Coca-Cola profits fizz as demand holds up despite global price hikes

Coca-Cola faced little or no pushback from consumers despite price increases brought on by the rising cost of raw materials.

Average selling prices increased by 11% for Coca-Cola brands, but revenue rose 4.3% to over $10.9bn (€9.9bn). Picture: Tony Dejak/AP

Coca-Cola's profits and revenue rose in the first three months as demand held up for its soft drinks despite multiple price increases around the world to combat higher commodity and shipping costs.

Average selling prices increased by 11%, the maker of Fanta and Sprite said, while global unit case volumes rose 3%. The shares rose slightly in the session, but are little changed from a year ago. 

Coca-Cola said two months ago that it would raise its prices further in 2023 "across the world" to combat the stubbornly high costs, but at a moderating pace, while rival PepsiCo hit a pause on price hikes.

Consumer goods makers have raised prices to pass on the sharp increases in raw-material costs from supply-chain snags fuelled by the pandemic and aggravated by the Russian invasion of Ukraine.

Still, Pepsi and Coca-Cola faced little or no pushback from consumers, thanks to their near-domination of the global carbonated drinks market.

Coca-Cola's first-quarter operating margin was almost 31%, compared to 32.5% a year earlier, as price hikes did not fully offset an impact from higher operating costs, an increase in marketing spending, investments and a stronger dollar.

"With pricing expected to moderate over the course of the year, this should come in tandem with moderating levels of commodity inflation, which should help to protect profitability," said Wedbush analyst Gerald Pascarelli. 

Revenue rose 4.3% to over $10.9bn (€9.9bn), beating analysts' forecasts.  

The company, however, maintained its annual forecasts. 

Reuters