FOOD & RECIPES

Coca-Cola Co. offers optimistic outlook

ATLANTA – James Robert B. Quincey, chairman and chief executive officer of The Coca-Cola Co., set a goal that the company would emerge from the COVID-19 pandemic stronger. If third-quarter results are any indication, the company is on track to meet that goal.

“Our underlying volumes have accelerated on a two-year basis with quarterly growth versus 2019 for the first time since the pandemic began,” Mr. Quincey said during an Oct. 27 conference call to discuss quarterly results. “This improvement has been supported by our transformation agenda, which set us on our path to more efficient and effective marketing as well as more disciplined and intelligent innovation.”

Noting that global recovery from the pandemic has not “been in a straight line” and “continues to be uneven,” Mr. Quincey said The Coca-Cola Co. is executing well in the dynamic environment.

“Although not yet back to 2019 levels as a percent of our business, we saw sequential improvement in away-from-home volumes on a two-year basis as consumers return to many of their former routines,” he said. “At-home volumes also showed ongoing strength, even as away-from-home channels improved.”

Net income for the quarter ended Oct. 1 rose 42% to $2.5 billion, equal to 57¢ per share on the common stock.

Quarterly sales rose 16% to $10 billion.

The strong quarter prompted management to raise Coca-Cola’s fiscal 2021 guidance and offer an optimistic outlook for fiscal 2022.

“We now expect to deliver organic revenue growth of 13% to 14%, which is at the high end of our previously provided range and comparable EPS growth of 15% to 17% in 2021,” said John Murphy, chief financial officer.

During fiscal 2020, Coca-Cola’s EPS was $1.95.

“It’s not typical for us to provide commentary on the year ahead at this stage, but I would like to highlight a few points regarding 2022 given the dynamics we are already seeing,” Mr. Murphy said. “While there are puts and takes to consider from the pandemic looking into next year, we’re confident in the underlying top-line trajectory, supported by our transformation work, our innovation agenda and a more efficient and effective approach to marketing.”

He emphasized Coca-Cola is not immune to higher costs or commodity inflation, but added the company is successfully managing through the current environment.

“Based on current rates and hedge position, we’d expect commodity inflation to have a mid-single-digit impact on our cost of goods sold in 2022,” he said. “We’ve been proactively accelerating our revenue growth management and productivity levers to offset some of this pressure as we look out to next year. And we’re closely monitoring the moving parts in the supply chain to ensure we are well positioned to meet demand.”

Mr. Quincey added, “We are pulling all the levers of price and mix and marketing innovation each and every year. And so that is the starting point as we think forward into 2022. Secondly, we see the environment of pricing, for example (in) the US and largely everywhere else as pretty rational, whether that be what competitors are doing or what the retailers are doing with their own label brands.”

In North America, the emergence of the Delta variant slowed recovery and created supply chain challenges.

“The at-home channel remains healthy,” Mr. Quincey said. “And although away-from-home growth accelerated early in the quarter, labor shortages have constrained capacity with some on-premise customers.”

North American unit case volume grew 4% in the quarter. The growth was driven by recovery in the fountain business as well as sparkling flavors and juice, according to the company.

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