Coca-Cola posts higher quarterly sales despite price hikes

Consumers continue to fill up on sodas even though they have to pay more.

Coca Cola Co.

KO 0.95%

Tuesday reported strong second-quarter sales and raised its revenue outlook for the year as people return to theme parks, movie theaters and travel destinations despite price hikes.

“We continue to see resilience and strong demand, not just in the United States but around the world,” Coke Chief Financial Officer John Murphy said in an interview.

Consumers who missed out on experiences such as restaurants and entertainment in the first two years of the Covid-19 pandemic are willing to spend more now, Coke chief executive James Quincey said on a call. with analysts. Executives said the company is bracing for consumer purchasing power to come under increasing pressure in the second half.

With talk of an impending recession weighing on the market, Coca-Cola is closely monitoring changes in consumer behavior, Murphy said. Coke doesn’t see much evidence that shoppers are switching to cheaper products, but the company is spending more to bring higher-quality items to market, such as refillable glass bottles in Latin America and a new 1.25-litre bottle. in the United States, he said. .

Coke also spends more on digital marketing than traditional advertising channels to better reach consumers, Murphy said.

In addition to its namesake cola and other soft drinks, Coca-Cola makes Simply Orange Juice, Dunkin’ Bottled Iced Coffee, and Smartwater bottled water. Last year, Coke bought full control of BodyArmor sports drinks. And the company announced last month that it was partnering with Brown-Forman Corp.

to launch a canned pre-mixed cocktail version of Jack and Coke.

Coke’s organic revenue, which excludes currency fluctuations as well as acquisitions or divestitures, increased 16% in the quarter ended July 1 as prices and mix of the company’s packaging increased 12%. The company’s overall case volume increased by 8%.

The soda giant said it expects full-year organic revenue to grow 12% or 13%. It previously forecast organic revenue growth of 7% or 8%.

As inflation climbs in the United States, rising food and energy prices have pushed the country’s most popular price index to its highest level in four decades. Gwynn Guilford of the WSJ explains how the consumer price index works and what it can tell you about inflation. Illustration: Jacob Reynolds

The company said second-quarter net income narrowed to $1.9 billion, or 44 cents per share, from $2.62 billion, or 61 cents per share, a year earlier.

Revenue rose 12% to $11.33 billion. Analysts forecast $10.56 billion in revenue, according to FactSet.

Earlier this month, rival PepsiCo Inc.

announced a 5.2% increase in revenue in the last quarter compared to the previous year, as prices rose and the company benefited from strong sales of its snacks and packaged foods.

Shares of Coca-Cola rose about 1% on Tuesday morning after the release of its results. Coke has seen its share price rise about 5% so far this year and more than 8% in the past 52 weeks.

Write to Connor Hart at connor.hart@wsj.com

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