Coca-Cola says people are shelling out more money for its drinks, thanks to a mix of reinvigorated marketing and mini-cans and glass bottles that tend to cost more.
To help boost weak sales growth, the maker of Sprite, Fanta and Powerade has been slashing costs, then pouring some of that money into increased marketing.
The Atlanta-based company says the stepped-up quality and quantity of its advertising is helping it command higher prices for its drinks.
For the quarter ended July 3, Coca-Cola said its profit rose to $US3.11 billion, up from $US2.6 billion a year earlier.
Total revenue including regions around the world slipped to $US12.16 billion, dragged down by the impact of foreign currency exchange rates. Coca-Cola said organic revenue, which strips out such factors, rose four percent overall for the period.
In a conference call with analysts, Coca-Cola CEO Muhtar Kent said the company’s revenue growth in North America during the second quarter would not have been achieved without the “infusion” of improved marketing.
Without providing specifics, the company said overall advertising spending saw a double-digit percentage increase during the quarter.
In the US, a recent campaign is the “Share A Coke” program, which puts popular names and words like “Friend” and “Legend” on packages. Many customers snap pictures of the cans and bottles, then post them on social media sites like Facebook and Instagram.
The increased focus on marketing comes as Coca-Cola faces broader challenges in the US, with beverage options proliferating and people continuing to move away from traditional sodas.
That has prompted the company to focus on extracting more money per transaction by raising prices on traditional packages, as well as pushing offerings like mini-cans that cost more. During the quarter, the company said the sales volume of mini-cans rose double-digits.
Sandy Douglas, president of Coca-Cola North America, noted that mums in particular like the smaller sizes and that people are willing to pay “a little bit more money” for them.
In the past, Douglas noted that the company marketed packages that were too big and led to waste. He said a variety of smaller sizes now account for roughly in the “low teens” as a percent of sales volume in North America.
For the quarter, Coca-Cola’s total volume for carbonated drinks in North America rose just one per cent. That increase was due to the company’s expanded distribution of Monster energy drinks. When including non-carbonated drinks like Powerade, volume for North America rose two per cent.
Organic revenue for the region rose five per cent, however, thanks to higher pricing and the smaller packages.
Shares of Coca-Cola edged up 11 cents to $US41.30.
