Coca-Cola, the world's largest soda company, on Tuesday reported a profit of $1.87 billion for the fourth quarter, despite declining demand in North America for its signature soft drinks. The company said soft drink volume declined 2 percent in the quarter, though that was offset by a steady climb in sales for products like Dasani water, Powerade, Honest Tea, and Simply Orange, leading to a 1 percent bump in overall sales volume.
That dynamic may be Coca-Cola's key to success in the future, as Americans increasingly ditch soft drinks in favor of healthier fare. According to Duane D. Stanford at Bloomberg:
Coca-Cola is trying keep U.S. sales growing amid criticism that sweetened drinks contribute to the nation’s obesity epidemic. The company last month started airing advertisements to bring attention to the importance of exercise and calories in curbing obesity. [Bloomberg]
Coca-Cola came under some criticism for those ads, with many saying the company was merely performing damage control. But the trends for the company indicate that it should get serious about selling non-sugary drinks — if only to meet its bottom line. As Alan Rappeport at The Financial Times says, the latest report "should make its executives rethink how they operated the business."
Coca-Cola is also relying heavily on emerging markets for growth. The company's global sales rose by 3 percent, powered by rising consumption in China, Russia, Latin America, and Africa. However, that doesn't mean Coca-Cola can resolve all its challenges by working around saturated markets in the U.S. and Europe. As Abram Brown at Forbes notes, North America remain's the company's most profitable market.
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