Soft- drink giant , Coca-cola reported its largest decline in quarterly revenue in at least 30 years, on the back of coronavirus- led closures of restaurants and public bars and gatherings.
In its second quarter for the period ended 30th June, net sales plummeted 28percent to $ 7.2 billion, revenue performance included a 22% decline in concentrate sales and a 4% decline in price/ mix. The revenue declines were primarily driven by pressure in away- from- home channels, which represent approximately half of the company’s revenues.
Global unit case volume shrank by 16%, although volume trends have shown signs of sequential improvement as global lockdowns ease. After plunging 25% in April, unit case volume fell by just 10% in June. So far in July, volume has fallen by the mid-single digits.
Read also: Coca-Cola quarterly sales suffer biggest drop in at least 25 years
Battered by the impact of the ravaging virus, sparkling soft drinks’ volume fell 12% in the quarter. Coke’s namesake brand saw volumes decline by 7%, and demand for CocaCola Zero Sugar, which had been boosting sales for the brand, fell 4%.
Other drink segments were hit even harder. Tea and coffee volume plunged 31%, largely due to temporary closures of nearly all Costa cafes in western Europe. Water, enhanced water and sports drinks saw volume decline by 24%. Volume of juice, dairy and plant- based beverages sank 20%, although Coke reported strong growth in North America for its Fairlife milk and Simply juices.
Despite the high degree of uncertainty, the Atlanta based company said it is committed to emerging stronger by gaining share and consumers, maintaining strong system economics, strengthening its reputation with stakeholders and positioning the organization to win in the new reality.
According to the company, it is planning a “refreshed” marketing approach that focuses on spending efficiently and effectively. The company announced in late June that it would be pausing all social media advertising for 30 days. Coke did not officially join the July advertising boycott against Facebook which was meant to put pressure on the social media company to crack down on hate speech and misinformation.
Coke is also looking to streamline its portfolio, with a focus on larger and more popular brands. Less than half of its 400 major brands account for 98% of the company’s revenue. Quincey said that the changes will mean making its entire organization more flexible and could result in layoffs.
The stock trading at around $ 46 seems attractive for value investors with its price- to- earnings ( P/ E) ratio of around 22.6, showing more room for upside run to the $ 60 recorded during the prepandemic era
