Coca-Cola has announced that it plans to raise soda prices further in 2023 to combat stubbornly high costs, in sharp contrast to a halt at rival PepsiCo Inc, 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 delivered a more somber 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.
Continue Raising Prices
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.
Average Selling Price
Coca-Cola's average selling price rose 11% for the full year ended Dec. 31, while PepsiCo's increased 14%.
Unit case volumes for Coca-Cola fell 1% in the quarter, hit by a drop in demand in Europe, where higher fuel and power costs have sparked a cost-of-living crisis.
“While 2022 brought many challenges, we are proud of our overall results in a dynamic operating environment,” said Quincey.
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% to 5%, above estimates of 3% 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.