Is Coca-Cola losing its fizz?

By Rosie Baker | 17 April 2014

Coca-Cola is losing its fizz around the world. For the first time in 15 years, consumption of Coca-Cola's fizzy drinks dipped globally. Volume is up in Australia, though.

Global sales of fizzy drinks by volume fell 1% in the quarter. Sales of all drinks, however were up 2% as consumers switch to still beverages. Volume in Australia is up 1%.

The drinks maker reported a 1% fall in profit in the first quarter of the year, and a 4% fall in global revenue for the quarter ending 28 March. But the results are better than the previous quarter when Coca-Cola CEO Muhtar Kent promised cost-cutting measures to reverse the company’s slowdown.

Cost-cutting measures are already having an impact, Kent said in a conference call to analysts, adding that the freed-up cash is already being funnelled into marketing. The company is testing ads more and also reusing creative to get more life out of campaigns.

Coca-Cola will also increase its global marketing budget by $400 million to around $4 billion. In the fourth quarter, Coca-Cola said it would funnel an additional $1 billion globally into media and marketing from cost-cutting elsewhere in the business.

“We don’t think this is a great result, but satisfying as one step in the right direction to restore momentum,” Kent said during a conference call.

He outlined a number of marketing and innovation efforts to revive sales of sparkling drinks. “Now beginning with our first priority, we are determined to accelerate sparkling beverage growth led by Coca-Cola and we’ve established comprehensive strategies to do so. The foundation of this plan is to invest in and deliver great marketing to support our sparking brand.

"We’re adding a sharpened focus with our bottling partners to increase sparkling brand penetration, as well as cold drink availability. We’re overlaying disciplined occasion, brand, price, packed channel strategies, supported by revenue growth management capabilities to drive sustained value growth."

Gary Fayard, chief financial officer, said that the company was investing not just in “more marketing but better-quality marketing as well”.

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