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Coke's Broadening Palate Drives Sales

New and reformulated products β€” like Coca-Cola Plus Coffee and lower-calorie Simply juices β€” now account for 25 percent of the company's revenue.

Coca Cola
AP Photo/John Bazemore

ATLANTA (AP) β€” Coca-Cola upped its revenue expectations for the year as new lines of healthier drinks and coffees win over fans. Chairman and CEO James Quincey said product innovation is helping the company gain global market share. New and reformulated products β€” like Coca-Cola Plus Coffee and lower-calorie Simply juices β€” now account for 25 percent of the company's revenue, Quincey said, up from 15 percent two years ago.

The world's largest drink company also sees plenty of room for growth. Quincey said 80 percent of the world's population lives in developing markets like Africa, India and China, where commercial beverages make up just one-quarter of drink consumption. In developed markets, commercial beverages account for three-quarters of consumption.

"That's a huge opportunity in front of us," Quincey said. "We're seeing good growth this quarter and have been seeing it for a while." Coke posted second quarter earnings of $2.61 billion, or 61 cents. Earnings, adjusted for one-time gains and costs, came to 63 cents per share, which is a penny better than expected, according to analysts surveyed by Zacks Investment Research.

Revenue was $10 billion, also beating expectations. Shares of Coca-Cola Co. rose three percent to $52.92 in early trading Tuesday after the Atlanta company projected organic revenue growth of five percent for the year. That's equal to its growth in 2018 and better than the four percent organic revenue growth the company initially forecast in January.

Coke said it still expects full year earnings growth between one percent and negative one percent.

Coke said its first energy drink, Coca-Cola Energy, launched in Europe during the quarter and saw some sales success. The company plans to expand sales of the new product to 20 markets by the end of this year. Quincey said the company hasn't yet said when the drink will come to the U.S.

Coke's acquisition of British coffee shop chain Costa Coffee β€” which was completed earlier this year β€” is also paying off. New drinks like Coca-Cola Plus Coffee and chilled, low-sugar Costa Coffee beverages saw growth in the April-June period.

Sales of Coke's namesake soft drinks rose three percent in the quarter, thanks to double-digit growth of Coca-Cola Zero Sugar and new products like Coca-Cola Orange Vanilla. Coke recorded some softness in older products like Dasani bottled water and Minute Maid juices. But in those cases, higher sales of premium products like Smartwater and Simply juices made up for some of the shortfall.

Overall volume was up in every market but North America, where it fell one percent. Quincey said a transition to smaller can sizes β€” which command higher prices β€” is one reason for the decline. Pricing rose up four percent in the region.

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