Coca-Cola volume kicks into higher gear

ATLANTA — The Coca-Cola Co.’s advertising and social media associated with the FIFA World Cup hit the back of the net. The company’s campaign covered more than 180 global markets during the tournament, which ran from June 11 to July 19. Digital and social activations generated more than 60 billion impressions and over 9 billion views, supported by more than 2,000 content creators, according to The Coca-Cola Co.

The campaign contributed to a portion of both 5% volume growth for trademark Coca-Cola and 8% volume growth for Powerade during the second quarter ended July 3. Companywide, global unit case volume increased by 5%.

“In the second quarter, our FIFA World Cup-integrated marketing campaign and the world-class activation brought consumers closer to the action, showed the power of our system at scale and drove momentum across our business,” said Henrique Braun, chief executive officer, in a July 28 earnings call.

The Coca-Cola Co. had net income of $4.43 billion, or $1.03 per share on the common stock, which was up 16% from $3.81 billion, or 89¢ per share, in the previous year’s second quarter. Net revenues rose 7% to $13.38 billion from $12.54 billion. Organic revenues were up 6% thanks to a 4% increase in concentrate sales and a 2% increase in price/mix.

Coca-Cola updated its fiscal-year outlook and now expects organic revenue to increase by approximately 5%, up from a prior outlook of 4% to 5%, and comparable EPS to increase by 9% to 10%, up from a prior outlook of 8% to 9%. Coca-Cola’s stock on the New York Stock Exchange closed at $88.27 per share on July 28, which was up 4.2% from a close of $84.07 on July 27.

Following the release of the financial results, BofA Global Research raised its fiscal-year outlook for Coca-Cola to $3.30 per share from $3.27 per share.

“KO (Coca-Cola) delivered another strong quarter, with adjusted EPS of 97¢, ahead of both our estimate and Visible Alpha Consensus of 93¢,” BofA said. “Relative to our model, the upside was primarily driven by stronger-than-expected sales, gross margins and operating margins. Unit case volume, the measure of underlying consumption and business health, increased an impressive 5%, driven by favorable weather in Europe, World Cup-related demand and an easy prior-year comparison.”

Gains in brands

India, China, the United States and Brazil powered the 5% increase in global unit case volume. Within sparkling soft drinks, unit case volume rose 4% with trademark Coca-Cola up 5%, Coca-Cola Zero Sugar up 16% and Diet Coke/Coca-Cola Light up 7%. Volume for juice, value-added dairy and plant-based beverages increased by 2%.

Volume for water, sports, coffee and tea increased by 6%. Within the category, water was up 6%, and sports drink volume was up 5%. Tea volume increased 6%, but coffee was down 2%.

In North America, unit case volume increased by 3%, driven primarily by growth in trademark Coca-Cola as well as juice, value-added dairy and plant-based beverages. Net revenues in North America rose 7% to $5.41 billion from $5.03 billion.

“In North America, while we benefited from cycling an easier prior-year comparison, we delivered strong performance,” Braun said. “We gained both value and volume share and grew revenue and profit for the quarter. Our dual approach with FIFA World Cup and America250 (promotions around the United States’ 250^th birthday) gave us a unique platform to be part of once-in-a-lifetime celebrations in locally relevant ways across the country.”

Fairlife production resuming

A ransomware attack in the second quarter impacted Fairlife, LLC, temporarily closing production lines at the dairy company owned by Coca-Cola.

“(A) majority of production operations have resumed at our four facilities in the US, and retail availability has been largely unimpacted,” said John Murphy, president and chief financial officer of Coca-Cola. “There was no impact to our second-quarter results, nor do we anticipate any material impact to our results in the second half.”

Over the six months ended July 3, Coca-Cola had net income of $8.35 billion, or $1.94 per share on the common stock, which was up 17% from $7.14 billion, or $1.66 per share, in the same time of the previous year. Six-month net revenues were $25.85 billion, up 9% from $23.66 billion.