The business of selling syrupy soda-pop concentrate isn't what it used to be, but beverage giant Coca-Cola
Coke's roots lie here at home, and the company has been working to "reinvigorate" weak case volume trends and an over-reliance on namesake soft drinks and other sugary offerings such as Diet Coke, Fanta, and Sprite. A recent acquisition of glaceau and its mineralwater brand meant the company further diversified into the faster-growing markets for water and sports drinks. The purchase helped boost second-quarter North American sales growth by 9%, while operating income grew a measly 1%.
Fortunately, those sales accounted for only about a quarter of second-quarter sales, because Coke is growing in the double digits elsewhere. In Africa and Latin America, there were at least 20% top-line improvements, while in Europe, sales improved more than 15% and operating income grew more than 20%. Only in Africa and the bottling investments segment was there a fall in operating income. That was because of marketing spending and the purchase of a couple of international bottlers as the company works to create stable relationships like the ones it has with Coca-Cola Enterprises
As with restaurant giant Yum! Brands
Fellow Fool Rich Smith recently pointed out that Coke has consistently beat earnings expectations for four years running. But as long as the company press release continues to be scattered with words like "restore" and phrases such as "return the business to sustainable growth," Fools should keep a close eye on recent momentum for signs it is running out of steam.
Also, archrival PepsiCo
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.