Coca-Cola (KO) customers are thirsty — for bottled water.
The company's first quarter earnings report out Wednesday points to the steady shift taking place within its customers' diets as they increasingly opt to sip on water, tea, coffee and energy drinks over carbonated sodas. Revenue fell 4% to $10.28 billion from $10.71 billion in the year-ago quarter ended April 1. That came in above analyst estimates for revenue of $10.24 billion, according to S&P Global Market Intelligence.
Coke grew unit case volume, a measurement of liters sold, by 2%, primarily due to a 7% increase in still beverage volume. Coke's still portfolio includes brands such as Dasani and Minute Maid. Sparkling beverage volume was flat, as Coke deals with the decline in soda consumption, particularly in the U.S. Trademark Coke volume fell in almost every market while the company saw significant upticks in bottled water, sports drinks and ready-to-drink tea.
Not all of its soda brands are deflating though. In the U.S., Coca-Cola grew volume for its Sprite and Fanta brands as well as juice, sports drinks, ready-to-drink tea and water. And trademark Coke volume still grew in Asia, by 3%.
Coke reported first quarter earnings of $1.48 billion, a 5% decline from $1.56 billion in the year-ago quarter. Earnings per share came to 34 cents, or 45 cents adjusted for one-time costs. The results beat analyst expectations for earnings per share of 44 cents, according to S&P Global Market Intelligence.
Coke shares fell 2.34% in pre-market trading on the report.
Coke has been focusing its energy on diversifying its portfolio, both with alternative sizes of its soda products and emphasizing its non-carbonated options, as it deals with the slow but steady decline of soda consumption in the U.S.
Soft drink volume fell 1.5% last year, according to Beverage Marketing Corp., while bottled water, tea and juice continue to gain traction as customers aim to cut back on sugar in favor of healthier options.
