Coca-Cola Posts Higher Quarterly Sales Despite Price Increases

Beverage company raises revenue forecast for the year, says consumers making up for events missed because of Covid-19

Coca-Cola has seen its share price increase about 5% so far this year.PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL

Consumers are still filling up on soda even if they have to pay more.

Coca-Cola Co. KO 0.17% on Tuesday reported strong second-quarter sales and raised its revenue outlook for the year as people return to theme parks, movie theaters and travel destinations despite price increases.

“We continue to see resilience and a lot of demand not just in the U.S. but across the world,” Coke Chief Financial Officer John Murphy said in an interview.

Consumers who missed experiences such as dining out and entertainment during the first two years of the Covid-19 pandemic are willing to spend more now, Coke Chief Executive James Quincey said on a call with analysts. Executives said the company is preparing for consumers’ purchasing power to come under increasing pressure in the second half of the year.

With talk of an impending recession hanging over the marketplace, Coca-Cola is closely monitoring changes in consumer behavior, Mr. Murphy said. Coke isn’t seeing much evidence of shoppers switching to lower-priced products, but the company is spending more on marketing better-value items, such as refillable glass bottles in Latin America and a new 1.25-liter bottle in the U.S., he said.

Coke is also spending more on digital marketing than traditional advertising channels to better reach consumers, Mr. Murphy said.

In addition to its namesake cola and other soft drinks, Coca-Cola makes Simply orange juice, Dunkin’ bottled iced coffee and SmartWater bottled water. Last year, Coke bought full control of BodyArmor sports drinks. And the company last month announced it was partnering with Brown-Forman Corp. to launch a premixed, canned-cocktail version of Jack and Coke.

Coke’s organic revenue, which strips out currency swings as well as acquisitions or divestitures, grew 16% in the quarter ended July 1 as the company’s pricing and packaging mix rose by 12%. The company’s global case volume increased 8%.

The soda giant said it expects its organic revenue for the full year to grow by 12% or 13%. It previously expected organic revenue growth of 7% or 8%.

The company said second-quarter net income narrowed to $1.9 billion, or 44 cents a share, from $2.62 billion, or 61 cents a share, in the previous year.

Revenue rose 12% to $11.33 billion. Analysts forecast $10.56 billion in revenue, according to FactSet.

Earlier this month, rival PepsiCo Inc. reported a 5.2% increase in revenue in the latest quarter from a year earlier, as prices rose and the company benefited from strong sales of its snacks and packaged foods.

Shares of Coca-Cola rose 1.6% Tuesday following its earnings release. Coke has seen its share price increase about 6.5% so far this year and over 10% in the past 52 weeks.