Coca-Cola shares experienced a decline on Tuesday after the beverage company disclosed quarterly revenue growth that fell short of analysts’ expectations. This overshadowed a small earnings beat and initial signs of stabilizing demand in key markets.
The firm reported adjusted earnings of 58 cents per share for the fourth quarter, surpassing Wall Street’s estimate of 56 cents.
Net revenue climbed 2% from the previous year to $11.8 billion, unfortunately missing the consensus forecast of $12.05 billion.
Coca-Cola’s stock saw a preliminary drop of almost 4% in premarket trading.
The results underscore the intricate challenge global consumer brands face as they strive to maintain growth through pricing strategies and premium offerings while adapting to cautious consumer behavior.
Pricing power offsets uneven demand
Coca-Cola announced a price increase of 4% in North America and 1% globally during the quarter, which helped boost revenue in spite of mixed volume trends.
Unit case volume increased by 1%, fueled by growth in Brazil, the United States, and Japan, although these gains were somewhat mitigated by an unfavorable product mix.
Coca-Cola Zero Sugar emerged as a standout product, with sales rising by 13% during the October-December period.
There was an uptick in demand for water, sports drinks, coffee, and tea, while juices and dairy products lagged behind.
The company’s juice, value-added dairy, and plant-based beverages segment reported a 3% decline in volume.
While Fairlife experienced increased demand, this was partially offset by the divestiture of Coca-Cola’s finished product operations in Nigeria to a bottler.
Sparkling soft drinks, including Coca-Cola’s flagship soda, showed flat overall volume, with the main brand posting a modest 1% increase.
Consumers remain cautious but selective
Like its competitor PepsiCo, Coca-Cola has encountered challenges as consumers cut back on discretionary spending and adjust their grocery shopping habits amid ongoing cost-of-living concerns.
The company reported that its overall volume for 2025 remained unchanged from the prior year, reflecting the effect of tighter household budgets.
In response, Coca-Cola has experimented with smaller packaging and more affordable alternatives.
Recently, the company introduced 7.5-ounce mini cans in North American convenience stores to cater to budget-conscious shoppers.
At the same time, premium brands like Smartwater and Fairlife continue to capture the attention of consumers willing to spend more, highlighting the growing divide between value-oriented and premium demand.
Coca-Cola reported a volume increase of 1% in North America and 2% in Latin America, two of its most critical markets.
Water, sports, coffee, and tea categories grew by 3%, while sparkling beverages remained flat.
Outlook remains steady despite near-term headwinds
Coca-Cola anticipates organic revenue growth of 4% to 5% and comparable earnings growth of 7% to 8% for 2026, illustrating confidence in its ability to navigate a tough consumer landscape.
The company expects core earnings per share to rise 7% to 8% in 2026, starting from approximately $3 in 2025. FactSet estimates of $3.22 suggest a growth rate of around 7.3%.
Coca-Cola’s stock has seen a significant rise in the past year, climbing 20.8% through Monday, compared to 15.3% for PepsiCo and 14.8% for the S&P 500.
The decline on Monday interrupted a seven-session winning streak, with shares closing at a record high on Friday.
This report comes as Coca-Cola prepares for a leadership transition.
The company announced in December that Henrique Braun, its chief operating officer and a veteran of three decades with the firm, will assume the role of chief executive on March 31.
Current chairman and CEO James Quincey will transition into the position of executive chairman.
Key Takeaways
- Coca-Cola shares fell due to underwhelming quarterly revenue growth.
- Adjusted earnings per share surpassed Wall Street expectations.
- Net revenue increased by 2% but missed consensus forecasts.
- Price increases helped bolster revenue amidst mixed volume trends.
- Consumers remain cautious, influencing changes in packaging and product offerings.
- Overall volume remained stable, reflecting economic pressures on household budgets.
FAQ
What were Coca-Cola’s adjusted earnings per share for the fourth quarter?
Coca-Cola reported adjusted earnings of 58 cents per share.
How much did Coca-Cola’s net revenue increase compared to the previous year?
Net revenue rose by 2% to $11.8 billion.
What strategic adjustments has Coca-Cola made in response to consumer spending trends?
The company has introduced smaller packaging and more affordable options.
What is Coca-Cola’s forecast for organic revenue growth in 2026?
The company anticipates organic revenue growth of 4% to 5% for 2026.
Who will be the new CEO of Coca-Cola?
Henrique Braun, the current chief operating officer, will become CEO on March 31.
In summary, Coca-Cola faces both challenges and opportunities as it continues to navigate evolving consumer preferences and economic factors. With ongoing adjustments to its offerings and pricing strategies, the company aims to maintain steady growth and adapt to the current market landscape.
