On Tuesday, Coca-Cola CEO James Quincey remarked that inflation is showing signs of moderation across most markets, following a period during which the beverage company relied on price increases to drive revenue growth.
Coke revealed its fourth-quarter results, revealing that higher prices contributed to surpassing Wall Street’s sales estimates for the quarter. However, the pace of Coke’s price hikes has slowed compared to the double-digit increases observed in the previous two years.
While Coke’s prices surged by 9% in the fourth quarter, Quincey clarified that this was primarily due to hyperinflation in markets like Argentina. In the majority of Coke’s markets, consumers were paying only about 3.5% more for their beverages compared to a year earlier.
Quincey explained, “When you think about 95% of the business, 3.5% on a global basis is close to what we were getting prior to Covid, prior to this inflation spike.”
According to data released by the U.S. Department of Labor on Tuesday, the U.S. consumer price index rose by 3.1% in January compared to the same period last year.
In July, Coke executives announced that the company had completed its price increases for 2023. Consumers in Europe and the U.S. had begun switching to more affordable private-label juices and bottled water instead of purchasing Coke’s Simply and Smartwater brands.
Quincey further noted on Tuesday that U.S. consumers have diverged into two groups. Those with greater disposable income are opting for Coke’s premium drinks, such as Fairlife milk, while those facing tighter budgets are reducing their spending and favoring value packs.
As a result of these dynamics, Coke’s North American volume contracted by 1% in the quarter. Shares of Coca-Cola experienced a minor decline of less than 1% in morning trading.
