In an interview about Coca-Cola’s recent performance, it was noted that the company exceeded expectations in the third quarter as consumers continue to tighten their budgets.
Coca-Cola reported a revenue of $11.9 billion for the last quarter, surpassing the anticipated $11.61 billion, although it fell short of last year’s $12 billion. Adjusted earnings came in at $0.77 per share, beating the forecast of $0.74. Price increases have helped the company navigate persistent consumer pressures, unfavorable commodity costs, and challenging trends in international markets.
CEO James Quincey highlighted in the earnings statement that Coca-Cola demonstrates “resilience in the face of a dynamic external environment.” He emphasized that the team continues to “tackle recent challenges while maintaining a focus on long-term growth opportunities.”
In contrast, competitor PepsiCo reported below-expected sales for North America and international markets, leading the company to revise its 2024 sales forecasts.
PepsiCo CEO Ramon Laguarta remarked that consumers are “facing significant challenges” and are making “many considerations” regarding food choices. He noted that these considerations are having a particularly severe impact on the snack industry.
Before the earnings report, JPMorgan analyst Andrea Teixeira shared in a note to clients that American consumers have “less money in their pockets and more choices,” which is forcing Coca-Cola to raise prices to sustain growth.
Teixeira also mentioned that management has been comparing the costs of dining at home versus eating out, especially among lower to middle-income families.
According to the Consumer Price Index, grocery costs increased by 1.3% in September compared to the same period last year, while dining out costs rose by 3.9%. Teixeira stated that Coca-Cola’s management is collaborating with grocery retailers to adapt to this environment. One initiative includes “selling affordable 2-liter bottles of soda with roasted chicken, which still offers a substantial savings compared to eating out.”
Though sales grew in Brazil, Japan, and the Philippines, Coca-Cola experienced a 1% decline in unit sales internationally, affected by slowdowns in China, Mexico, and Turkey.
The company is also venturing into the alcoholic beverage market as a means of growth. Deutsche Bank analyst Chris Wyant expressed that the company is “partially focused” on “further exploring the beverage alcohol market.” Coca-Cola plans to launch Bacardi rum and cola cocktails in European markets and Mexico next year.
