Coke, Pepsi bottlers see sales fall

CHICAGO Wed Oct 28, 2009 11:04am EDT

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CHICAGO (Reuters) - Coca-Cola Enterprises Inc (CCE.N) and PepsiAmericas Inc PAS.N sold fewer soft drinks in the United States than analysts anticipated, signaling that consumers remain cautious about spending and pushing shares of both bottlers down.

Coke Enterprises still managed to increase profit more than expected and raised its 2009 earnings forecast [ID:nN28500645].

PepsiAmericas' lower profit fell short of analysts' expectations and the smaller bottler cut its outlook [ID:nBNG205357].

The companies, which bottle and distribute soft drinks, have tried to protect profits as consumers avoid higher-priced drinks, like bottled teas, and eat out at restaurants less frequently.

PepsiAmericas, which is being acquired by PepsiCo Inc (PEP.N), said it expected sales pressure to persist for the rest of 2009. PepsiCo is set to buy the 57 percent or so of PepsiAmericas it does not already own.

Shares of Coke Enterprises slid 2 percent to $19.63, while PepsiAmericas slipped 0.5 percent to $29.30.

Meanwhile, Mexico's FEMSA (FMSAUBD.MX) posted a 25 percent jump in profit, driven by strong results from its Coca-Cola FEMSA (KOFL.MX) soft drink bottling unit [ID:nN28297558].

NORTH AMERICA VOLUMES DROP

Coke Enterprises, the largest bottler of Coca-Cola Co (KO.N) drinks, said sales by volume fell 6.5 percent, after declining 1 percent in the second quarter and 0.5 percent in the first quarter.

The company felt pressure in North America, where volume fell 10 percent. A year earlier, U.S. sales got a boost from Olympic-related promotions and the July 4 holiday falling in the quarter.

The U.S. volume decline "will disappoint the Street," but is attributable to July 4, the economy and Coke Enterprises' focus on smaller, more profitable packages, Credit Suisse analyst Carlos Laboy said in a note to clients. He called its 4 percent volume growth in Europe "surprisingly strong."

Last week, Coca-Cola reported disappointing revenue on a 4 percent decline in sales volume in North America.

Analysts said those results boded poorly for Coke Enterprises, which bottles and sells about 80 percent of all the Coke drinks sold in North America, including Coca-Cola, Dasani water and Powerade sports drinks. Coke owns about 35 percent of Coke Enterprises.

Coke Enterprises is selling 16-ounce cold bottles of Coca-Cola for 99 cents and taking other steps to revive U.S. sales.

In Europe, it is adding drinks such as Monster and vitaminwater to its lineup. It will also start distributing Ocean Spray juice drinks in parts of Europe in early 2010.

Coke Enterprises' sales fell 3 percent to $5.57 billion, while analysts expected $5.71 billion. Prices climbed 7.5 percent. It expects full year revenue to decline slightly, but rise in a low-to-mid single-digit range excluding the impact of currency.

PepsiAmericas sales fell 15 percent to $1.13 billion, while analysts expected $1.22 billion. Its U.S. volume slid 9 percent.

Pepsi Bottling Group Inc PBG.N, the largest bottler of Pepsi drinks, posted a slightly greater-than-expected increase in quarterly profit earlier this month. Its revenue also lagged expectations.

(Additional reporting by Abhishek Takle in Bangalore, Martinne Geller in New York and Cyntia Barrera Diaz in Mexico City; Editing by Lisa Von Ahn, Dave Zimmerman)

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