The Coca-Cola Company has reported net revenues for Q2 have declined due to refranchising, however, the firm has delivered strong organic revenue (non-GAAP) growth through balanced volume and price/mix, while gaining value share globally.
Net revenues declined 8% to $8bn, impacted by a 15% headwind from the refranchising of company-owned bottling operations. Organic revenues (non-GAAP) grew 5%, driven by concentrate sales growth of more than 2% and price/mix growth of more than 2%.
Unit case volume grew 2%. Growth was led by Trademark Coca-Cola, including continued double-digit growth for Coca-Cola Zero Sugar, and also reflects the continued strong performance of Fuze Tea.
Year-to-date cash from operations was $2.6bn, down 22%. The decline was largely due to the impact of more than $600m from the year-over-year increase in tax payments in addition to the impact of the refranchising of North American bottling territories, partially offset by strong cash generation in the underlying business. Year-to-date free cash flow (non-GAAP) was $2bn, down 20%.
During the quarter, the company has continued to accelerate its evolution as a total beverage company, from testing new products locally to lifting and shifting successful brands globally.
The firm is also driving an acceleration in the sparkling soft drinks category through investment and innovation, with 5% retail value growth in its sparkling portfolio during the quarter.
These efforts, balanced with disciplined growth, have resulted in transaction growth of 4% year-to-date, outpacing unit case volume growth of 3%.
James Quincey, President and CEO, said, 'We're encouraged with our performance year-to-date as we continue our evolution as a consumer-centric, total beverage company. We have the right strategies in place and remain focused on achieving our full year guidance.'
Lifting, shifting and scaling brands around the world
The company expanded its footprint within the fast-growing, plant-based nourishment category with the launch of AdeZ in Europe by leveraging the brand edge of AdeS, a plant-based beverage originating in Latin America. Positioned as a premium offering, AdeZ will expand the company's presence beyond the beverage aisle into on-the-go snacking.
AdeZ was launched in more than 10 European markets during the quarter and is on-track to be in 19 markets by the end of 2018. This rollout across a new continent, within a year after the acquisition of AdeS, illustrates the company’s ability to act with speed and agility in a rapidly changing consumer landscape.
Reducing sugar while growing value
The company continued to execute on its strategy of delivering great-tasting sparkling beverages with less sugar.
During the quarter, the company debuted Coca-Cola Stevia No Sugar in New Zealand, which is sweetened with 100% stevia.
The company also expanded its Diet Coke brand re-stage into the UK, including the introduction of new flavors.
Within North America, the company's no-sugar sparkling soft drink portfolio accelerated from the first quarter, resulting in 7% retail value growth, driven by Coca-Cola Zero Sugar and Diet Coke.
Digitizing the enterprise
The company continues to embrace the growth of e-commerce and rethink how products are sold and delivered, not only to consumers but to customers as well.
In North America, the company expanded coverage of the digital MyCoke platform, which allows retail customers to replenish beverage inventories and schedule future orders online.
The MyCoke platform has led to over a 5% increase in sales revenue versus orders placed through traditional call centers, while reducing costs and further driving the Coca-Cola system's competitive edge.