GLOBAL – Coca-Cola aims to take price with local market inflation in developing and emerging markets even as the company sees consumers globally are getting increasingly cost-conscious.
Coca-Cola’s CEO James Quincey during the company’s second-quarter earnings call pointed out that in a world with a wide spectrum of market dynamics, from inflation to currency devaluation to shifting consumer needs, Coca-Cola’s business is proving to be very resilient.
The beverage giant reported profits of US$2.5 billion, up 34 percent from the year-ago period on a six percent increase in revenues to US$12 billion.
Revenue grew 6 percent from a year ago to US$12bn, beating analysts’ expectations as higher prices offset flat unit case volume.
During the second quarter, the company’s overall unit case volume remained steady. Developed markets showed no significant change, as growth in Mexico balanced out, while declines were observed in the United States and Spain.
Similarly, developing and emerging markets remained even, with growth in India and Brazil offset by the suspension of business in Russia in 2022 and a decline in Pakistan.
The company said that its unit case volume declined 5 percent in Europe, Middle East and Africa, as strong growth in Ukraine, South Africa, and France was more than offset by the suspension of business in Russia and a decline in Pakistan.
Unit case volume in Latin America grew 4%, with strong growth across all categories. Growth was led by Mexico and Brazil.
In the Asia Pacific region, the company saw a 2% growth in unit case volume, primarily driven by positive performances across various beverage categories.
Quincey said that customers in the U.S. and Europe are switching to private-label bottled water and juices.
“It’s, in our view, highly related to the strength of the brands in any specific category. So we see it more in terms of beverages happening in water and juices rather than soft drinks, and certainly less when you get to colas,” added Quincey.
Chief financial officer John Murphy expressed confidence that the company had “numerous levers” at its disposal to build topline growth but remains focused on improving the business.
Coca-Cola now expects full-year revenue to increase between 8 and 9 percent, compared with previous guidance of 7 and 8 percent.
It also forecasts currency-neutral earnings per share growth of 9 to 11 percent, up from previous expectations of 7 to 9 percent.