Says Third-Quarter Earnings Will Decline By as Much as 24%

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CHICAGO ( -- Faced with lowered second-half earnings estimates, Coca-Cola Co.'s new chairman-CEO blasted the company's recent performance and vowed to improve the beverage giant's marketing operations.

"The lifeblood of this company is marketing," Neville Isdell said in a call with analysts. "We have to make sure our marketing is more effective than it has been."

Wall Street shocked
Despite ongoing warnings of pending doom for the carbonated soft-drink industry by analysts and observers, Coke shocked Wall Street today when it warned earnings per share would fall by as much as 24% in the third quarter and 11% for the second half, citing cool weather in Europe, unfavorable packaging deposit laws in Germany and the marketer's slow response to bottle and can volume declines in North America.

"Some of these variables are beyond our control ... but we have issues to a large extent that need correcting," Mr. Isdell said. "We must be candid about understanding, addressing and solving the issues."

"We have to continue growth led by carbonated soft drinks, regardless of what the skeptics might think. I know the category can grow," Mr. Isdell said. He admitted that the company's portfolio will change dramatically with added flavors and more diet offerings, "but consumers in every market want carbonated soft drinks."

Understanding the consumer
To get there, he said the company needs to improve its capabilities to understand consumer preferences, lead the market in innovation and capitalize on health and convenience trends. "We have to make it easy for consumers to both enjoy and feel good about or products," he said.

Soon after taking the reins at Coke, Mr. Isdell named Chuck Fruit chief marketing officer, from vice president of integrated marketing. He replaced Daniel Palumbo, who was brought in by Steve Heyer, the former president and chief operating officer who was passed over for the spot now held by Mr. Isdell.

Iconic advertising
One new ad effort from Coke was the "I Wish" campaign, from independent ad agency Mother of London, which was shot in South Africa and aired in 20 countries including the U.S. The commercial echoes Coke's classic "Hilltop" spot that taught the world to sing 30 years ago. Coke is scouring its agency roster worldwide to try to recapture such iconic advertising.

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