TLDR
- Coca-Cola beat Q3 earnings estimates with adjusted earnings of $0.82 per share versus expected $0.78, while organic revenue grew 6%.
- Global unit volume increased 1% compared to 0.75% expected, with Coca-Cola Zero Sugar growing 14% across all regions.
- The company maintained fiscal 2025 guidance expecting adjusted earnings growth of approximately 3% and net revenue growth of 1% to 2%.
- CEO James Quincey noted the company stayed flexible in a challenging environment by adapting plans and investing for growth.
- Trademark Coca-Cola volumes declined in the US as demand recovered from boycott impacts and shifted toward zero-sugar and health-conscious options.
Coca-Cola reported third quarter earnings that topped Wall Street estimates on Tuesday. Adjusted earnings reached $0.82 per share compared to analyst expectations of $0.78.
Organic revenue grew 6% during the quarter. This came in slightly higher than what analysts had predicted.
The beverage giant’s stock jumped more than 2% in premarket trading following the announcement. Chairman and CEO James Quincey acknowledged the difficult operating conditions in a statement.
Coca-Cola Consolidated, Inc., COKE
“While the overall environment has continued to be challenging, we’ve stayed flexible,” Quincey said. The company adapted its plans where needed and continued investing for growth.
Global unit volume increased 1% compared to analyst expectations of 0.75%. However, this remains well below the 4% increase the metric posted in the third quarter of 2022.
Regional performance varied across the company’s global operations. Europe, the Middle East, and Africa saw unit case volume jump 4%.
North America and Latin America both reported flat volume. The Asia Pacific segment experienced a 1% decline.
Zero Sugar Leads Growth
Coca-Cola Zero Sugar emerged as a clear winner during the quarter. The product line grew 14% and saw gains across all geographic regions.
CFO John Murphy told Reuters that growing demand for lower-calorie products was impacting sales of trademark Coke. US consumers have become more health-conscious in recent years.
The company has invested heavily in zero-sugar beverages and premium products like energy drinks and Fairlife milk. This strategy targets more affluent consumers willing to pay higher prices.
Not all product categories performed well. Juice, value-added dairy, and plant-based beverages saw volume drop 3%.
The company’s water business grew 3% by volume with gains across all regions. Sports drink volume increased 3% globally with North America as the primary driver.
Trademark Coca-Cola volumes declined in the US market. Murphy said demand is recovering from boycott impacts after a viral video showed the company laying off Latino staff.
“This year has been tougher than certainly we expected,” Murphy said. Reuters found no public evidence that the company had reported migrant employees to Immigration and Customs Enforcement in February.
Pricing and Product Strategy
The company is adjusting its approach to reach different consumer segments. Coca-Cola plans to launch cane sugar trademark soda in the US this fall.
The company will also offer mini 7.5-ounce single-serve cans priced under $2 at convenience stores. This targets lower-income consumers who are more price-sensitive.
“Affordability and value are really important and we understand that,” Murphy said. The company needs the right packages at the right price points to keep consumers engaged.
In the third quarter, volumes grew 1% while prices increased 6%. The prior quarter saw volumes drop 1% with prices also rising 6%.
Quarterly revenue reached $12.46 billion, topping analyst estimates of $12.39 billion. Like rival PepsiCo, the company expects to benefit from a weaker dollar this year.
Coca-Cola maintained its fiscal 2025 guidance. The company still expects adjusted earnings growth of around 3%.
Net revenue growth is projected at 1% to 2% for the full year. Earlier this month, PepsiCo also beat quarterly estimates on international growth and demand for healthier drinks.
Coca-Cola stock is up about 10% year to date. PepsiCo stock has remained flat over the same period.
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