Soft drinks giant Coca-Cola is seeing sales and profits rise as it was able to increase its prices significantly. Consumer demand is holding up despite inflation, but the multinational is more cautious about the current financial year.
Stroke of caution
Although volumes sold fell 1 % in the fourth quarter of last financial year, Coca-Cola saw its revenue grow 15 % to 10.1 billion dollars (more than 9 billion euros). Its operating margin rose to 20.5 %, as its operating profit went up a quarter to 2.1 billion dollars (2 billion euros). These strong figures came courtesy of the sharp price increases the manufacturer managed to implement: prices rose by 12 % on average. For the year as a whole, sales grew organically by 16 % to 43 billion dollars (40 billion euros) as volumes were up 5 %.
The company’s ability to increase prices so sharply without resulting in too big a drop in volumes is due to a de facto duopoly in the soft drinks market. With PepsiCo as its only serious competitor, consumers have few alternatives. Still, PepsiCo recently warned that more shoppers are now buying cheaper private brands, forcing the company to make cautious estimates for 2023. Coca-Cola is also holding back: the company is targeting organic sales growth of 7 to 8 %.