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Coca-Cola's revenue up _ but costs eat into profit

Associated Press Modified: July 17, 2012 at 4:45 pm •  Published: July 17, 2012

NEW YORK (AP) — The Coca-Cola Co. is selling more of its sodas, sports drinks and bottled waters in most parts of the world, with growth particularly strong in emerging markets.

The world's biggest beverage maker — which makes Minute Maid, Powerade and Dasani — said Tuesday that its sales volume rose 4 percent globally in the second quarter. Revenue growth was powered by higher prices and expansion in countries such as India, where volume increased 20 percent.

Still, the company's quarterly profit slipped as costs for ingredients climbed as well. The Atlanta-based company was also up against a tough comparison, as the year-ago results were boosted by a one-time net gain related to the merger of two of the company's bottlers.

In its flagship North American market, Coca-Cola said overall sales volume rose 1 percent, while a mix of higher prices and smaller bottles and cans lifted revenue by 5 percent.

Volume for its sparkling beverages — or sodas such as Coke and Sprite — fell 2 percent.

Soda consumption in general has been on the decline for several years as people lose their taste for sugary sodas and increasingly reach for alternatives, such as sports drinks and bottled teas.

Coca-Cola CEO Muhtar Kent said he thinks the soda business in the U.S. can nevertheless grow once the company eases its pricing.

"Don't forget that we're cycling in epic headwinds in commodity costs," Kent said.

As for Mayor Michael Bloomberg's recent proposal to ban the sale of supersized sugary drinks in New York City, Kent did not say whether he thinks the broader sentiment targeting colas for obesity will impact the business over the long-term. But he said that singling out sodas for blame doesn't make sense.

"There are better ways to address concerns about obesity," he said, noting that Coca-Cola has worked to reduce calories in school drinks and put clearer calorie information on the front of its bottles and cans.

Still, Coca-Cola is looking beyond its fizzy sodas for growth. Sales volume for its still beverages, such as Powerade and zero-calorie Vitaminwater, rose 8 percent in the quarter. Juice brands rose 3 percent, driven by lower-calorie Minute Maid offerings.

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