Packs of Coca Cola and Diet Coke at a shop in Reading, Britain, on Jan. 25, 2019.PETER CZIBORRA/Reuters
Coca-Cola Co KO-N said on Tuesday it would raise soda prices further in 2023 to combat stubbornly high costs, in sharp contrast to a halt at rival PepsiCo Inc PEP-Q, as the beverage giants bet on different paths to boost sales for the year.
Coca-Cola also forecast annual profit growth above Wall Street expectations, while PepsiCo had delivered a more sombre forecast last week.
A near duopoly in the global carbonated drinks market has made it relatively easy for the companies to undertake multiple cost inflation-induced price hikes over the last year without demand drying up.
Coca-Cola Chief Executive James Quincey said the company would continue raising prices “across the world” this year, but at a moderating pace.
Analysts said Coca-Cola’s brand strength gives it the power to set prices in its category at levels above competitors.
“(Coca-Cola) would certainly be a price leader in carbonated soft drinks. They have the capacity to take pricing,” Wedbush Securities analyst Gerald Pascarelli said.
He added Coca-Cola’s strategy last year of relying less on price increases to drive sales compared to its main rival also gives it more room to raise rates without losing competitiveness.
Coca-Cola’s average selling price rose 11 per cent for the full year ended Dec. 31, while PepsiCo’s increased 14 per cent.
Unit case volumes for Coca-Cola fell 1 per cent in the quarter, hit by a drop in demand in Europe, where higher fuel and power costs have sparked a cost-of-living crisis.
Quincey said consumer demand in the region is likely to remain weak for the rest of 2023.
Coca-Cola forecast annual adjusted earnings per share to rise 4 per cent to 5 per cent, above estimates of 3 per cent growth, according to Refinitiv IBES data.
Adjusted fourth-quarter profit came in line at 45 cents per share, the first time in three years the company failed to beat expectations.
Coca-Cola’s shares fell marginally on Tuesday.