Keeping a sparkle, as soda fizzles

May 1, 2014, 3:34 PM UTC

World’s Most Admired Companies rank: 6

Headquarters: Atlanta
Employees: 700,000 (including bottling and distribution partners)
The business: The $47 billion beverage giant has 17 brands with more than $1 billion in annual retail sales — including Sprite, Minute Maid, and Vitaminwater — and sells more than 500 brands of soda, tea, and juice.

Almost 2 billion people every day drink a Coca-Cola product. That’s roughly a third of the global population, spread across nearly every country in the world. With its iconic red-and-white logo, polar bears, and annual advertising budget twice the size of the GDP of Belize, the world’s largest beverage company (and No. 6 on Fortune’s list of Most Admired Companies) dominates the battle for market share: Its flagship brand, Coke, makes up 17% of the carbonated soft drink sales in the U.S., and 27% abroad. But in today’s new era of quinoa and kale, market forces are threatening to erode its supremacy. In the U.S. last year soda sales fell 3%, the biggest dip on record, according to Beverage Digest. And in April, for the first time in 15 years, Coca-Cola’s global soda volume (about 75% of its business) registered a quarterly decline. Muhtar Kent, CEO of the 128-year-old company, says that’s just a hiccup in the grander plan to double 2009 business by 2020 — growth that will come, analysts project, from different markets, as well as from new packaging, new sweeteners, and new distribution systems.

Message on a bottle

For 13 of the past 14 years, Coca-Cola has been the most valuable brand in the world, according to consultant Interbrand. (In 2013 it lost the title to Apple.) Decades of savvy marketing have turned that slender bottle into an icon of Americana and made the company logo ubiquitous — including on social media, where Coke has more than 80 million Facebook fans. Now, in the face of waning soda sales, the company is counting on its marketing muscle even more, announcing it will bolster that budget by $1 billion over the next three years. The Coke campaign surrounding this summer’s World Cup in Brazil, says the company, will be its largest ever.

Unparalleled reach

Even in remote Zimbabwean villages, local vendors are selling Coke. The company’s distribution network is so comprehensive that groups like the Gates Foundation are testing it as a means to reach rural areas, delivering medicine and supplies alongside soda. And while developed markets may be sipping less of the sweet stuff (or taxing it, in the case of Mexico and France), emerging ones are still far from saturated. Last quarter, Coca-Cola grew volume 12% in China, where the company and its bottlers are investing $8 billion over the next six years.

The new new Coke

The ghost of “new Coke,” the infamous ’80s bust, may never quite disappear, but the company isn’t shying away from innovation, says Beverage Digest editor John Sicher. In Argentina and Chile, it launched a product called Coca-Cola Life, made with a new variant of the plant-based sweetener stevia; it won FDA approval for another version of the sweetener last year. Earlier this year, Coke dived into the pod market, partnering with Keurig Green Mountain for a Keurig Cold at-home beverage system (think K-Cups for coffee, but with soda). You supply the fizz.

This story is from the May 19, 2014 issue of Fortune.

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