The Coca-Cola Company (KO) reported a good and better-than-expected second quarter Wednesday morning, posting a 16% increase in net income and 5% revenue and volume growth. "For a consumer product company, that is very very healthy," Coca-Cola Chairman and CEO Muhtar Kent said in a telephone interview with DailyFinance following the earnings release.
"We've had a great quarter of growth and we've always said we can restore United States back to growth and we've done it and it's not an aberration," Kent said. This is the "first time since 2006 brand Coca-Cola grew in the United States. And for the first time since 2006, our total business grew 2% in North America." North America produces about 25% of the company's revenue.
The CEO of the largest beverage company in the world still believes the U.S. is "a great market for growth" because of its demographics and consumption habits. "We believe that everything that we've done to course-correct in the U.S. in the last three years is working," he says.
Kent gives specific examples: "Portion controls, small packages for immediate consumption like the 99 cent 15 ounce or 14 ounce. The contour two-liter bottle that's getting us to 4 million homes in the U.S. that we didn't have before. And all our other innovations like Powerade Zero, Powerade Ion, vitaminwater; the way we connect to consumer; the fact that vitaminwater has the largest Facebook page of consumers compared to any of our principal competitors' brands. All of that is beginning to yield results."
Going forward, the plans are already in place. Coca-Cola is acquiring its bottler, Coca Cola Enterprises (CCE), and signed a deal to distribute Dr. Pepper Snapple (DPS) brands. "We expect to be very successful distributor of Dr. Pepper and some other Snapple brands in North America, in addition to our wonderful portfolio of our flagship brands."
"What we're doing is working," says Kent. "Our brand is stronger than ever now, our marketing is working, and our brand pricing architecture is working. It's all about healthy brands, healthy customer relations, and it's all about a healthy system, which we have now."
Investors, so far, seem to agree. Coca-Cola shares traded nearly 2% higher in afternoon trading at $54.29.
Reading a Stock Quote
Learn to read the ingredients of a stock.View Course »