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Coke sees progress in N America

Neville Isdell, chief executive of Coca-Cola, said on Wednesday he was seeing “the early signs of progress” in efforts to revitalise its North American operations, which account for almost 30 per cent of its sales.

While sales of its core sparkling drinks fell again in the region, the company reported a 1 per cent rise in unit case volumes and a 17 per cent increase in operating income, supported by this year’s $4.1bn acquisition of Glaceau, a maker of enhanced water drinks.

Muhtar Kent, president and chief operating officer, said that while he expected Glaceau to be “a very important catalyst for sustainable growth in North America”, Coca-Cola was continuing its focus on the sparkling drinks category, where sales have fallen as customers switch to juice, energy and water drinks. In September, the company introduced a modernised “grip” version of its 20 fluid ounce plastic cola bottle in the US, replacing a design that had been in service for 14 years, with red, silver and black labels for its Coke, Diet Coke and Coke Zero products.

Mr Kent said the company “will be coming out with a lot of innovation in packaging, and also in sales equipment as we move forward, with a key focus on the point-of-sale”.

During the company’s third quarter, net income increased by 13 per cent, to $1.65bn or 71 cents per share, ahead of Wall Street’s expectations, boosted by continued strong international growth and the impact of the weak dollar.

Coke also said that it expected raw material costs in 2008 for commodities such as corn syrup and aluminium to be either flat or down slightly.

Gary Fayard, chief financial officer, said: “We are starting to see a moderation in commodity costs impacting beverage companies, both globally and in North America, and we believe the worst is behind us.”

The company also highlighted its sales growth in China, where it said it was investing “aggressively”. During the quarter it reached 120,000 more outlets, and distributed 165,000 new coolers.

Mr Kent said that Coca Cola planned to establish its brands as “a staple in the local community” with wide availability by next year’s Beijing Olympics, where it is a leading IOC sponsor.

The Financial Times Limited 2007