Coca-Cola on Tuesday posted higher quarterly revenue than expected despite a strained geopolitical and consumer environment.
The Atlanta beverage company attributed some of the growth in North America to the launch of smaller drink sizes and more cherry-flavored sodas.
Coca-Cola reported net sales of $12.5 billion in the first quarter, up 12% from the prior year. The company said its net income attributable to shareholders grew 18% over the year to $3.9 billion. But its cost of goods sold increased 11% to $4.6 billion from the same period last year.
Coca-Cola is not only a major Atlanta employer but also a bellwether for the broader economy.
The beverage giant noted challenges some of its customers are facing and said what was key to its growth was being “consumer centric” and innovative — both priorities for new CEO Henrique Braun, who took over in late March.
“While many consumers remain resilient, others are under pressure due to persistent inflation, greater macroeconomic uncertainty and volatility driven by the conflict in the Middle East,” Braun said on a Tuesday earnings call, his first in the new role.
One strategy was to offer more affordable product sizes. For example, Coca-Cola started selling single-serve mini cans in North American convenience stores, which the company said helped grow volume. The 7.5-ounce cans have a suggested retail cost of $1.29, Coca-Cola previously said.
“The consumers that have pressure today are the low-income consumers, and we have really dialed up our affordability options to get closer to them,” Braun said.
The company also leaned into flavors people enjoy such as cherry. Coca-Cola recently revived Mr. Pibb after nearly 25 years. In February, the company announced the permanent return of Diet Cherry Coke and launched new flavor Coca-Cola Cherry Float.
Braun gave other examples across the globe of how it was targeting customers, such as relaunching Coca‑Cola Zero Caffeine Zero Sugar in Europe to appeal to people monitoring caffeine in the evening.
The company wasn’t immune, though, to the war in Iran that began in late February. Braun said while Coca-Cola grew volume in Eurasia and the Middle East through the quarter, “our volume declined in March after the onset of the conflict.”
John Murphy, president and chief financial officer of Coca-Cola, called the overall impact of the war manageable but said the situation is still fluid.
“It’s difficult at this stage to say exactly how it’s going to play out,” he said. Murphy added that Coca-Cola’s bottling partners are more exposed than the company to supply disruptions from the Iran war, as well as higher aluminum and plastic prices.
Still, Coca-Cola’s quarterly results beat Wall Street expectations, according to CNBC. Shares of Coca-Cola were up about 6% as of midday Tuesday.
During the quarter, Coca-Cola said it grew global unit case volume 3%.
Sparkling soft drinks were up 2%, with strong growth in diet beverages. Coca-Cola Zero Sugar increased 13%, and Diet Coke was up 6%.
Water, sports, coffee and tea beverages increased 5%, while juice, dairy and plant-based beverages were down 1%.
Coca-Cola maintained its full-year outlook for organic revenue growth of 4% to 5%. But it raised its forecast for comparable earnings per share growth to 8% to 9%, up from 7% to 8%.
About the Author
Keep Reading
The Latest
Featured
