The Coca-Cola Company reported “strong” double-digit revenue growth in its third quarter earnings results this week, leading to higher year-end projections as volume sales surpassed 2019 levels amid an “asynchronous” pandemic recovery.
Net revenue for the company grew 16% to $10 billion in Q3, with organic revenue up 14%. The sales increase was in part driven by 8% growth in the company’s concentrate sales, which were hardest hit by the pandemic, and a 6% increase in price/mix. Coke increased its market share in the total non-alcoholic, RTD beverage sector, including gains in at-home and on-premise channels.
Global unit case volume was up 6% in the quarter, outpacing 2019, and operating income grew 26%. Earnings per share (EPS) rose 41% to $0.57 and comparable EPS was up 18% to $0.65. Year-to-date cash flow from operations was $9.2 billion, up $3 billion from last year.
Global soft drink sales were up 6% with volume ahead of 2019 sales. Trademark Coca-Cola was up 5%. Nutrition, juice dairy and plant-based beverages were up 12% in Q3, up from 11% growth in 2019, driven by “solid performance” from Minute Maid Pulpy in China, Maaza in India and Del Valle in Mexico. Hydration, sports, coffee and tea were up 6%.
Reported net revenue and organic revenue in North America each grew 13% in the quarter. Concentrate sales in the region were up 7% and unit case volume increased by 4%. Recovery in the company’s fountain business helped drive growth, while sparkling flavors in the CSD portfolio (like Sprite and Fanta) and juice performed best.
“Our strategic transformation is enabling us to effectively navigate a dynamic environment and emerge stronger from the pandemic,” said chairman and CEO James Quincey in pre-prepared statements. “We are updating our full-year guidance to reflect another quarter of momentum in the business. While the recovery continues to be asynchronous around the world, we are investing for growth to drive long-term value for the system. Our strong system alignment and networked organization are helping us unlock enormous potential in our brands and across our markets.”
Speaking to investors and analysts during an earnings call yesterday, Quincey said the company expects full year 2021 organic revenue growth to be at the high end of previous projections and bottom line and cash flow guidance has been raised.
In addition to the strong performance from the brand’s CSD portfolio, Quincey noted that sparkling water line AHA has performed well in new markets, including China, while the company seeks to turn sports drink brand Aquarius into “more of a global brand.”
Coke is also continuing its push into the alcohol space as it expands the Topo Chico Hard Seltzer line across the U.S. via its distribution partnership with Molson Coors, Quincey added. The product is also now launching in Canada.
“Our experimentation with Topo Chico Hard Seltzer is expanding, and we’re gathering valuable insights globally, including the importance of building the category in regions where it is nascent,” he said. “We are seeing encouraging performance where the flavored alcoholic beverage category is growing rapidly, and we have on-shelf presence.”
During the call’s Q&A session, Quincey also commented on the ongoing supply chain crisis and recent moves to increase prices, stating that the company has worked to fortify its access to raw materials via a division called the Cross Enterprise Procurement Group which “buys key commodities on behalf of the company and the bottlers.” However, he acknowledged a “heightened degree of sporadic problems” around the global marketing, including gas price spikes and a CO2 shortage in Europe, while the U.S. faces labor shortages amid rising shipping and freight costs.
While Coke made off-cycle pricing increases in the U.S. during the quarter, Quincey said the action was “pretty rational,” noting price increases have been almost universal among the company’s major competitors. He also said the company continues to work with its bottling partners to minimize supply disruptions.
“We have global scale, we have global coordination, and we have long-term relationships with many of our ecosystem partners that are allowing us to manage and offset what’s going on,” he said. “Now, as regards the bottler inventory toward the end of the year, clearly, we’re working with the bottlers. And obviously, they can have the comfort and assurance that they don’t necessarily need to hold it in their hands for us to be certain of having it as a system.”