Coca-Cola Co exceeded expectations on both revenue and profit for the first quarter of the year, despite facing numerous price increases due to higher commodity and shipping costs. The company was able to maintain strong demand for its sodas, with unit case volumes rising by 3%. Although Coca-Cola announced its intention to raise prices globally in 2023, it plans to do so at a more moderate pace than its rival PepsiCo, which has paused its price hikes.
With Coca-Cola and PepsiCo dominating the global carbonated drinks market, the former has been able to increase its prices with little to no resistance from consumers. This has been critical in helping the company offset the steep commodity and raw material costs it has incurred due to supply chain disruptions caused by the pandemic and the Russia-Ukraine conflict.
According to NielsenIQ's data, the average price of 192 ounces of Coca-Cola's soda in the U.S. rose from $8.03 in 2021 to $9.30 in 2022, and it stands at $10.55 so far in 2023. However, despite the price hikes, Coca-Cola's first-quarter operating margin was 30.7%, down from 32.5% a year earlier due to higher operating costs, increased marketing spending, investments, and a stronger dollar.
Nonetheless, the company's revenue for the first quarter of 2023 increased by approximately 5% to $10.98 billion, beating Refinitiv's estimated $10.80 billion. Adjusted earnings were 68 cents per share, higher than estimates of 64 cents.
Although the company's shares rose by around 1% in premarket trading, it remains to be seen how well Coca-Cola will fare as it continues to grapple with the challenges posed by the ongoing pandemic and global supply chain disruptions.
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