Diversification drive benefits Coca-Cola Enterpises

By Neil Merrett

- Last updated on GMT

Related tags Cent Coca-cola enterprises Coca-cola

Coca-Cola Enterprises posted a four per cent increase in sales
to $5.6bn (€4bn) for its second quarter as it continues
to restructure its operations amidst changing consumer demand in
the soft drinks market.

The increase was not enough to offset a four per cent profit decline over the period ending 29 June as the costs took hold, the company revealed.

Operating margins were up by a percentage point to 11 per cent over the same period last year though.

With changing consumer demands, beverage producers like Coca-Cola are under increased pressure to invest in new segments like non-carbonated drinks and fruit juices.

This new focus has resulted in Coca-Cola Enterprises entering agreements with soup maker Campbell's for the distribution of its V8 juice, as well as the acquisition of the glacéau water brand.

Company president John Brock remained encouraged by the results, which he believes maintain the company's ambitions for the coming year.

"Our restructuring efforts are on track as we work to enhance service to our customers and increase efficiency and effectiveness," he stated.

Despite Brock's optimism, there were problems for the group particularly in its North American operations.

Increased costs for sweetener and aluminium supply proved to be particularly detrimental to the division, with production costs per case up 9.5 per cent.

The increased costs were setback further by a 3 per cent decline in volume sales over the period.

To help offset this impact the company stressed that it enacted a new pricing strategy in the region.

In Europe, the company posted a two per cent rise in volume sales, which it attributed to growing popularity of its Coca-Cola zero brand as well as its still beverage ranges like Capri Sun and Oasis.

On the continent, the continued strength of its flagship Coca-Cola brand led to increased sales volumes of four per cent, though the figure was down by 0.5 per cent in Great Britain.

The company said that changes enacted within both its American and European operations were keeping it on track to meet its full year ambitions "Going forward, we also are encouraged by the opportunities that lie ahead as we incorporate important new brands and products into our portfolio," added Brock.

Coca-Cola Enterprises is the world's largest producer and distributor of the beverage giant's products, representing 19 per cent of total worldwide production of the company's brands.

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