The Coca-Cola Company (KO, Financial), the big daddy of the beverage sector reported its revenue for the first quarter of 2014. The company recorded total revenue of $10.58 billion that beat estimates. Let’s take a brief look at the quarter.
Quarter in a Nutshell
The revenue of the company fell by 4% but still the sales volume of the company had risen by 2%, which brings about positive growth in the company. Currency exchange was also one of the reasons for the decline in the revenue of the company. PepsiCo (PEP, Financial) the biggest rival of Coca-Cola topped the revenue charts but it could do so only because of its giant sale in the snack sector which helped it to achieve the toppers list. Its beverage sector too faced the same downfall as that of Coca-Cola.
The primary reason which ditched the company was Latin America as the sales were flat from this region. High soda tax was the main culprits. This increased the rates of the beverage that automatically had an adverse effect on the volume of the drink. Emerging markets such as Brazil, India, and China turned out to be the bright spots. These countries saw massive increase in the consumption of the beverage. The fizzy drink has been on alert all over the world because these days health conscious people try to avoid them and instead use alternative drinks such as fruit juices in their place.
Coca-Cola in order to bolster its sales in the year is deciding to establish a partnership relationship with Keurig Green Mountain so that their home consumption increases and bears a positive impact on the top line of the company. They have also come up with the idea of using zero calorie natural sweeteners in their drink. The main purpose of this is to grab the attention of people.
The new range of non calorie drink which has been introduced in Argentina and Chile has been named “Coca-Cola life”. The company sales took a beating in the domestic market where consumer tastes and preferences are getting inclined towards healthier option. The sugary drinks invite health hazards to several people. Coca-Cola is also planning to invest $400 million in its marketing program for the year.
The Crux of the Tale
The big giant’s overall performance during the quarter was satisfactory, and fairly better than the expectation of the Wall Street analysts. They had expected the sales to turn out to be around $10.53 billion. The company has faced setbacks in the previous year, but this has started of well. One of the major reason for downfall is that the company is experiencing difficult times in the domestic country, though overseas market is doing decent. It is quite natural for the shareholders of the company to be in a fix under the current circumstance, when the stock rates are a little shaky, but I believe Coca-Cola holds a great deal of promise for the future.
