Coca-Cola revenues hit by bottler refranchising efforts during 2018

The Coca-Cola Company recorded a 10% decline in net revenues during 2018, as it was hurt by the refranchising of its bottling operations.

Sales for the year stood at $31.86 billion. However, organic revenues grew 5% and operating income increased 14% to $8.7 billion.

Coke tied up the refranchising of its North American bottling operations last March in a move to create a system of economically aligned bottling partners with the capability to serve major customers, coupled with the ability to maintain strong ties across diverse markets.

Aside from its bottling investments unit, the company recorded sales rises across key markets; net revenues grew 9% in North America and by 4% in Europe, Middle East and Africa.

As consumers increasingly look for healthier alternatives to sugary sodas, Coca-Cola has looked to grow its low-calorie drinks portfolio. Coca-Cola Zero Sugar had its best year in 2018, posting double-digit volume growth globally, and the firm has already launched two new Diet Coke flavours this year.

Coca-Cola CEO James Quincey.

However, in the fourth quarter of the year, Coke’s juice, dairy and plant-based beverages volume declined 2% in North America as “strong growth” in Fairlife and Honest juices was offset by the impact of package downsizing across the juice portfolio.

James Quincey, Coca-Cola CEO, said: “I am pleased with our strong organic revenue and earnings growth in 2018. Our results demonstrate progress in our transformation as a consumer-centric, total beverage company and the power of a more strategically aligned system. Coca-Cola has established a strong foundation to capitalise on long-term growth opportunities and drive sustained shareowner value.”

The company drew attention to its increased agility and the strength of its distribution system last year, helping it launch approximately 500 products across multiple markets through its “lift, shift and scale” strategy, while also accelerating the elimination of underperforming products.

Coke inked a range of noteworthy acquisitions last year, including deals for sports drink brand Bodyarmor and UK coffee chain Costa.

For 2019, the company has forecasted a 4% growth in organic revenues.