The demand for Coca-Cola Co.’s drinks has remained strong, and the company on Monday beat Wall Street expectations for first-quarter revenue and earnings. It also implemented several price increases to offset rising commodity and shipping costs.

Even while competitor PepsiCo halted price increases, the business indicated in February that it will continue to boost soda prices in 2023 “across the world” albeit at a slower rate.

The manufacturer of Fanta and Sprite reported that average selling prices grew 11% in the first quarter while unit case volumes increased globally by 3%.

“The strength in case volume growth gives us confidence that sales momentum can continue as Coca-Cola’s sales strategies are resonating with consumers,” Edward Jones analyst Brittany Quatrochi said.

Early trading saw an increase of roughly 1% in the company’s shares.

Due to Pepsi and Coca-Cola’s near-dominance of the world market for carbonated beverages, consumers haven’t been particularly resistant to price rises.

However, Coca-Cola CEO James Quincey stated on an earnings call that “there is uncertainty on how the consumer environment may ultimately play out in 2023.”

Quincey added that China’s spending is still returning to pre-pandemic levels despite the easing of limits, while the recent banking crisis has increased concern about consumer behaviour in Europe.

In the meantime, due to higher operational costs, increased marketing expenditure, investments, and a strong currency, the first-quarter operating margin decreased to 30.7% from 32.5% a year earlier.

Executives stated on the call that while freight costs and the pricing of some commodities were stabilising, the prices of sweeteners and juices were heading higher.

“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.

According to Refinitiv data, revenue increased 4.3% to $10.96 billion, exceeding projections of $10.80 billion, while adjusted earnings of 68 cents per share exceeded forecasts of 64 cents.

(Adapted from BusinessToday.com)