Coca-Cola Sees Increased Demand in Q4 Despite Stock Decline

DEE-ANN DURBIN, Associated Press

12 hours ago

FILE – The Coca-Cola logo adorns the side of a delivery truck, May 15, 2024, in southeast Denver. (AP Photo/David Zalubowski, File)

The Coca-Cola Company has reported a rebound in global demand during the fourth quarter, although investor confidence has been tempered by concerns regarding the company’s future outlook.

During the October to December period, Coca-Cola experienced a 1% rise in unit case volumes worldwide, particularly benefitting from growth in the United States, Japan, and Brazil. North America also saw a 1% increase, marking a positive shift after several quarters of stagnant or declining sales.

However, the company’s net revenue for the fourth quarter fell below expectations, leading Coca-Cola to project an organic revenue increase of 4% to 5% for 2026. This is a slight decline from the 5% growth reported last year, which analysts had expected to be matched this year.

Coca-Cola’s shares dropped by 2% in morning trading following the report.

The company is tackling challenges regarding weak demand in markets such as China, India, and parts of Europe. In North America, Coca-Cola raised prices by 4% and 1% globally during the quarter, while also choosing to lower prices in select European and Asian markets to stimulate demand.

Additional challenges lie ahead as government initiatives aimed at reducing sugary drink consumption may impact sales. In Mexico, one of Coca-Cola’s major markets, a new tax on sugary beverages took effect on January 1.

In the U.S., some states have begun to limit the types of foods purchasable with benefits from the Supplemental Nutrition Assistance Program (SNAP). Recently, five states—Indiana, Iowa, Nebraska, Utah, and West Virginia—implemented waivers prohibiting the purchase of soda using SNAP funds.

James Quincey, Coca-Cola’s Chairman and CEO, stated that the company believes these SNAP waivers will be manageable, as consumers are likely to use cash for their purchases if SNAP does not cover them.

“Clearly, we think that consumers should be allowed to choose, but regulation is regulation,” Quincey noted during a conference call with investors. “This just puts the challenge on us to give them the category, the beverage, the brand, the pack size, the price point that works for them.”

To address affordability, Coca-Cola recently launched 7.5-ounce mini cans across North American convenience stores.

Coca-Cola Zero Sugar showcased strong performance in the fourth quarter, with a 13% global sales increase. The company also saw heightened demand for water, sports drinks, coffee, and tea, whereas juices and dairy products struggled. As a result, Coca-Cola announced the discontinuation of Minute Maid frozen canned juice sales in the U.S. after 80 years, citing declining demand.

Henrique Braun, Coca-Cola’s Chief Operating Officer, will step into the role of CEO on March 31, with Quincey transitioning to executive chairman.

Braun intends to prioritize innovation at Coca-Cola, exploring locally popular brands for investment and potential global expansion. He pointed out that Santa Clara, a Mexican dairy brand acquired in 2012, has recently reached billion-dollar status.

“The consumer is seeking more innovation at the local level as well, and that’s where we believe we can make a bigger difference,” Braun commented.

While revenue increased by 2% to $11.8 billion for the October-December quarter, it fell short of Wall Street’s forecast. Analysts had anticipated quarterly revenue to reach $12.05 billion.

Net income climbed by 3% to $2.3 billion. Adjusted for one-time items, the company reported earnings of 58 cents per share, which was 2 cents above what Wall Street had projected.