Coca-Cola sees first quarterly volume growth since pandemic start

Coca-Cola raises full-year guidance amid better-than-expected Q3 sales as away-from-home channels continue to recover, said top executives on a third quarter earnings call Oct. 27.

The multinational beverage corporation saw a 14% increase in organic revenue for the quarter as total volumes grew for the first time since the beginning of the COVID-19 pandemic and even outpaced 2019 levels.

On a global basis, Coca-Cola's coffee sector saw the highest growth rate at 19% in Q3, followed by the company's nutrition, juice, dairy, and plant-based beverage business at 12%. Coke's sparkling soft drink category and hydration, sports, coffee, and tea segment saw volume growth of 6%.

Chairman and CEO James Quincey attributed the company's successful quarter to an increase in sales in away-from-home channels, such as restaurants and movie theatres, which have been slow to recover amid the rise of COVID-19 variants and sporadic lockdowns across the world.

"Although not yet back to 2019 levels as a percent of our business, we saw sequential improvement in away-from-home volumes on a 2-year

basis as consumers returned to many of their former routines," said Quincey. "At-home volumes also showed ongoing strength even as away-from-home channels improved."

However, although many of Coke's global markets saw significant third-quarter growth, recent supply chain issues, such as labor shortages, high freight and commodity prices, and limited shipping availability, have led to constrained capacity and higher incremental costs for the company.

"We expect commodity inflation to have a mid-single-digit impact on our cost of goods sold in 2022," said COF John Murphy.

To offset inflation costs, the beverage giant plans to continue to raise prices in 2022.

However, because Coca-Cola buys mainly on a long-term contract basis, Quincey said he does not anticipate seeing the sort of price volatility expected in the spot market.

"The system has the ability to lock in while still inflationary in 2022," said Quincey. "Whether we're talking about PET or metals or sugars or corn syrup, they're all going up in 2022, but it's not like the sky is falling.