Spin The Bottle

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What's going on?

Coca-Cola is done playing coy about what a catch it is: the drinks giant posted quarterly earnings that came in ahead of expectations on Wednesday.

What does this mean?

Wherever there’s a social hotspot – a restaurant, a theater, a stadium – there’s sure to be a tap with “Coca-Cola” emblazoned on it. So with plenty of spots getting well and truly hot again last quarter, the drinks giant’s organic revenue growth – excluding the effects of currency swings and acquisitions – climbed an expectation-busting 37% compared to the same time last year. That strong growth means Coke’s quarterly revenue has now overtaken pre-pandemic levels, and its outlook for the rest of the year looks like it’ll continue that trend: the drinks maker is now expecting to grow organic revenue and profit by up to 14% this year – up from roughly 9% and 10% respectively.

Why should I care?

For markets: Coke’s prices are right.
Investors sent Coke’s shares up on Wednesday, but the company’s better-than-expected results mightn’t be the only reason investors have taken a fancy to the stock. With the specter of inflation looming, they’ve been on the lookout for companies that can easily offset the rising costs of raw materials by nudging up their own product prices. And since “consumer staples” sell things that shoppers tend to buy no matter what, they fit the bill exactly. Case in point: Coke said on Wednesday that its prices will have risen as much as 3% between 2019 and 2021.

Zooming out: Pepsi had a good run.
Arch-rival Pepsi reported better-than-expected results of its own last week, but its 13% organic revenue growth was almost two-thirds lower than Coke’s (tweet this). The company, after all, has a big snacks business and sells more of its drinks in grocery stores than Coke does. Both of those benefit much more from a world in limbo, as well as from the crushing existential despair that might push someone to drink a Pepsi in the first place.

Originally posted as part of the Finimize daily email.

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