Coca-Cola
Coca-Cola CEO James Quincey highlighted Coke Orange Vanilla as a flavor innovation that’s boosting sales
Coca-Cola Co. is driving sales by going beyond classic-flavored soda to try new tastes and packaging, the company said on its first-quarter earnings call.
Coca-Cola KO, +1.71% reported earnings and revenue that beat expectations, sending shares up 1.4% in Tuesday trading.
The word “innovation” was mentioned dozens of times on the earnings call, according to a FactSet transcript, and for Coca-Cola, that means expanding the company’s flavor profile.
“[C]onstant innovation is crucial for sustained growth,” said Chief Executive James Quincey.
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“Our sparkling portfolio benefited from the continued strong performance in Coke Zero Sugar and new flavor combinations like Orange Vanilla Coke, which helped drive 6% retail value growth for brand Coca-Cola in our flagship markets,” he said.
The flavor innovations go even further than orange and vanilla. Coca-Cola Coffee was tested in Asian markets last year and will be coming to more than 25 markets by the end of the year.
And Coca-Cola Energy is launching in Europe this month, starting in Spain and Hungary, and will be heading to other countries in 2019 and 2020. Coca-Cola Energy is primarily for adults between the ages of 18 and 25, the company said in the March 28 launch announcement.
Innovation isn’t just about the taste of the beverage. For example, while unit case volume was down 1% in North America, the mini can business was up 14%.
“The most important thing is to work out how to stay relevant,” said Quincey. “There are innovations which are about new products, but there are innovations about marketing and packaging which is all aimed to help stay relevant.”
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These innovations have become more important as soda consumption has fallen and concern about sugar consumption has risen.
The competition is coming up with new flavors of its own. Pepsi Co. PEP, +0.51% announced on Tuesday that it’s adding fruit juice to Pepsi cola for three new flavors: mango, berry and lime.
“Overall, we were impressed with Coca-Cola’s ability to deliver a strong pipeline, suggesting that its refranchising and portfolio transformation are paying off,” wrote Wells Fargo analysts in a Tuesday note.
Coca-Cola stock is up 1.8% for the year to date while the Dow Jones Industrial Average DJIA, +0.55% has gained 14.3% for the period.
