Coca-Cola bet on Sprite, non-soda drinks in the U.S to report better than expected Q3 profit

Coca-Cola Co reported better than expected profit and revenue for the third quarter as North America sales rose three percent on higher demand for Sprite, tea and coffee.

The company said it was gaining market share against rivals, echoing sector analysts’ views ahead of the results that it was eating into the sales of arch-rival PepsiCo Inc.

While the Coca-Cola’s overall volume sales in North America remained flat in the third quarter, Sprite sales rose in the mid-single digits and tea and coffee sales increased in the low-single digits. This is just as Diet Coke sales were down.

On the other hand, PepsiCo this month reported a drop in quarterly beverage sales in North America for the first time in two years, hit by weak demand for Gatorade and marketing missteps.

Coca-Cola is gaining share from rival Pepsi due to better performance in the territories it has franchised to bottlers and a more aggressive push in the non-carbonated drink business, Nik Modi, RBC Capital Markets analyst wrote in a pre-earnings note.

Coca-Cola has also been cutting costs, including by the refranchising of its low-margin bottling operations and reducing workforce. Cost of goods sold fell 18 percent in the quarter, and general and selling expenses dropped 20 percent.

Net income attributable to Coca-Cola’s shareholders rose to $1.45 billion, or 33 cents per share, in the third quarter ended Sept. 29, from $1.05 billion, or 24 cents per share, a year earlier.

Excluding items, the company earned a profit of 50 cents per share, beating the average analyst estimate of 49 cents, according to Thomson Reuters I/B/E/S.

Revenue fell 14.6 percent to $9.08 billion as the company refranchised some bottling operations, but beat the average estimate of $8.72 billion.