Western US a challenging "pocket" for the firm

Western US a challenging "pocket" for the firm

Coca-Cola Enterprises (CCE) said it is seeing a “rebound” in the US soft drinks market, despite recording a drop in sales volumes for the region in the first quarter.

Speaking at the firm’s earnings conference today (27 April), Steve Cahillane, president and CEO for Coca-Cola Refreshments, said there are “pockets” that are doing better than others in the US.

“We are seeing a nice rebound in the US," he said. "But the pockets that continue to be more challenged are parts of the western US where unemployment remains quite high, where the housing market had more of an effect than it did on the rest of the country. We are seeing those markets lagging the overall potential recovery.”

However, he added: “From a channel perspective, we’re seeing some better movement across the balance of the US.”

CCE saw net profits soar in the first quarter of this year, boosted by volume growth in Europe. For the three months to the end of March, the company earned US$106m compared to $61m in the prior year. Sales, however, declined by 1.5% to $4.97bn.

Cahillane told analysts that while the still beverage category is “back on track”, it is unlikely to return to the growth that it had experienced previously.

“Vitamin Water is exceeding our expectations from a consumer standpoint perspective and helping us drive our overall still business," he said. "Our Smart Water brand continues to grow at double-digit rate … and we’re seeing some improvement in still water."

However, he added: “For 2010 I don’t think we’ll see a return to the type of growth rates in still where it was a driver of our overall business because sparkling continues to perform very well and I would see that continuing into the future. We’re seeing a continuation of the trends we saw where the whole sparkling category continues to benefit from the challenges in the economy.”

The firm added that competition remains “quite intense” in Europe and that its priority is growing the category.