Coca-Cola

Coca-Cola boasted to analysts the company had increased their sales by hiking prices

Coca-Cola’s CEO boasted of strong revenue growth “driven by pricing actions and robust volume growth.” “James Quincey — Chairman and Chief Executive Officer: And we saw renewed pandemic-related mobility restrictions in China. Inflationary forces are driving costs, pricing, and interest rates higher, resulting in currency volatility in many parts of the world. Against this backdrop, our industry remains healthy and is growing both in value and volume, which continues to include some benefit from cycling COVID-related impacts from the prior year. In the third quarter, we delivered strong organic revenue growth across all operating segments. This was driven by pricing actions and robust volume growth. We had share gains overall and across most categories, as well as within both at-home and away-from-home channels. We accomplished this by investing in our business and providing the right portfolio of brands and packages to retain and add consumers. Notably, we drove revenue growth ahead of transactions growth, which is also ahead of volume growth in the quarter, reflecting the strength of our revenue growth management capabilities.” (Coca-Cola Q3 2022 Earnings Call, 10/25/2022)

Coca-Cola’s CFO informed analysts “our price/mix of 12% was driven primarily by pricing actions across operating segments.” “John Murphy — Chief Financial Officer: Thank you, James, and good morning, everyone. Today, I’ll comment on our third quarter performance and provide considerations for our updated guidance to this year. I’ll also provide some early commentary on 2023 and what actions we are taking to drive a top-line-led growth equation to navigate this dynamic environment. We are encouraged with the continued momentum of our business, and we delivered another set of strong results in the third quarter. We grew organic revenue 16%, unit cases grew 4%, with broad-based growth across most operating segments and targeted investments in the marketplace. Concentrate sales were in line with unit cases for the quarter. Our price/mix of 12% was driven primarily by pricing actions across operating segments, along with revenue growth management initiatives, further improvement in away-from-home channels in most markets and positive segment mix. Comparable gross margin for the quarter was down approximately 190 basis points versus the prior year.” (Coca-Cola Q3 2022 Earnings Call, 10/25/2022)

Coca-Cola executives predicted price hikes would continue into 2023

Coca-Cola’s CFO credited “smart pricing” for driving revenue and that it was “something that we expect to be able to generate into 2023.”“John Murphy — Chief Financial Officer: And to your second question on ongoing price increases, I think it links back to some of James’ comments earlier. The name of the game is to optimize our revenue equation over the next 12 to 18 months. That’s going to be a combination of smart pricing, understanding the mix, both from a channel and package perspective, and being able to utilize the many levers that we have inside of the RGM toolkits that our bottlers have. So again, I think at this stage, it’s still early to say what the exact numbers will be for each of those topics. But I think the broader point is that the top-line momentum that we’ve enjoyed here today, that we see continuing to hold through the rest of the year, is something that we expect to be able to generate into 2023.” (Coca-Cola Q3 2022 Earnings Call, 10/25/2022)

Coca-Cola’s CEO: “at the moment, we’re in a period where there’s more price/mix than there is volume, and that seems that seems likely to continue into next year.” “James Quincey — Chairman and Chief Executive Officer: Yeah, Chris. I think, yes, clearly, it’s likely that next year price/mix will run ahead of volume in a similar way it has this year. I mean our long-term growth algorithm has assumed a relative balance between price and mix. Clearly, at the moment, we’re in a period where there’s more price/mix than there is volume, and that seems that seems likely to continue into next year. It is also true that this year, there has been some benefit from the channel mix on the reopening. The reopening benefit that was obviously a reopening cost in the previous year in price/mix is now largely done. And so that kind of tailwind won’t be there last — next year. Are all the channels away from home completely reopened? No.” (Coca-Cola Q3 2022 Earnings Call, 10/25/2022)

As prices increases, Coca-Cola said it was exploring selling smaller packages

Coca-Cola said the company was exploring “having smaller bottles or smaller multipacks of less cans per multipack” to offset higher prices. “James Quincey — Chairman and Chief Executive Officer: Yes. Absolutely. I mean value packs or ensuring affordability for the consumer is one of the core pieces of RGM. It’s about extending the price ladder and, in recessionary times, about making sure the entry price point, whether it would be on the larger packs or on the smaller packs becomes as low down in the price spectrum, the actual out-of-pocket as possible. As I talked about in the last answer, one of the recession behavior tends to be to try and reduce the dollar outlay of the basket, and therefore, the price point becomes even more important than the price per liter. And so around the world, that’s absolutely what we’re pursuing, whether it’s in the U.S., having smaller bottles or smaller multipacks of less cans per multipack; or the example I used in Japan, where we took the 500 mL and split it into 350 and 700. Of course, around the world in a number of countries, we leverage our capabilities with returnable bottles. Given the economics of returnables particularly in the developing markets, that is a way of generating a lower price point because, of course, in effect, you don’t pay for the packaging because it comes back again.” (Coca-Cola Q3 2022 Earnings Call, 10/25/2022)Coca-Cola’s CEO said the company was creating “small cans or sleek cans to really stretching out the pricing ladder, not just putting all the bets on the affordable end.”“James Quincey — Chairman and Chief Executive Officer: But of course, that will also have its other side of the coin which is to try and ensure there are some perhaps more premium options for those that still have plenty of disposable income. Not everyone will have exactly the same effect in this period. So likely to see continued push, for example, in the U.S. on small cans or sleek cans to really stretching out the pricing ladder, not just putting all the bets on the affordable end. And we will continue with the brand and the product innovation. I don’t know if you went to the NACS. There was a lot of innovation on show — the Convenience Store Conference for the North America, there was a lot of innovation on display there, both package and product. And so we will be approaching ’23 with a broad innovation agenda, but with some slight weighting to packaging to