Coca-Cola reported that lower-income consumers are under the most pressure, particularly as it relates to at-home shopping occasions. However, there is a rebound & strong growth in away-from-home channels that extend beyond restaurants to amusement, travel, leisure, and hospitality channels.
- Coke delivered strong +11% y/y organic revenue growth driven by +2% unit case growth and both new & carryover pricing actions.
- Volume improved sequentially each month in the quarter with September being the strongest month.
- Coke gained volume & share in both at-home and away-from-home channels during the quarter.
- Consumer spending in developed markets has been solid, with certain consumers switching to private-label products although this trend is less pronounced in the U.S.
- Away-from-home strength is driving Coke’s U.S. business & sales.
- North America strength was reported in sparkling soft drinks with higher household penetration & repeat purchases of its Sprite Lymonade Legacy product line.
- Coke believes there is an opportunity for greater packaging diversity (pack size, can size & bottle shapes) given the current economic environment in which some demos seek more affordable options while others seek more premium options.
- Coke reported the European consumer is under slightly more pressure than the U.S. consumer from a disposable income perspective, driving more trade-down & basket reduction.
- This is consistent with +18% pricing in Europe which is more than double the +8% rate in North America.
- As consumers typically do not trade down universally (but rather make a choice to save money in certain categories), the company’s objective is to make sure consumers value a wide variety of Coke brands so that they trade down into other Coke products rather than into private label brands.