The Coca-Cola Company surpassed analyst forecasts in its Q2 2023 earnings report today, announcing 6% net revenue growth in the quarter ending June 30.
Organic revenue growth in the quarter was up 11% and the company raised its full-year guidance to 8% to 9%, up from its previous forecast of 7% to 8%. According to the report, revenue performance was bolstered by a 10% average increase in pricing and 1% in growth sales concentrate.
“I am encouraged that our all-weather strategy, working together with our bottling partners, has delivered strong second quarter results,” said Coke chairman and CEO James Quincey in a prepared statement. “We are executing efficiently and effectively on a local level while maintaining flexibility on a global level.”
The beverage giant’s North America segment saw unit case volumes decline 1% as growth in sparkling flavors, value-added dairy and plant-based beverages were offset by declines in water, sports, coffee and tea in addition to Trademark Coca-Cola.
During a call with investors on Wednesday morning, Quincey expressed concern over the fact that, in some markets, consumers are beginning to switch to private-label drinks categories such as water and juice. In April, Coke licensed its Simply and Minute Maid juice brands to multinational fruit sales and marketing company Frutura which will distribute fresh grapes and citrus fruits under the company’s labels.
“The strategy, on top of what we need to do in terms of marketing and continuing to [emphasize] the brand’s relevance to consumers… [is to] anchor and continue to evolve and adapt our strategies on affordability, whether that be renewables, whether that be affordable small packs,” he said.
According to an analysis of NielsenIQ data by Goldman Sachs Equity research, Coke (-5.8%) and its BodyArmor brand (-7.7%) reported falling sales in the two-week period ending July 15. Meanwhile, volumes dipped -11.4% and -10%, respectively.
Despite the decline in sports drinks sales, Quincey remains optimistic about the channel growth moving forward citing the recent relaunch of Vitamin Water Zero (now sweetened with monk fruit) and the debut of BodyArmor Flash IV in the U.S. He told investors both products “saw strong consumer interest” in the quarter and “demonstrated promising results.”
Elsewhere, Coke’s dairy-focused Fairlife brand experienced an “exceptional” quarter as both Core Power and Fairlife Nutrition continued to exhibit strong momentum. In May, the ultra-filtered milk brand invested $650 million to open a new 745,000 sq. ft. production facility in Webster, New York that is expected to bring 250 jobs to the region.
Quincey also expressed confidence in Coke’s Simply Mixology line, a range of mixers/ready-to-drink mocktails. The zero-proof product collection made its debut back in January and features Lime Margarita, Peach Sour and Strawberry Guava Mojito varieties.
“We are segmenting our broader opportunities and using our refreshed resource allocation capabilities and [prioritizing] markets and categories that offer the highest return on our investment,” said Quincey during the call. “We are building our edge through consumer centricity by accelerating the speed to market our acceleration.”