Coca-Cola raises prices to offset higher commodity costs

In its first-quarter 2021 results on April 19, Coca-Cola Co. announces a recovery in demand from a year earlier as North America and Western Europe take longer to recover. Global unit case volume in March, nevertheless, turned to 2019 levels.

The beverage giant’s first-quarter sales rose 5% to $9.02 billion, surpassing expectations of $8.6 billion. Organic revenues increased by 6%.

Coke stated demand improved every month of the quarter, driven by markets led by China and India where risk tied to the coronavirus has fallen.

They continue to focus on developing more robust and executing versus their growth accelerators throughout the recovery phase. They like the company’s progress, said chairman and chief executive, James Quincey.

Quincey replied that they have support from improvements in their business, particularly in markets where vaccine availability increases and economies are opening up. The company remains optimistic in its full-year guidance.

First-quarter 2021 highlights

Net revenues developed 5% to $9 billion, and organic revenues (non-GAAP) increased 6%. This was due to a 5% growth in concentrate sales, as well as a rise in price/mix of 1%.

The operating margin, which added items impacting comparability, was 30.2% versus 27.7% in the corresponding quarter. Furthermore, the comparable working margin (non-GAAP) was 31% versus 30.7% in the previous period.

Earnings per share decreased 19% to $0.52, and comparable EPS (non-GAAP) increased 8% to $0.55. Comparable EPS (non-GAAP) growth covered the impact of a 2-point currency headwind.

Coca-Cola lost market value share in the entire nonalcoholic ready-to-drink (NARTD). Nevertheless, an underlying share increase in both at-home and away-from-home channels was higher than offset by unfavorable channel mix because of continued pressure in away-from-home channels.

Cash flow from operations was $1.6 billion, up to $1.1 billion upon the prior year’s period. This was due to positive business performance, five extra days in the quarter, and working capital initiatives.

Coca Cola price increases on the way

On CNBC Monday, Quincey told the company is hedged facing any significant force in 2021, but he suspects to see higher commodity costs next year.

Coke could boost prices on its drinks to combat the impact of those more expensive commodity prices. This, according to its CEO.

CNBC stated Coke joins Kimberly-Clark, J.M. Smucker, and other consumer titans in hiking prices.

While the movement will increase their profit margins, it may transpire at the expense of cash-strapped consumers who are still fighting from the economic influence of the COVID-19 epidemic, the financial news outlet noted.