Coke Price Increases Planned As Soda Sales Fizzle

Atlanta, GA (AHN) - Coca Cola announced on Thursday it would increase its prices after Labor Day to make up for the company's declining second quarter income which was down by 23 percent to $1.32 billion.

But the company did not provide details on the price hike planned for Coke.

The profit decline was caused by dwindling U.S. soda sales and a $5.3 billion writedown in franchise licenses and goodwill. While the bottler's international sales went up by 5 percent, its total global sales rose by only 3 percent, lower than the estimate of 4 percent.

The reduction in sales was attributed by Coca Cola chief executive officer Muhtar Kent to less disposable money to purchase Diet Coke, Minute Maid juices and Dasani bottled water caused by rising fuel and food prices. The natural calamities in Asia and labor strikes in Europe were also partly responsible for the drop in overseas sales of Coke.

Following the announcement of Coca Cola's profit reduction, the firm's share fell by $2 or 3.8 percent to $50.34 on Thursday. On Friday, its shares went down again by $1.77 or 3.4 percent to $50.24 during midday trading.

Jack Russo, analyst of Edward Jones, explained the drop in Coca Cola's share prices reflects the lessening of investor confidence because of the slower growth of the company's overseas sales.