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Coca-Cola to push ahead with price hikes as PepsiCo hits pause

Published 02/14/2023, 06:59 AM
Updated 02/14/2023, 11:31 AM
© Reuters. FILE PHOTO: Bottles of Coca-Cola are displayed at a supermarket of Swiss retailer Denner, as the spread of the coronavirus disease (COVID-19) continues, in Glattbrugg, Switzerland June 26, 2020.   REUTERS/Arnd Wiegmann

© Reuters. FILE PHOTO: Bottles of Coca-Cola are displayed at a supermarket of Swiss retailer Denner, as the spread of the coronavirus disease (COVID-19) continues, in Glattbrugg, Switzerland June 26, 2020. REUTERS/Arnd Wiegmann

By Ananya Mariam Rajesh

(Reuters) -Coca-Cola Co 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 (NASDAQ:PEP) Inc, as the beverage giants bet on different paths to boost sales for the year.  

Coca-Cola (NYSE:KO) also forecast annual profit growth above Wall Street expectations, while PepsiCo had 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.

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% 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.

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.

© Reuters. FILE PHOTO: Bottles of Coca-Cola are displayed at a supermarket of Swiss retailer Denner, as the spread of the coronavirus disease (COVID-19) continues, in Glattbrugg, Switzerland June 26, 2020.   REUTERS/Arnd Wiegmann

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.

Latest comments

makes a lot of sense, stubborn cost increase and rising profits at the same time. shut up.
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