HomeEconomyCoca-Cola sales resist dollar rise but could soon see inflation

Coca-Cola sales resist dollar rise but could soon see inflation

The parent company of the Coca, Fanta, Sprite and Minute Maid brands saw its sales increase by 4% in volume despite significant exchange rate effects. On the other hand, the head of the group already perceives unfavorable changes in consumption due to price increases.

Coca-Cola raised its full-year forecast on Tuesday after beating expectations in the third quarter despite the dollar’s strength, though the group saw some changes in consumption related to inflation.

Customers have not yet been scalded a priori by the rise in prices of the group’s products: sales increased by 4% in volume, details a press release. They were driven by purchases outside the home, such as at restaurants, movie theaters, or gas stations.

Stronger dollar weighed on revenue

Habits, however, are starting to change, Coca-Cola boss James Quincey said during a conference call. In a recession, consumers tend to cut back on nonessential spending first before reevaluating their entire shopping cart, sometimes choosing off-brand products or smaller sizes, he said. “You can clearly see it starting to happen in some places,” said James Quincey. In Europe in particular, customers seem to gravitate more toward off-brand products or low-cost stores.

In addition to the threat of a slowdown in demand for its products, the group must manage changes in exchange rates, marked mainly by the strengthening of the US currency against other currencies. They weighed 8% on the revenue of the parent company of the Coca, Fanta, Sprite and Minute Maid brands.

Revenue forecasts revised upwards

The company’s sales ultimately rose 10% to $11.1 billion. Its net profit rose 14% to $2.8 billion. The stock was up 1.6% mid-session on Wall Street. For the full year, Coca-Cola slightly raised its organic sales forecast, which excludes the impact of foreign exchange (+14-15% vs. +12-13% prior), as well as its adjusted earnings per share forecast. Currency effects should weigh 7% on revenues, compared to the 6% initially forecast.

Its main competitor in the non-alcoholic beverage market, PepsiCo, also raised its growth forecast for the year in early October.

Author: TT with AFP
Source: BFM TV

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