Coca-Cola beats estimates with price hikes, low-sugar drinks

Coca-Cola Co. posted third-quarter sales growth that beat Wall Street expectations — a sign that consumers are snapping up the company’s beverages despite higher prices. Atlanta-based Coca-Cola reported organic revenue growth of 6%, topping the average of analyst estimates. Adjusted earnings per share also outpaced expectations.

The results point to Coca-Cola winning over shoppers with its widening portfolio of beverages, including sugar-free soda, sports drinks and water, as consumers shift away from traditional full-calorie soft drinks and toward healthier options. Coca-Cola Zero Sugar grew 14%, driven by growth across all regions, the company said.

"There’s more and more focus on people wanting to live a healthier, more balanced lifestyle, and Coke Zero, Diet Coke, etc. fit more into that equation,” Chief Financial Officer John Murphy said in an interview Tuesday morning.

The company is also beginning a phased roll-out of Coke made with American cane sugar in glass bottles, Murphy said. The introduction will be somewhat measured because of limited supplies of cane sugar in the US, he said.

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"If you look at the success of Mexican Coke in the United States, it’s a combination of the product and the package, and we’re very keen to offer that same combination,” Murphy said.

New Coke

Earlier this year, US President Donald Trump announced the company planned to unveil a new Coke product made with US cane sugar. For decades, Coca-Cola has used high fructose corn syrup, which is cheaper than cane sugar, to sweeten its signature product in the US. However, a pricier version of the soft drink, imported from Mexico, uses cane sugar and has gained a following.

Shares of Coca-Cola rose as much as 3.7% in premarket trading. The stock has gained almost 10% this year through Monday’s close, compared with a nearly 15% increase in the S&P 500 Index.

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The company’s price mix, or what it charges across a range of products, gained 6% in the quarter, higher than analysts’ average estimate. Smaller-sized bottles and cans are also helping to drive sales as grocery competition intensifies and the cost of living rises.

Global Results

Overall unit case volume rose 1%, driven by growth in Central Asia, North Africa, Brazil and the United Kingdom. The company reiterated its full-year guidance of comparable earnings per share growth of approximately 3%.

Earlier Tuesday, one of the world’s largest Coca-Cola bottlers agreed to buy a controlling stake in another, creating a bottling giant in Africa in a transaction valued at about $2.6 billion. It’s another step in Coca-Cola’s move away from the business of bottling, which includes selling a stake in its Indian bottling operations this year.

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