Coca-Cola raises 2019 forecast on coffee, zero sugar soda boost

Coca-Cola Co beat second-quarter earnings expectations and raised its organic revenue forecast for the full year, betting on its new ready-to-drink coffee business and demand for zero-sugar sodas.

The world’s biggest beverage maker said on Tuesday it now expected organic revenues to grow 5 percent in the whole of 2019, up from its previous projection of an increase of about 4 percent.

Coca-Cola has been responding to changing consumer tastes by moving beyond traditional sodas and offering drinks that are lower in sugar or come in new flavors.

As a part of Chief Executive Officer James Quincey’s plan to create a “total beverage company”, the company bought Britain-based Costa Coffee for $5 billion in a deal announced in 2018 and finalized this year. It recently rolled out ready-to-drink coffee in cans in the UK and a coffee based soda in several markets.

This push comes as beverage makers, including rival PepsiCo, look to expand into coffee, tea, juices, bottled water and energy drinks in the face of falling soda sales.

Coca-Cola expects Coke coffee, a beverage that blends coffee and its trademark soda, to be available in more than 25 markets around the world by the end of the year. The beverage has slightly less caffeine than a normal cup of coffee but more than a can of the soda.

A ready-to-drink Costa Coffee in three variants also hit European markets earlier this year.

Shares in the Atlanta-based company, a Dow Jones Industrial Average index component, rose nearly 4 percent before the bell.

Wells Fargo analyst Bonnie Herzog said Coca-Cola’s improved revenues suggested its refranchising and portfolio transformation were paying off.

In the second quarter, a 4 percent volume growth in traditional Coca-Cola and its zero-sugar version helped net revenue rise 6.1 percent to US$10 billion, a touch above analysts’ estimates.

Net income attributable to Coca-Cola rose to 12.6 percent to US$2.61 billion.

Excluding one-time items, it earned 63 cents per share, 2 cents above Wall Street’s estimates, according IBES data from Refinitiv.

Organic revenue, a keenly watched metric that gives sales growth excluding acquisitions and currency fluctuations, rose 6 percent.