KO Coca Cola Company

By Jennifer Maloney and Aisha Al-Muslim 

A rebound in demand for diet cola lifted Coca-Cola Co.'s core soda business in the latest quarter, as consumers turned back to the zero-calorie drinks they once spurned.

The company's global soda volume grew 2% from the same quarter a year ago, led by rising demand for Diet Coke and Coke Zero Sugar, a reformulation of Coke Zero that tastes and looks more like original Coke, with a red circle on the cans.

"Coke Zero Sugar is on a roll," with sales growth world-wide in the high-teen percentage points, Chief Executive James Quincey said in an interview Tuesday.

Diet Coke even eked out gains in the U.S., where its sales volume had been sliding for more than a decade as consumers turned to bottled water and flavored seltzer. Low- and no-calorie Sprite and Fanta also helped boost sales, except in a couple of Central American countries where the company changed the recipes too sharply and consumers were unhappy, Mr. Quincey said.

"We've course-corrected" in those markets, he said. "Where we've gone down in stages in the sugar reduction, we've seen good consumer acceptance."

The soda giant in January launched four new flavors of Diet Coke, including Ginger Lime and Zesty Blood Orange, packaged in new slim cans.

Low single-digit percentage price increases on Coke products in North America, implemented after the U.S. placed tariffs on Chinese imports, didn't seem to dampen demand. Organic revenue, which excludes currency swings, acquisitions and divestitures, increased 6% from a year ago. Sales volume grew 2% from a year earlier.

Coca-Cola replaced Coke Zero with Coke Zero Sugar in the U.S. last year. The company has been aiming to cut sugar from its products and diversify beyond soda as more countries implement taxes on high-calorie beverages to combat rising rates of obesity and diabetes, and as consumers switch to healthier beverages.

Overall, net revenue for the beverage company dropped 9% to $8.25 billion, as a result of the refranchising of company-owned bottling operations. Analysts polled by Refinitiv had expected revenue of $8.17 billion.

The Atlanta-based company posted a profit for the third quarter of $1.88 billion, or 44 cents a share, up from $1.45 billion, or 33 cents a share, a year earlier. On an adjusted basis, it earned 58 cents a share, beating the 55 cents a share analysts expected.

For 2018, the company maintained its guidance of at least 4% growth in organic revenue and comparable adjusted earnings per share from continuing operations of a 8% to 10% growth versus $1.91 in 2017.

The stock was up 0.6% in morning trading Tuesday. Shares are up 1.9% in the past 12 months.

Write to Jennifer Maloney at jennifer.maloney@wsj.com and Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

October 30, 2018 10:15 ET (14:15 GMT)

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