11 February 2025
If you are covering Coca-Cola’s latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“The latest earnings season has been difficult for consumer companies, with many releasing disappointing results as a result of macroeconomic challenges. However, Coca-Cola has bucked this trend and delivered a very positive update, one that underscores its abilities as the global leader in soft drinks. The company has benefited from price increases and people buying smaller, more expensive, packs of drinks. Even with the hyperinflation seen in the likes of Argentina and Egypt stripped out, the results make for pleasing reading. Volume growth has been tough to achieve, but Coca-Cola is managing it and the growth is happening in multiple markets across the world. In particular Coke Zero is doing very well, with sales up 13% year-on-year as consumers still want fizzy drinks but are looking to cut back on sugar. Coca-Cola has balanced this desire from consumers very well and its product range should stand the test of time as the trend away from sugary drinks continues.
“The one drag on the company, however, is the coffee market, with Costa Coffee in particular being called out. Consumers remain under pressure, and while they are willing to buy a can of Coke, they are less willing to go out on a regular basis and spend considerable sums on takeaway coffees and cakes. This isn’t a situation that will shift overnight either, and as such Costa will likely remain challenged for the year to come.
“Guidance from the company was a little on the low side, perhaps unsurprising given the strong year it has had. Ultimately, Coca-Cola is not immune to the ups and downs of consumer confidence and the global economy remains in a challenged phase. However, the business is well run and it is striking the right balance in the most part when it comes to products and where these are sold. So, while the last year may be tough to replicate, Coca-Cola still has the goods to produce good growth where others may struggle.”
