Coca-Cola Co (KO.N) has once again increased its annual sales and profit projections, reflecting robust consumer demand for its beverages, including sodas, juices, and energy drinks, coupled with higher pricing.
The company’s stock surged by 3% in early trading, further bolstered by its strong performance in the third quarter, surpassing market expectations.
Rival PepsiCo (PEP.O) also exceeded expectations and revealed plans to raise prices in the coming year. Consumers continue to invest in “affordable luxuries” amidst escalating food prices and an increased cost of living.
Coca-Cola reported a substantial 9% rise in average selling prices during the third quarter, alongside a 2% increase in overall unit case volumes.
During an earnings call, CEO James Quincey acknowledged that the company was closely monitoring the impact of weight-loss drugs on its business.
The rising popularity of products like Wegovy and Ozempic has raised concerns within the packaged food industry, but Quincey expressed uncertainty about the extent of their influence, stating, “there is still a lot of views out there as to what impact, if any, it will have.”
Markus Hansen, a portfolio manager at Vontobel Quality Growth, offered his perspective, noting that Coca-Cola, as a primarily liquid-focused and globally present company, might experience the effects of these weight-loss drugs later than others.
Coca-Cola accounts for 3.98% of Vontobel’s Global Equity strategy.
The company, known for brands like Sprite and Fanta, has upgraded its full-year organic revenue growth outlook to a range of 10% to 11%, up from the previous estimate of 8% to 9%.
Additionally, Coca-Cola anticipates annual core earnings per share to increase between 7% and 8%, compared to the earlier projection of 5% to 6%.
In the third quarter, the company achieved a net revenue of $11.91 billion, surpassing market estimates of $11.44 billion.
Adjusted earnings of 74 cents per share also exceeded expectations, which were set at 69 cents, according to data from LSEG.
In conclusion, Coca-Cola’s revised forecasts and strong quarterly performance demonstrate its resilience in the face of economic challenges and shifting consumer preferences, setting a positive trajectory for the company’s future growth.