Coca-Cola speeds up efforts to cut sugar in drinks

October 26, 2016 7:13 AM EDT

The logo of Dow Jones Industrial Average stock market index listed company Coca-Cola (KO) is seen in Los Angeles, California, United States, April 4, 2016. REUTERS/Lucy Nicholson


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By Sruthi Ramakrishnan

(Reuters) - Coca-Cola Co (NYSE: KO) reported a better-than-expected quarterly profit, and said it would step up efforts to reduce sugar in its beverages, amid growing pressure from health experts and governments who have blamed sugary drinks for a rise in obesity.

The company's move comes after rival PepsiCo Inc (NYSE: PEP) announced plans to reduce sugar in its drinks last week.

Coca-Cola has over 200 reformulation initiatives underway to reduce added sugar in its drinks and is launching more sugar-free, low- and no-calorie products, Chief Operating Officer James Quincey said on a post-earnings call.

The company, which gets about 70 percent of its volume sales from fizzy drinks, is also rolling out Coca-Cola Zero with a "new and improved taste," he said.

Coca-Cola has also been building its non-carbonated drinks portfolio and offloading much of its bottling business to cope with falling demand for carbonated beverages in North America, its biggest market.

Volumes of noncarbonated drinks, which include tea, juices and energy drinks, in the region grew 2 percent in the third quarter ended Sept. 30.

The world's largest beverage maker has relied on smaller pack sizes and premium packaging using glass and aluminum to drive margins in developed markets.

Total sales in North America rose 3 percent to $2.66 billion. Volume sales of carbonated beverages such as Sprite, Fanta and Coca-Cola Zero rose, while those of Diet Coke fell.

REFRANCHISING

Coca-Cola also announced six new franchising agreements with bottlers on Wednesday. (http://bit.ly/2dJC6DZ)

Following these deals, the company would have refranchised territories that account for about 65 percent of total U.S. bottler-delivered distribution volume.

The company aims to refranchise all its North American territories by the end of 2017.

Coca-Cola's net income attributable to shareholders fell 28 percent to $1.05 billion, or 24 cents per share.

Excluding items, Coca-Cola earned 49 cents per share.

Net operating revenue fell 7 percent to $10.63 billion, the sixth straight quarter of decline.

Analysts on average had expected adjusted earnings of 48 cents per share on revenue of $10.51 billion, according to Thomson Reuters I/B/E/S.

Shares of the company, which maintained its 2016 forecast, were up about 0.6 percent at $42.78.

(Reporting by Sruthi Ramakrishnan in Bengaluru, Editing by Anil D'Silva)



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