- Coca-Cola increased its second-quarter revenue and raised its sales and profit forecasts for the full year.
- The manufacturer raised prices by 13% in the first quarter, and in the April-June period by another 9%.
- Increases in beverage prices negatively affect demand, with fewer purchases of beverages away from home.
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Coca-Cola launches its marketing machine
Coca-Cola shares rose nearly 2% as the company surprised everyone with second-quarter revenue growth. The manufacturer is trying new versions of its drinks, such as Coke Spiced and Georgia Coffee, to meet the diverse tastes of customers. At the same time, it sponsors music festivals and sporting events such as the 2024 European Football Championship and the Paris Olympic Games to attract younger consumers.
The company's selling, general and administrative expenses increased nearly 7% to $3.55 billion. during the quarter as the company doubled spending on marketing campaigns ahead of the Paris Olympics while promoting consumer-friendly options like 12-ounce slim cans globally.
– Coca-Cola is a marketing machine. The continuous increase in marketing expenses suggests that the group is not slowing down, says Aarin Chiekrie, equity analyst at Hargreaves Lansdown, quoted by finance.yahoo.com.
The Atlanta-based beverage giant said on July 23 this year that it expects sales to grow 9% to 10% this year, up from 8% to 9% last year. One standout product was Coca-Cola Zero Sugar, which saw global volume sales increase by 20%.
The group's revenues increased by 3%, to USD 12.4 billion. in April-June. This was more than predicted by Wall Street analysts, who expected revenues of $11.8 billion.
Coca-Cola has been raising drink prices since 2020
Coca-Cola raised prices by 13% in the first quarter and by another 9% in the April-June period. As he explains, this was partly due to hyperinflation in some markets, including Argentina and Nigeria. The manufacturer has raised prices on average every quarter since the end of 2020.
Coca-Cola chairman and CEO James Quincey defended the price increases. In North America, where they increased by 11%, half of the increase was generated by sales of more expensive drinks, such as Topo Chico mineral water and Fairlife milk.
– We still have rising costs, mainly related to agriculture, not metal raw materials for packaging. Ultimately, our strategy remains constant. When cost inflation occurs, we will try to push through price increases, explains Quincey on abcnews.go.com.
However, price increases are negatively impacting demand in the domestic market, with unit sales in North America down 1%. Coca-Cola recorded a decline in demand in this region for both water, sports drinks, carbonated drinks, coffee, tea and branded drinks.
However, in the Asia-Pacific region, where Coca-Cola reduced prices by 3%, unit sales increased by 3%. It also increased by 5% in Latin America and remained unchanged in Europe, the Middle East and Africa.
It is worth recalling that the company noticed lower purchases of drinks outside the home – in places such as restaurants and cinemas. This is a trend that has been going on since the second half of last year.
