- Coca-Cola increased the price of its drinks by around 10 percent in 2023
- Customers were still willing to pay the highest prices globally, but not in the US.
- Bosses at the soft drink giant said US price increases are coming to an end
Coca-Cola’s strategy of raising prices has boosted profits, but sales are losing steam in North America after a series of price increases.
Globally, demand for its drinks grew 2 percent in 2023, even though they were 10 percent more expensive on average.
The double whammy of more drinks sold at higher prices helped lift revenue 6 percent to $45.8 billion, Coca-Cola said today in reporting its annual results.
But in North America, its largest market, businessmen admitted that a succession of price increases had coincided with a sales volume drop of 1 percent in 2023.
In real terms, this means tens of millions fewer cans and bottles purchased in stores or fountain drinks ordered in restaurants and bars.
Coca-Cola reported that overall sales rose despite price increases of about 10 percent last year. Pictured is a worker restocking shelves at a store in Orem, Utah.
Although sales volume increased worldwide, Coca-Cola CEO James Quincey acknowledged that consumers in North America were beginning to cut back on spending.
Fast food giants have also admitted that higher prices – such as the $29 KFC bucket and $18 Big Mac meal – are impacting sales at McDonald’s, KFC and Pizza Hut.
The good news for shoppers is that bosses at the soft drink giant said price increases in the United States are coming to an end.
Coca-Cola CEO James Quincey said the impact of high prices was beginning to be felt in North America and the company would moderate prices in response.
“In North America and Europe, while inflation is moderating, the cumulative impact of inflation is putting pressure on certain segments of value-seeking consumers.” Quincey said in an earnings conference call with investors.
the later he told Bloomberg that the successive quarterly price increases were going to come to an end and that prices would probably moderate in the coming months.
“A sector of American consumers came under pressure in 2023,” Quincey said. “We’re making sure we have affordable options that allow people to stay within the franchise.”
Despite the slight drop in sales in North America, the global growth of its drinks – which include Sprite, Fanta, Powerade and Minute Maid – suggests the company is doing a good job of passing costs on to consumers.
Rivals are not doing so well in that regard, as inflation has raised costs but also caused consumers to reduce their purchases.
Pepsi reported a drop in quarterly revenue last week after consumers rejected higher prices. In the photo, boxes of Pepsi soda in a store in New York.
Pepsi last week reported a quarterly revenue decline, its first in 14 quarters. Following the news, its share price fell approximately 3.5 percent.
Shortly after markets opened on Tuesday, Coca-Cola’s stock price remained virtually unchanged.
“Coca-Cola’s results were much better than PepsiCo’s, as Coca-Cola continues to benefit from being able to pass on price increases,” Dave Wagner, portfolio manager at Aptus Capital Advisors, told Reuters.
Coca-Cola boss Quincy also said the company would offer an increasing number of sugar-free options in response to a decline in consumption of sweet soft drinks.
For this year, Coca-Cola forecasts revenue growth of 6 to 7 percent. That’s more than analyst expectations of 5.9 percent.