Coke unfazed by recent Chinese sales slump, stretches sparkling lead over PepsiCo

Reporting its full year and Q4 results for the year ending December 31 2012 this morning, Coke reported full-year net operating revenues of 48.017bn, up 3% on 2012, while net income attributable to shareholders also rose 5% to $9.019bn.

Muhtar Kent, CEO and chairman, said: “In a year marked by continued uncertainty in the global economy, we delivered solid volume, revenue and profit growth, and we realized further volume and value share gains in non-alcoholic ready-to-drink beverages.”​

Still suffering in Europe​

Coke’s healthy figures reflect its strong growth across all regions bar Europe, which accounts for around 10.6% of group sales, where the company posted a 6% fall in full-year revenues, while income before tax also fell 4% to $3.134bn.

“During the quarter, the Europe group maintained volume share and gained value share in still beverages,” ​the company said.

“In a quarter marked by declines in the overall beverage industry in Europe, our sparkling beverage volume declined 5% in the quarter and our still beverage volume declined 3% as a result of continued weak consumer confidence, adverse weather and aggressive competitive pricing.”​

Despite its relatively low sales share, Coke’s European business is still incredibly profitable compared North America, for instance, which only returns income before tax of $2.327bn on sales of $21.68bn.

Another slight cloud on the horizon for Coke was its Pacific group performance, where despite volume growth of 2% in Q4 (5% for FY 2012), net revenues fell 1% during the quarter, due to lower concentrate sales and price/mix issues.

Clear carbonate lead over PepsiCo​

Chinese volumes fell 4% in Q4 (cycling 10% growth in Q4 2011), with Coke blaming an ongoing economic slowdown, poor weather and a later Chinese New Year in 2013.

Nonetheless, the company claimed that it was extending its near 2:1 volume share advantage over its “closest competitor”, ​which Coca-Cola Company spokesman Kent Landers confirmed to BeverageDaily.com was PepsiCo.

2011 data from Euromonitor International ascribes a 19% overall market volume share to Tingyi-PepsiCo, with Coke the second top-tier player on 16% and Wahaha on 7%.

But Landers explained that the 2:1 number referred to Coke's sparkling beverage portfolio in China, not non-alcoholic RTDs, "so this is a KO [Coca-Cola Company] v PEP [PepsiCo] comparison"​.

“As we look ahead to 2013, we continue to expect China’s recent economic slowdown to have a short-term effect on our industry and on our business, although we do expect to see some improvement in consumer disposable income as the year progresses,” ​Coke said today.

As such, the company said it expected its Chinese business to deliver sequential improvement throughout the rest of 2013.

“We have every confidence in the long-term resilience of our China business, and we remain very excited about our opportunities in the region,” ​Coke added.