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April 27, 2017

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Coca-Cola's profits dwindle on poor soda sales

NEW YORK--Coca-Cola's fourth-quarter profit fell as the world's biggest beverage maker once again sold less soda in North America.

The maker of Sprite, Dasani and Vitaminwater water said Tuesday that sales volume declined 1 percent in North America. That reflected a 3-percent decline in soda, which offset improved performance by noncarbonated drinks such as Powerade. Last week, PepsiCo also said its soda volume fell in the "mid-single digits."

Coca-Cola also saw slower growth in emerging markets such as India and China. Overall, global sales volume rose just 1 percent in the quarter as a result. The Atlanta-based company said it would intensify its cost-cutting to produce another US$1 billion in savings by 2016, much of which would be reinvested into marketing.

"We know our business responds to marketing," CEO Muhtar Kent said in a call with reporters. While some jobs may be lost as a result of the cost cuts, he noted that other jobs might be created.

Although Coca-Cola and PepsiCo are tapping emerging markets for growth and sell a wide array of beverages, pressure is mounting for the two companies to figure out how to get soda sales moving in the right direction at home.

Americans have been cutting back on soda for years as beverage aisles have grown increasingly crowded with options such as Monster energy drinks or Sparkling Ice waters. Soda is also blamed for making people fat and, more recently, industry executives have blamed concerns about artificial sweeteners for a decline in sales of diet sodas.

In fact, Kent said the soda decline in North America over the past year was "largely due to softer Diet Coke volumes."

But he stressed that the company was working with "credible third parties" to address any "misperceptions" about soda, but did not specify whom. He expressed confidence that soda in North America can still grow and just needs improved marketing, innovation and on-the-ground sales execution.

Coca-Cola is testing new ventures in the meantime. The company rolled out a drink called "Coca-Cola Life" sweetened with sugar and stevia in Argentina last year. In the latest quarter, Kent said soda volumes in the country rose by a high-single-digit percentage.

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