ATLANTA, July 17, 2012 – The Coca-Cola Company today reported solid second quarter and year-to-date 2012 results, with continued strong volume and revenue growth, as well as further volume and value share gains in total nonalcoholic ready-to-drink (NARTD) beverages.
Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, “We are pleased with our second quarter and year-to-date results. We are delivering consistent quality performance in line with our 2020 Vision growth targets, despite a very challenging and increasingly unpredictable global economy. Notably, we continue to gain global volume and value share by giving our consumers what they are looking for – meaningful brand connections, wide-ranging product and package choices, greater information about our brands, and significant investments in programs that support healthy and active lifestyles, all at the heart of our brand values.
“As we complete the 10 th quarter of our 2020 Vision, we remain passionately focused on offering a portfolio of brands that refresh and hydrate our consumers while bringing them simple moments of happiness. Together with our system bottling partners, our long-term growth plans remain on track and our commitment to enhance the well-being of the consumers, customers and communities we serve around the world is as strong as ever.”
Pacific Group
- During the quarter, the Pacific Group gained volume and value share in total NARTD beverages, driven by volume and value share gains across multiple still beverage categories. Volume growth in the quarter was broad-based, with 7% growth in China, 4% growth in Japan, 24% growth in Thailand and 6% growth in the Philippines. Sparkling beverage volume growth was 6% in the quarter, led by 5% growth of brand Coca-Cola, 8% Sprite growth and 11% Fanta growth. Still beverages grew 12% in the quarter, with strong double-digit growth in packaged water and 13% growth in ready-to-drink tea. Japan's sparkling beverage volume grew 1% and still beverage volume grew 5%. Importantly, all channels in Japan showed growth, including convenience stores and vending, and we grew volume and value share in total NARTD beverages in the quarter. Despite some moderation in China's macroeconomic growth trends this year, sparkling beverage volume grew 3% in the quarter and still beverage volume grew 14%. Importantly, the continued rollout of smaller package offerings across the portfolio generated strong 12% growth in transactions, and helped drive volume and value share gains in sparkling beverages during the quarter.
- Concentrate sales in the quarter lagged unit case sales as a result of timing of shipments, primarily in China.
Muhtar Kent - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Now let me turn to our Pacific Group, which grew 8% in both the quarter and year-to-date, including 6% year-to-date growth for brand Coca-Cola. Additionally, our Pacific Group captured both volume and value share in nonalcoholic beverages this quarter.
During our last earnings call, we shared our expectations that our volume growth in China might moderate to some extent as our business would not be immune to China's cooling economy. In fact, China's GDP growth rate is at a 3-year low, yet still above 7%. As anticipated, the broader beverage industry in China has felt the impact of this economic slowdown. Despite this, our business in China delivered 7% growth in the second quarter, while cycling a strong 21% growth from last year. Year-to-date growth in China was a solid 8%, cycling 17% from last year.
The rightsized packaging efforts we put in place in China last year keep generating consistent, strong incremental transactions, in line with our expectations. As such, both sparkling beverage and total beverage transactions were up double-digits for both the quarter as well as year-to-date in China. And importantly, we once again captured both volume and value share in the sparkling category -- beverage category in China this past quarter.
We're very excited about our opportunities in this region. Our clear focus on building our business for sustainable growth provides us with confidence that China will continue to serve as a double-digit growth market over the long term.
Question-and-Answer Session
Bonnie Herzog - Wells Fargo Securities, LLC, Research Division
I had a question on China. You talked about the volume in China slowing due to the economic slowdown. So I was hoping you could provide a little more color on some of the symptoms of a soft landing you're seeing in your business by some of your key categories, and then possibly by area or region. And then I also would be curious to hear how your business in China performed in the quarter compared to what your expectations were early on this quarter.
Muhtar Kent
I think during our last earnings call, again, I think we shared our expectation that our volume growth in China might moderate to some extent as, a, the business is not going to be totally immune to the cooling, particularly along the coastal areas of China. And I think as anticipated, the broader beverage industry in China has also felt the impact of that slowdown in the first half of 2012. But also -- and so it was not -- in terms of expectations, it's probably where we expected the business to land in terms of how we saw the marketplace developing. I think, year-to-date growth in China being a solid 8%, cycling plus 17% from prior year, I believe we're content. But certainly, we'll always try to achieve double-digit growth. But importantly, I think the rightsizing packaging efforts that we put into place in China last year continued to generate consistent incremental transactions, in line with our expectations. In fact, a little bit ahead of our expectations. And as such, total beverage transactions -- and you've heard us talk about transactions being really a really very good metric for the health of the business -- were up double-digits for both the quarter, up about 12%, and also on a year-to-date basis, up about 14%. So just want to stress that, a really important point. And again, we captured both volume and value share significantly in the sparkling beverage category in China in this past quarter. And our brands, particularly in the sparkling category, have been doing very well. And transactions, as I say, which is a great health of the business, have been progressing well. In terms of regions, I think the northern regions and the regions -- more inland regions are doing a little better than the coastal regions in China. And I think we'll continue to see that throughout the year as some consumers have moved back into the central and inland regions of China, given some of the slowing down of the export businesses along the coast.
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