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Coke's profits fall as company works to cut costs

Fizzy soda remains company's biggest business, but that may be changing

Coco-Cola's profit and revenue fell in the third quarter as the world's biggest drink maker booked charges related to its cost-cutting push and took a hit from the strong dollar.

The maker of Sprite, Fanta and Dasani water said Wednesday that global sales volume rose 3%. That reflected a 6% increase in non-carbonated drinks, which Coke refers to as "still'' beverages, and a 2 per cent increase in sodas, which Coke calls "sparkling'' drinks.

In North America, soda volume declined again, reflecting a 9.5% decline in Diet Coke and a 3% drop for regular, full-calorie Coke. For years now, people in the U.S. have been moving away from sugary sodas, which have been blamed for fueling obesity rates and related ills like diabetes. But more recently, diet sodas have been falling at a steeper rate, a trend Coke blames on concerns people have about the safety of artificial sweeteners.

Kathy Waller, Coke's chief financial officer, said in a phone interview the company is trying to figure out how much of the declines in diet sodas for North America are being driven by the shift to smaller cans and bottles. Coke has been marketing the more petite sizes more aggressively as part of a push to position its drinks as more premium offerings that fetch more money.

In the meantime, Coke's decline in soda volume for North America was offset by a 7% increase in non-carbonated drinks. Waller said bottled waters and sports drinks each rose 10% in the quarter.

Like rival PepsiCo Inc., Coca-Cola's volume growth is being driven by non-carbonated drinks like bottled waters and teas.

Coca-Cola reported stronger growth in non-carbonated drinks than in sodas for each of its five geographical divisions for the quarter.

For three months ended Oct. 2, Coca-Cola earned $1.45 billion, or 33 cents per share. Not including one-time items, Coke earned 51 cents per share, or a penny more than Wall Street expected, according to Zacks Investment Research.

Total revenue was $11.43 billion, short of the $11.61 billion analysts expected.

Shares of Coke fell 2 per cent to $41.45 before the opening bell.


Fizzy soda is still Coca-Cola's biggest business, but that has been slowly changing.

The world's largest beverage maker got nearly three-quarters of its global sales volume from carbonated drinks last year. Yet most of its growth—70 per cent—came from non-carbonated drinks like bottled waters and teas in 2014, according to the company. In the third quarter, the company said Wednesday non-carbonated drinks rose 6 per cent globally while carbonated drinks rose 2 per cent.

In North America, a decline in carbonated drinks was offset by an increase on non-carbonated drinks. In the U.S., people have been moving away from soda for years given its reputation for making people fat and the growing number of options in the beverage aisle. More recently, diet sodas have also suffered — a trend Coke executives blame on concerns about artificial sweeteners.

Here's a look at how some of Coke's drinks fared in North America for the three months ended Oct. 2:

Regular, full-calorie Coke — down 3%

Coke Zero — down 4%

Diet Coke — down 9.5%

Juice and juice drinks — up 1%

Teas — up 6%

Sports drinks — up 10%

Bottled waters — up 10%

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