But it's in looking ahead to future quarters that most observers agree that Coca-Cola has poised itself for effervescent results. IBISWorld analysts, for their part, believe that Coke's acquisition of
North American bottling business is vital for the former.
"It's really important for Coke in that it directly gives them the biggest market share in both bottling and syrup," IBISWorld analyst Areeb Pirani says. The deal is taking place in a challenging North America soft drink market and in a time when soft drink companies are also facing increasing import competition Pirani said, noting customers are becoming increasingly discerning with their tastes.
Coca-Cola Enterprises dominates that the U.S. soft drink production market right now, chugging some 35% of soft drink market share; rival
has a 27% market share and
Dr Pepper Snapple
has a 6.5% market share.
Coke has recognized that amid this difficult environment, "we need to go out there and take control of our supply chain," Pirani said, adding that both Coke and PepsiCo are increasingly looking abroad for their markets.
"There's a lot of competition, and consumption has been on the decline in the U.S.," Pirani said. This is driving companies like Coke and Pepsi to do significant marketing, while cutting margins. "Coke Zero is a successful example," Pirani said. Still, both companies are able to withstand the economic pressures that plague smaller players in the industry.
For the first quarter, Coca-Cola posted adjusted earnings of 80 cents a share, which
as unit case volume increased 3%. Coca-Cola said its international unit case volume grew 5% and unit case volume in North America fell 2%.
Pirani expects both Coke and Pepsi to continue their shift away from carbonated soft drinks and to focus more on energy, sports drinks, bottled water and other higher- margin products. "The focus on consumer health won't go away," he said.
-- Reported by Andrea Tse in New York
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