-off switch,” he said. “There's a phasing of how markets tend to reopen. But that's true in the US. So for example, in the US, the fountain volumes were still negative in March because whilst people are going out to restaurants and there’s more mobility, it’s not back to what it was. The occupancy levels of offices are nowhere near 100%.”
Coca-Cola net income in the first quarter was $2.26 billion, or 52¢ per share on the common stock, down 19% from $2.8 billion, or 64¢ per share, in the first quarter last year. Net sales were $9.02 billion, up 5% from $8.6 billion.