Dive Brief:

• Rising prices due to inflation and other key economic factors have not tamped down consumers’ want for soda and other soft drinks, with beverage brand the Coca-Cola Company reporting a 12% hike in net revenue for its second quarter earnings as individuals continued to shell out for its products.
• Positive results for the first half of the year as well as the overall resiliency of the business caused Coca-Cola to raise its top-line guidance for the second half of the year, CEO James Quincey said Tuesday during the company’s earnings call.
• “As we enter the second half of the year, we continue to raise the bar in every aspect of how we do business,” John Murphy, CFO for the company said. “And we feel confident in our ability to effectively navigate this dynamic global environment and deliver on our updated guidance for 2022.”

Dive Insight:

Net revenue for the firm surpassed analyst expectations, expanding 12% to hit $11.3 billion according to the company’s second quarter results. Global unit case volume lifted 8% for the brand. The company is still keeping its eye on consumer spending trends, Quincey said, as pricing continues to inch upwards.

“Consumer elasticities have largely held a better-than-expected year-to-date, though we are watching closely for signs of changing consumer behavior as the year goes on and as the average cost of the consumer basket continues to go up,” he said during the company’s earnings call.

Coca-Cola now expects organic revenue growth of between 12-13%, as well as comparable earnings per share growth of 5-6% when compared to 2021 going into the second half of the year, Murphy said.

It is also expecting the consumer environment to grow more challenging, according to Quincey, with Coca-Cola “stepping up its investments, sharpening our resource allocation capabilities” and looking to utilize more of its data to better reach consumers.

Food prices especially have continued to expand over recent months due to inflation, with food, shelter and gasoline the top areas where consumer costs have continued to soar, according to July 13 data from the Bureau of Labor Statistics (BLS).  The food index rose 10.4% for the 12-month period ending in June, the highest increase since February 1981, while the food at home index rose by 12.2%.

The company is also taking several steps to mitigate against upcoming inflationary pressures, including deepening its relationship with key supply partners as it looks to “simplify and streamline the way we do business,” he said.  

Murphy, a 10-year veteran of the firm who has served as the company’s CFO since 2019, is also set to take on the role of president following the retirement of current President Brian Smith this coming September. He will serve as the firm’s CFO and president beginning Oct. 1.