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As Sales Soar, Coca-Cola Warns Against Over-Optimism

Away-from-home sales may be recovering, but Coca-Cola does not believe that the effects of the pandemic are behind us. Stressing multiple times the “asynchronous” nature of this recovery domestically and internationally — less than half of the United States population is fully vaccinated, as is only 13.2 percent of the world’s population — company executives warned against regarding this moment as a return to normal.

“I’m not sure I would characterize the U.S. as past COVID,” James Quincey, the company’s CEO, said on a call with analysts. “It’s certainly moved to a phase, like several other markets, where there are high levels of vaccination, where the most serious parts of COVID are affecting mainly the unvaccinated as well as some of the vulnerable. So it’s not over, and we can see that in the numbers.”

He noted that away-from-home sales remain below pre-pandemic levels, even as quick-service restaurant (QSR) sales have recovered. Bar sales remain below 2019 levels, as do travel and transportation.

The company’s EVP and CFO John Murphy added, “We remain clear-eyed as we look at the rest of the year, with many markets continuing to face obstacles, such as the spread of the COVID-19 Delta variant, while others continue to see the benefits of reopening.”

This sentiment is consistent with the company’s messaging to analysts throughout 2021. In the previous quarter, Quincey cautioned against “Pollyannaism,” pointing out areas in which the pandemic continued to grow worse. Now, on this most recent call, he noted new lockdowns in Australia and New Zealand and the resurgence of COVID in parts of Southeast Asia. The company’s less-than-optimistic take on the progress of the virus is not just unfounded pessimism—the company has been modeling the virus’ progression since Q2 2020, comparing it to how previous crises have panned out. This method has proven to be fairly accurate in predicting the course of the pandemic, at least as of the start of this year.

Overall, Coca-Cola’s net revenues rose sharply in the quarter, growing 42 percent year over year, dramatically outperforming competitor PepsiCo, which announced about a week earlier that its own net revenues grew 20.5 percent in its most recent quarter. The company also outperformed the economy’s recovery in general, bolstered not only by the increase in consumers’ mobility, but also by its digital sales efforts.

“We outpaced the overall macro-economic recovery led by strong performance in away-from-home channels and business-to-consumer eCommerce,” said Quincey.

To the latter point, he noted that the company is making “progress with our consumer-facing digital propositions.” Additionally, it is investing in technologies for internal use through its Platform Services organization, which, per a 2020 news release, works “in service of operating units, categories and functions to create efficiencies and deliver capabilities at scale across the globe.”

Through these efforts, Quincey said, the company has “a sizable opportunity to become a holistic digital leader.” He described these online sales as being “of the utmost importance,” adding that the company is developing “an integrated ecosystem of platforms to create value across the digital and physical worlds.”

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