The Coca-Cola Company raised its full-year organic sales guidance on Tuesday after posting first quarter 2024 earnings and revenue that surpassed analysts’ expectations, propelled by strong global demand amidst a “dynamic backdrop.”
In the quarter ended March 29, Coca-Cola saw net sales grow 3% year-over-year to $11.3 billion and organic revenues of 11%. Revenue performance was fueled by a 13% increase in price/mix and a 2% decline in concentrate sales. Global unit case volume grew 1%.
Meanwhile, operating margin was 18.9% versus 30.7% in the prior year period. This was driven by a charge of $765 million related to the remeasurement of Coca-Cola’s consideration liability to fair value in conjunction with the acquisition of Fairlife in 2020 and a non-cash impairment charge of $760 million related to the BODYARMOR trademark.
“We’re encouraged by our start to 2024, delivering another quarter of volume, topline, and earnings growth amidst a dynamic backdrop,” said James Quincey, chairman and CEO of Coca-Cola, in a prepared statement. “We believe our global system is primed for sustained success.”
In North America, unit case volume was flat as growth in juice, value-added dairy, plant-based beverages and trademark Coca-Cola was offset by a decline in water, sports, coffee, and tea. Still, Coca-Cola says it’s “encouraged by the continued growth” in sports water, including Body Armor’s recent Zero Sugar and Flash IV launches.
According to Quincey, the U.S. consumer “remains in good shape,” though there is a purchasing power compression among lower income consumers. As a result, he said, there has been a marginal channel shift with slightly more at-home volume versus away-from-home.
As a result, the beverage giant has ramped up its revenue growth management (RGM) efforts and packaging efforts in the U.S. Pricing, which grew seven points in the first quarter, has also played a significant role in Coca-Cola’s Q1 results. The company expects pricing to moderate as the year goes on.
“Pricing is likely going to be as it was pre-COVID,” Quincey told investors. “We’re expecting to see 2024 end up with a much more balanced growth equation over the rest of the year.”
Outside of the U.S., Coca-Cola saw improvements in macro trends in water, sports, coffee, and tea in Europe, the Middle East, and Africa. In Q1, unit case volume grew 2%, led by Nigeria, Germany and South Africa. Price/mix grew 22%, with approximately two-thirds driven by markets experiencing “intense” inflation.
On Monday, Bloomberg reported that Coca-Cola is readying for a potential initial public offering (IPO) of its African bottling business as soon as next year. According to the report, the beverage giant is considering a dual listing for Coca-Cola Beverages Africa in Johannesburg and Amsterdam.
In Q1, the company’s bottling investments saw price/mix grow 6%, driven by pricing actions across most markets as well as favorable mix. Unit case volume declined 7%, as growth in South Africa was more than offset by the impact of refranchising bottling operations.
Though Quincey did not share any information about the potential IPO during Tuesday’s earnings call, he did say, “Across the world, [Coca-Cola] is continuing to win the market by leveraging our scale and relying on our local expertise about bottling partners.”
Looking ahead, Coca-Cola now expects to deliver FY 2024 organic revenue (non-GAAP) growth of 8% to 9%, up from its previous range of 6% to 7%. Growth will be largely driven by the company’s continued innovation pipeline – on the heels of Coca-Cola Spiced – with Quincey saying Coca-Cola is “leaning into integrated execution to drive basket [growth] and create incremental value for customers.”