Coca-Cola Q3 Earnings Show Company Defying Worries Amid Inflation

“In the face of these pressures, consumers stayed resilient,” James Quincey, Coca-Cola’s chief executive said on a call with investors. He added later, however, that he saw emerging changes in consumer behavior as “the impact of inflation running ahead of wages is starting to come through.” That led to shoppers putting off purchases of “more discretionary, higher-ticket” items, Mr. Quincey said, and seeking out cheaper options for other products.

“Their ability to make sure that they have affordable options in these price-sensitive consumers’ hands is critical,” Bonnie Herzog, an analyst at Goldman Sachs, said of Coca-Cola. “That is something that they have done very well.”

Investors are watching closely as big companies begin to report their latest quarterly earnings to get a sense of the health of the economy and the path of inflation. The Federal Reserve is on a campaign to bring down stubbornly high inflation by increasing interest rates, which raises the cost of borrowing for companies and consumers.

Food and drink giants like Coca-Cola, Pepsi, Procter Gamble and Nestlé all reported significant price increases in earnings reports this month, a sign that the cost of food — a major factor lifting overall inflation in recent months — is set to remain high. While some companies have warned that their profit margins are coming under pressure, they have mostly been able to pass on higher costs to consumers.

Prices at Chipotle Mexican Grill might increase as much as 15 percent year over year before falling to 11 percent at the beginning of next year, Jack Hartung, the company’s chief financial officer, said on a call with investors on Tuesday. Executives said lower-income consumers were dining at Chipotle less because of high prices.

Article source: https://www.nytimes.com/2022/10/25/business/coca-cola-q3-earnings.html