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Last Updated: Tuesday, 7 February 2006, 14:50 GMT
Marketing costs knock Coca Cola
Marketing poster for Coke's Dasani water brand
Coke is pushing its healthier brands like Dasani water
Coca Cola's profits fell 28% in the last three months of 2005 following higher marketing costs and falling soft drink sales in France and the UK.

The fall in net profit to $864m (494m) was also down to a $188m tax charge for returning overseas profit.

Coke's sales by volume rose by four percent in 2005, despite declining sales in France and the UK.

It spent an extra $400m in marketing to revive sales of drinks such as Coke and Sprite, which make up 80% of revenues.

'Innovation deficit'

In recent years, Coca-Cola has seen its sales growth slip behind that of its rival PepsiCo, which has a bigger share of the noncarbonated soft drinks market.

Chief executive Neville Isdell said the latest results "complete a transition year in which the company delivered solid unit case volume growth that was balanced well between carbonated soft drinks and noncarbonated beverages".

The firm is coming to the end of a strategic turnaround that has seen it focus more on emerging markets and sales of healthier, non-fizzy drinks such as its Dasani water and Minute Maid orange juice brands.

Last December it introduced a new marketing campaign based around the slogan "the Coke side of Life".

Back then Mr Isdell acknowledged that there had been an "innovation deficit" at the company prior to his arrival in 2004.

For 2006, Coca Cola has a raft of new soft drinks due to debut, including tea and coffee drinks, vitamin-enhanced juices and new versions of its Coke and Diet Coke favourites.

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