USA – American multinational beverage company Coca-Cola has reported a 16% rise in first quarter (Q1) earnings primarily driven by strong recovery in away-from-home channels and continued growth in the home channel.
Net revenues for the Atlanta-based company totaled US$10.5b in the quarter beating Wall Street’s expectations of US$9.8 billion.
Coca-Cola’s profits of US$2.8 billion, or 64 cents a share, rose 24% from a year ago — surpassing consensus estimates of 58 cents a share.
The company’s unit cases increased 8% and margins improve just over 2 percentage points to 32.5% compared to the same time last year.
“Volume growth was strong across all operating segments, driven by marketing investments and aided by an increase in consumer mobility as the impact of the pandemic abated in most regions,” Coca-Cola CEO James Quincey explained.
While the company’s away-from-home channels have recovered to its 2019 levels, Quincey noted it has not yet “fully recovered” as many outlets lost during the pandemic have not yet been fully regained.
Coca-Cola Co.’s success in the first quarter also was driven by its “accelerated agenda in marketing and innovation,” which Quincey said is “tying our beverages to daily consumption occasions.”
The company’s new global “real magic” marketing campaign, which Coca-Cola says focuses on “unexpected moments of connection” that happen when people get together and share common experiences, is a good example.
The limited-edition Coke Starlight is another. Quincey notes that the drink, which claims to taste like space, helped to make the Coke trademark the fastest growing trademark in measured retail in North America in the first quarter.
Pricing also played a powerful role in expanding the underlying gross margins despite rising commodity costs – a tool that CFO John Murphy noted the company will continue to leverage.
Coca-Cola’s gains came despite record-high inflation, continued supply chain challenges, a COVID resurgence in some parts of the world and significant geopolitical conflict.
Moving into Q2, Quincey revealed that his company is prepared to quickly respond to local market conditions with a mix of price adjustments, package differentiation and “ever-sharper” promotional strategies.
He added that the company is also experimenting with refillable packaging in Latin America and Africa and returnable glass bottles in parts of the Southwest United States.
The Coca-Cola CEO said the goal of these initiatives is to reduce waste and give consumers financial incentives to use reusable bottles.
When it comes to prices Coke chief financial officer noted that Coke has to “earn the right” to hike prices by constantly innovating and ensuring sure it’s on top of changing trends.
To that end, Coke has been busy developing quirky new flavors — and eliminating some old favorites such as Tab — as the company tries to remain relevant with younger consumers.
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