After increasing prices last year and into 2023 to offset the impact of inflation, Coca-Cola is expecting to slow price hikes later this year
Coca-Cola is using lessons learned over the past few years with the pandemic to keep up with and pivot based on consumer preferences, the CFO said.The Morning Ledger provides daily news and insights on corporate finance from the CFO Journal team.For instance, the company late last year said it was introducing packages at lower price points as the company prepared for a global recession and in an aim to help consumers whose pocketbooks are squeezed by inflation.
With inflation easing in some areas, such as spot prices for oil and freight rates, the company is also expecting to moderate price increases, Mr. Murphy said. “If I look towards the second half of the year particularly, our expectation is that inflation will moderate over most markets,” he said. That will result in a “more normal” pricing cycle compared with the past 12 to 18 months, according to Mr. Murphy, explaining that this means fewer and less significant price increases.
“Especially in the developed world, where I think we’ve had the most abnormality relative to what we’ve experienced over the last number of years, I would see us having less frequency and also I think [price increases] will moderate,” he said. Slowed price increases are largely included in Coca-Cola’s expectations for the year, according to Gerald Pascarelli, a senior vice president and equity research analyst at financial services firm Wedbush Securities Inc. Second-quarter pricing will likely remain strong, but as commodity inflation eases, those prices will start to come down in the back half of the year, he said. “I don’t think anyone thinks that double-digit [price hikes are] sustainable over the long term.
Global sales volumes were up 3% after falling slightly last quarter for the first time in at least a year, largely due to one-time events including pandemic-related lockdowns in China and the company’s withdrawal from Russia. The higher volumes were because of stronger sales at away-from-home venues, the company said. Growth in Coca-Cola’s developed markets, led by Mexico, Western Europe and Australia, outpaced more modest increases in developing and emerging markets, including China and India.
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