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Coca-Cola Raises Annual Forecasts As Demand Unaffected By Price Hikes

By Donna Ahern
Coca-Cola Raises Annual Forecasts As Demand Unaffected By Price Hikes

Coca-Cola Co raised its annual revenue and profit forecasts after beating quarterly results on the back of higher pricing, with demand for its soft drinks remaining resilient at a time when consumers are cutting back on non-essential spending.

Recent results from rival PepsiCo and consumer products makers in Europe such as Unilever point to steady consumer spending on sodas, snacks and other essential items, with little to no resistance to the multiple prices hikes undertaken to offset the impact of rising costs.

"We are seeing strong engagement from consumers across our staple of brands, which include Sprite, Fanta ... and Thums Up," James Quincey, CEO, Coca-Cola said on a post-earnings call on Wednesday.

Raided Forecasts

Earlier this month, PepsiCo also raised its annual revenue and profit forecasts for a second time this year after beating second-quarter results.


"Consumers have shown an unwillingness to trade down to private label cola or beverage brands and have largely accepted the recent price increases," Garrett Nelson, research analyst, CFRA said.

Coca-Cola's average selling prices rose 10% in the second quarter, while in North America volumes declined 1%, showing little impact to demand with overall unit case volumes remaining flat.

However, some Wall Street analysts said the focus in the second half of the year would be on whether volumes return to stronger growth.

"This whole idea of resiliency likely becomes less topical as we get into the back half of the year and pricing begins to come down," Gerald Pascarelli, analyst, Wedbush said.

Revised Forecasts 


Coca-Cola now expects organic revenue growth of 8% to 9% for the full year, compared with a prior forecast of an increase of 7% to 8%.

The maker of Sprite and Fanta also forecast full-year core earnings per share to rise between 5% and 6% higher than prior expectations.

Coca-Cola's shares were trading marginally lower.

Read More: Coca-Cola Beats Quarterly Revenue Estimates On Steady Demand

News by Reuters, edited by Donna Ahern, Checkout. For more A-brand news, click here. Click subscribe to sign up for the Checkout print edition.

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