Coca-Cola's net income and revenue remained virtually flat in the
third quarter, dragged down by the costs of the company's marketing
investment and strength of the dollar over the past year.
The soft drinks giant reported net gains of 43 cents per share, exactly
the same as a year ago. A charge of three cents a share was included for
marketing investments and an additional one cent was charged for the
negative impact of currency exchange.
The company's bottom line appears to have paid the price for the "think
local, act local" advertising strategy that it introduced two years ago.
The appointment of a raft of local hotshops worldwide, including Soul
and Mother in the UK, is thought to have added substantially to
Coca-Cola's marketing costs.
Last month, Coca-Cola signalled a move away from this approach when it
appointed Ogilvy & Mather to handle the Fanta and Sprite accounts
globally and handed the global Diet Coke account to Lowe Lintas &
At the same time, Coca-Cola is relying on one-off marketing activity to
give solidity to its sales performance in the current economic climate.
The much-vaunted sponsorship tie-in with the movie Harry Potter and the
Sorcerer's Stone and the introduction of Diet Coke with Lemon is
expected to play a crucial role in this.
Last month, Coca-Cola lowered its volume growth forecast to between 4
and 5 per cent in the wake of the 11 September terrorist attacks.
Analysts said that short-term sales in "away-from-home" venues such as
restaurants had been particularly hard hit by the events. These venues
account for one-third of Coca-Cola's US sales.