Mini-cans add froth to Coke's sales

Smaller cans and bottles positioned as premium offerings with higher prices
2/10/2015

Small is the new big for Coca-Cola. That’s after the company reported that mini-cans are powering its soda sales in Canada and the U.S.

Sales of the mini-cans, which still represent a tiny fraction of overall volume, rose 15 per cent during the company’s last quarter.

For the quarter, Coca-Cola's overall soda volume in North America was flat, while volume for non-carbonated drinks rose 3 per cent. Its ``price/mix'' for the region, which factors in the prices and sizes of its drinks, rose 4 per cent.

``A lot of it was driven by the smaller cans, which are more premium-priced,'' said Kathy Waller, Coca-Cola's chief financial officer, in a phone interview.

In January Coca-Cola Canada announced that it was increasing availability of its smaller 222-ml mini-cans and 237-ml glass bottles.

Coke Canada also said it would introduce a sleeker 310-ml can as early as March and shrink the dimensions of its most popular bottle size by 15 per cent, from 591-ml to 500-ml.

The world's biggest beverage maker has been struggling to boost global sales volume amid economic volatility overseas and an ongoing shift away from soda back at home.

To make up for weak volume gains, it's using a variety of tactics including a focus on the smaller cans' and smaller bottles that are positioned as premium offerings and help push up revenue.

During a conference call, CEO Muhtar Kent said 2015 would be a ``transitional year'' as the company undergoes dramatic cost-cutting to improve results.

But he nevertheless expressed optimism for growth; he noted that the average household consumes 26 beverages a day, and that only 1.4 of those are Coca-Cola brands.

To keep pace with changing tastes, Coca-Cola has also diversified and owns an array of brands including Honest Tea and Zico coconut water that better fit with prevailing health trends. It also recently began a rollout in the United States of Fairlife, a pricier milk that promises more protein and less sugar.

Still, about 70 per cent of Coca-Cola's global sales volume comes from carbonated soft drinks, according to Ali Dibadj, a Bernstein analyst.

For 2014, Coca-Cola said volume rose 2 per cent, including a 1 per cent boost in carbonated soft drinks. That was in line with its performance the previous year, and down from 2012.

The shift away from soft drinks comes amid a proliferation of options in the beverage aisle.

Between 2001 and 2006, an internal study by Coca-Cola found that 30 per cent of the industry's growth was driven by categories that hadn't existed five years earlier.

Soda's image has also taken a beating from health advocates at home and overseas, who blame it for fueling weight gain.

Coca-Cola is also working on reducing costs by $3 billion a year to boost its financial results and have more money for marketing. Earlier this year, it said it was cutting up to 1,800 jobs as part of the push.

For the period ended Dec. 31, Coca-Cola Co. said it earned $770 million, or 17 cents per share. Excluding one-time items such as unfavourable currency exchange rates and expenses related to its cost-cutting plan, it earned 44 cents per share. A year ago, it earned $1.71 billion, or 38 cents per share.

Total revenue slipped to $10.87 billion, but beat Wall Street expectations of $10.77 billion.

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