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Coke boss ‘personally committed’ to tackling obesity

By Elaine WATSON , 12-Feb-2013
Last updated the 12-Feb-2013 at 19:31 GMT

Coca-Cola chief executive Muhtar Kent says he has resolved to find “meaningful solutions to the complex issue of obesity” and is “personally committed” to leveraging the company’s resources to tackle the problem.

Speaking on a call with analysts this morning to discuss the firm’s Q4 and full-year 2012 results, Kent said Coke was “well on the way” to delivering on its target of doubling the size of its business by 2020 (vs 2009).

However, companies the size of Coca-Cola also have to take the lead by giving consumers the information they need to make informed choices, said Kent, who recently went on the offensive by approving new ads in which Coke suggested it could be part of the solution to a problem many critics argue it has helped to create.

Coca-Cola - which was recently targeted in a hard-hitting video by the Center for Science in the Public Interest featuring diabetic bears guzzling soda - is also committed to transparency via calorie labeling and responsible marketing, added Kent.

There is an important conversation going on about obesity and we want to be part of the solution

However, he also stressed that communications must be informed by “evidence-based science”, echoing a speech by chief procurement officer Ron Lewis at the Supply Side West trade show last fall in which he claimed many politicians see the soft drinks industry as an “easy target”, and had developed “short-sighted policies” such as soda taxes or limits on beverage sizes that were not supported by scientific evidence.

He added: "There is an important conversation going on about obesity and we want to be part of the solution... I am personally committed to leveraging all our resources to lead and make a difference here.

"We are committed to investing in innovation of our sweeteners, products, packaging and equipment that fosters active, healthy living. We are committed to bringing real choice to consumers everywhere and educating them on how the choices we offer can play a role in a sensible balanced diet and active, healthy lifestyles.

"We are committed to transparency about the nutritional content of our products and we are committed to responsible marketing of our products."

North America: ‘We’ve got to evaluate the impact of payroll tax rises and higher gas prices’

While much of Coca-Cola’s growth is still coming from sales of full-sugar soda (worldwide volumes of Coca-Cola were up 3% in FY 2012), volumes of still beverages such as Powerade, and ready to drink teas are growing much faster (+10% in FY 2012), revealed Kent.

In the North American market, meanwhile, volumes of zero-calorie drink Coke Zero grew in the high single digits for the full year, while overall sparkling beverage volumes declined 1%, reflecting a continuing shift towards zero-calorie sodas.

Asked about US consumer confidence, Kent said: “There is some sense of improvement but we’ve got to wait and evaluate the impact of payroll tax rises and higher gasoline prices.”

Strong growth in Thailand and India, weaker sales in China

Coca-Cola posted a 5.6% rise in net income to $1.9bn in the fourth quarter (three months to Dec 31, 2012) and a 4% rise in net revenue to $11.46bn.

Volumes were up 3% in the quarter, and up 4% in the full year (FY), driven by strong growth in key emerging markets such as Thailand (+22% FY), India (+16% FY) and Russia (+8% FY).

Fourth quarter volumes grew 5% in Latin America but slumped 4% in China, which Kent blamed on the “ongoing economic slowdown as well as poor weather, the cycling of double-digit growth from the prior year and a later Chinese New Year in 2013”.

He added: “As we look ahead to 2013, we continue to expect China's recent economic slowdown to have a short-term effect on our industry and on our business, although we do expect to see some improvement in consumer disposable income as the year progresses.”

Volumes in Europe decline 5% in Q4

Volumes in Europe declined 5% in the quarter, reflecting ongoing economic uncertainty and weak consumer confidence, said Kent.

But he added: “The sentiment there is that it’s not going to get any worse. That feeling is beginning to emerge, but I think it’s going to be a long recovery.”

Eurasia and Africa volume grew 10% in the quarter, driven by growth in the Middle East and North Africa, Turkey, and Russia.

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