ATLANTA – Carbonated soft drinks drove Coca-Cola's first-quarter results, even as market trends shift, showing consumers choosing healthier, less-sugary drinks.
The company, which has lately been expanding its portfolio to include a variety of healthier alternatives in response to market trends, has also been rebranding its core products.
The company's restaging of its Diet Coke and Coke Zero Sugar brands is yielding dividends, as the company's first-quarter results showed an increase in sales for the targeted products.
The Coca-Cola Zero Sugar brand, one of the company's top sellers, registered a double-digit sales increase, according to the company's newest first-quarter results. The company did not specify what the double digits were.
The recently introduced fruit-flavored Diet Coke products in smaller, sleeker packaging attracted volume growth, reversing lower pre-rebrand numbers. The company attributed the performance to the new packaging and flavors. Diet Coke's rebound was among the remarkable turnarounds the company witnessed in the latest quarterly financial report.
The company's major profit drivers were the Coca-Cola classic brand, which registered a 3 percent increase, Coke Zero Sugar and sparkling drinks, which continued to record increasing sales.
"If anyone thinks Coca-Cola will give up on carbonated soft drinks, even as they aggressively pursue a total beverage strategy, they are misinformed," said Duane Stanford, executive editor with Beverage Digest, a publication on nonalcoholic beverages in the U.S., adding that the category was still big and profitable.
Speaking during an investor call, Coca-Cola Co. CEO James Quincey said the company was encouraged by consumer response to the rebranded products, but said it was too early in the process to make definitive conclusions on the results.
"We got off to a strong start returning Diet Coke to growth in North America," Quincey said.
Quincey lauded the "bold action taken to change the trajectory of the results" and encouraged similar boldness to keep the momentum going.
Stanford said Diet Coke's next chapter was still being written but said the opening paragraph of the rebranded products had gotten people's attention.
Diet Coke was introduced in 1982.
After taking over the leadership of Coca-Cola, Quincey had emphasized the importance of focusing on marketing strategies to increase sales, which had declined over the years.
Quincey began his tenure by announcing layoffs that would free up $800 million in spending to help revive the company's growth.
The money would be channeled to marketing and product development.
According to the company, volume sales grew by 3 percent.
The company reported a 16 percent net revenue decline for the quarter to $7.6 billion, attributing the decline to the re-franchising of bottling territories in North America.
"We are encouraged with our first quarter performance as we continue our evolution as a consumer-centric, total beverage company," said Quincey.