Soft drink giant Coca-Cola reported a four percent decline in profits last quarter as the company’s sales dropped in key high-growth markets. Coca-Cola reported that sales in important markets such as China and the United States dropped during the quarter due to changes in taste and limited global economic growth.
A truly worldwide brand, Coca-Cola is one of the few products to have achieved a position of near-dominance in hundreds of global markets. The company is just as large an entity in emerging markets such as China and India as it is in the United States, where it was founded over 120 years ago.
Despite its immense brand power, however, Coca-Cola’s sales have declined over the past three months as changing tastes in established markets made the drink a less popular choice. Full-calorie sodas, such as Coca-Cola, are less popular with the American market than they once were as health becomes a major concern.
Issues affecting the company in the United States include a New York City law that could ban soft drinks at sixteen ounces per drink. The law is pending approval, but intense support from Mayor Michael Bloomberg leads to the ban coming into place in New York City, and potentially in other major urban areas.
At the same time as United States anti-obesity efforts reduced demand for Coca-Cola’s line-up of products, low economic growth in key markets such as China and India have put a squeeze on the beverage giant. Coke’s ability to make up sales in one region with another key market appears to be failing, analysts believe.
Despite a $2.6 billion reduction in net income, the Atlanta-based company is very optimistic about its worldwide growth potential. Coca-Cola opened a new plant in Myanmar last month, with plans to invest $200 million into the country as a new production base in Southeast Asia.
