August 30, 2007/Bloomberg News -- Roberto Goizueta, the late, legendary chief executive of Coca-Cola, fueled a 39-fold surge in the company's stock by relying on its flagship brand: Coke.

Now, after the U.S. market for soft drinks shrank for two years, the current chief, Neville Isdell, has turned to the lab to try to restore growth and revive the shares by creating new drinks with proven health benefits. Some say that the effort is too little, too late.

"They're doing the right thing with these new drinks, but I still see a problem for them with reliance on soft drinks," said Walter Todd, a principal at Greenwood Capital Associates, which held Coca-Cola shares when they peaked.

Coca-Cola, taking cues from drug makers, is running as many as 21 clinical trials to prove the benefits of drinks like Minute Maid Heart Wise orange juice, which lowers cholesterol, and Enviga green tea, which boosts metabolism. Those products can be twice as profitable as soda, which still accounts for 80% of Coca-Cola's sales.

The shares, already up 10% in 2007, are forecast to rise 11% in the coming year to $59. Even at that price, they will still be a third less than they were at the stock's all-time high of $87.94 in 1998. Coca-Cola shares were up 17 cents to $53.43 in early New York Stock Exchange trading on Wednesday.

Coca-Cola stock had gained every year from 1981 through 1998 as the company expanded overseas and sold assets like Columbia Pictures and Sterling Vineyards. After Goizueta's sudden death in 1997, the company struggled with management changes, with three chief executives in the next seven years. The stock dropped in 1999 and lost half its value until reaching a low of $37.07 in March 2003.

Isdell, who worked for Coca-Cola and its bottlers for three decades, was brought out of retirement in June 2004 to take the helm. At the time, the shares were trading at about $51. They have gained 3.7% during his tenure.

Greenwood Capital bought Coca-Cola shares again in 2004 in the mid-$40s and sold them at about the same price last year because Todd "ran out of patience" with the company's turnaround. PepsiCo is now a top-10 holding, while the firm owns no Coca-Cola shares.

Coca-Cola's battle mirrors that of Anheuser-Busch, the U.S. brewer, whose domestic volume growth slowed to 1.2% last year as consumers switched to imports and spirits. Sales at Anheuser increased an average of 4% over the past five years, trailing Coca-Cola's 6.5% gain.

PepsiCo's sales have outpaced both, rising an average of 8.4% over the same period, fueled by demand for Frito-Lay snacks and drinks like Gatorade, which it bought for $14 billion as part of the purchase of Quaker Oats in 2001. Coca-Cola's board had rejected that deal as too expensive.

New drinks with benefits may help Coca-Cola win back consumers. Healthier beverages, overseas expansion and the recent $4.1 billion purchase of Glaceau Vitaminwater may lift Coca-Cola's revenue 22% by 2010, faster than the 18% gain forecast for Pepsi in a Bloomberg survey.

While soda sales have shrunk in North America, overseas demand is surging in countries like China, Russia, Brazil and parts of Europe. Global soda shipments rose 4% last year, the biggest gain since 1998, and executives have said repeatedly that soft drinks will remain their top focus.

Coca-Cola gets 70% of sales outside North America. It sells some fortified juices in Europe and Asia, and analysts like Bill Pecoriello of Morgan Stanley have said that Coca-Cola would likely expand Glaceau Vitaminwater to Europe and beyond.

"The core of our business is healthy, and it's poised to capture significant growth over the coming years," the president, Muhtar Kent, said during a July conference call. "All the programs that were put into place, both the sparkling and still beverages, are working."

Some have questioned the science behind the new health drinks, however.

The attorney general for Connecticut, Richard Blumenthal, has called Coca-Cola's assertion that three cans of Enviga burn 100 calories "voodoo nutrition." To burn the 3,500 calories it takes to lose a single pound, consumers would have to drink three cans of Enviga every day for 35 straight days at a cost of $146, the nonprofit Center for Science in the Public Interest said in a February lawsuit against Coca-Cola and Nestle, which co-developed the drink.

Coca-Cola dismisses criticism of Enviga. The drink helps "achieve a healthy lifestyle" by gently increasing metabolism, says Rhona Applebaum, Coke's chief scientist.

The Enviga clinical trial was run by the University of Lausanne in Switzerland, and 31 participants were sealed in "metabolic chambers" where blood pressure and heart rate were measured. They were given meals like risotto and drank three 8.5-ounce, or 250-milliliter, servings per day of Enviga, which contains green tea extracts, caffeine and calcium.

The study showed that the average person burned about 100 calories from three servings of the drink.

"We really agonize about the designs of these studies to make sure they are bulletproof," said Danny Strickland, Coke's chief innovation officer. "We really needed to step up the pace of innovation as part of the total revitalization of the company."

From the September 10, 2007, Prepared Foods e-Flash