Coca-Cola’s stronger-than-expected volume and organic revenue growth in its third quarter comes at a time when other competitors are struggling with softer returns, and underscores the potential for its new pricing, marketing and innovation playbook to drive incremental growth.
The gains, including a 5% increase in volume and 7% increase in organic revenue growth, also raise the bar for next year – prompting questions from investment analysts about whether Coca-Cola Co can hold on to and surpass this year’s incremental gains – especially given boosts from one-off events, like the FIFA World Cup and America’s 250th anniversary.
For CEO Henrique Braun, the answer is a resounding yes – even as the company acknowledges rising destocking risks, cost inflation and volume pressure in North America.
“We are really excited with the results that we had in Q3 because it shows sustained and steady momentum that we had from the first half,” and it shows “the strategy is working in an environment that continues to be very dynamic,” Braun said during the company’s sales and earnings call Oct. 27.
Marketing success reveals ongoing growth opportunities
He explained that Coca-Cola’s activations around the FIFA World Cup and America’s 250th anniversary “were great moments for us to pressure test our end-to-end activation, going from the brand strategy, the innovations that we brought to life, the revenue growth management and execution coming in a very integrated way.”
He added Coca-Cola is applying lessons learned from these activations to ongoing and upcoming campaigns, including “learnings from our strong sports playbook with the next iteration of Fan Work Is Thirsty Work, which brings Coca-Cola into football fandom through team packaging, retail activation and locally relevant fan experiences.”
The company also applied its sports playbook into soccer activations around the English Premier League and Bundesliga, the highest-level professional association soccer league in Germany, he said.
In addition, Braun said, “parts of the tech, data and AI that we used during the FIFA World Cup, you are seeing on campaigns like Fanta Halloween,” which leverages connected packaging with “really great content” that stretches across the path to purchase from building brand awareness to the transaction.
Together these campaigns show how Coca-Cola Co can drive more engagement moving forward, he added.
The success of these strategies across campaigns and beyond the high-profile, one-off events this summer, show that the company has “everything that is under our control to guarantee that we continue to deliver our long-term algorithm,” even as the company prepares to cycle year-to-date high volumes, Braun said.
Balancing affordability and premiumization
Coca-Cola Co will not lean on marketing alone to maintain and expand sales in the coming year, which promises to be equally difficult to this year with inflation and shifting shopper priorities suppressing spending.
It also will rely, in part, on strategic pricing and affordability actions, said Braun.
“We have seen that value continues to be something that cuts across every market and every consumer that we see all over the world, and value means different things for the consumer, which then touches into affordability and premiumization in a way that we capitalize in our plans,” Braun said.
He added: “On the affordability, what we always look at is, do we have the right value, the relevance of that brand, and the worth-choosing option for the consumer to keep them in the franchise? If the answer is yes, we continue to push forward and get more coverage of that packaging format. If not, we adapt our plans and put that in place.”
As an example, he pointed to the single-serve PET package with plasma technology that the company can use on longer routes to maintain shelf life. After successfully using it in India, it is now importing it into Africa, where it can bolster affordability in the market.
At the same time, the company is building premium offerings as a counterbalance, he said, pointing to Core Power and Smartwater as examples.
Finally, the company is leveraging its revenue growth model strategy to ensure it delivers the right amount of the right product to the right market.
“It goes in tandem – affordability and premiumization – and that is what you are going to see not only the rest of the year, but building into 2027,” Braun said.
Headwinds on the horizon
Despite the success of these strategies, Coca-Cola, and other CPG players, are acting in an unpredictable macro-economic environment with rising geo-political tensions, which could complicate the company’s delivery.
It also expects several near-term headwinds, including “slight destocking” expected in the fourth quarter, ongoing cost pressures in logistics and transportation, six fewer selling days in the fourth quarter and potential headwinds from a plan to refranchise Coca-Cola Beverages Africa.
Nonetheless, CFO John Murphy said he expects at least 5% organic revenue growth and at least 9% comparable currency-neutral earnings per share growth, excluding acquisitions and divestitures.
These gains hinge in part on the expectation that consumer behavior will “remain largely unchanged with value being a very important consideration across all markets and income groups,” and on the company’s ability to manage “various cost pressures,” he said.
He explained that as Coca-Cola continues to navigate this environment, it will continue to invest behind its brands, maintain disciplined cost management and focus on expanding margins over time.
As such, he said he expects the company’s “proven all-weather strategy” to be “our best ally to sustain our momentum for the rest of the year and into 2027.”
