Coca-Cola (KO) CEO James Quincey is holding firm on prices even as the Trump administration’s trade war drives up costs like aluminum cans and orange juice.
“We’re not doing it [raising prices] out of cycle. Obviously prices went up because of a whole set of normal things — last year’s inflation — that’s already happened. But we’re sticking to our current pricing plan because, you know, some things are more expensive and some things are less expensive. And it all goes into the bundle,” Quincey told Yahoo Finance (video above).
Shares of the beverage giant rose nearly 1% in trading on Tuesday as it beat on first quarter earnings and didn’t issue a warning with its full-year guidance. The company said in a statement that it expects the trade war’s impact to be “manageable” this year.
Read more about Coca-Cola’s stock moves and today’s market action.
That isn’t to say consumers aren’t showing signs of being under pressure as large companies begin to raise prices to compensate for their higher costs of doing business.
In Coke’s North America business, for example, unit case volumes fell 3% as it raised prices by 8%. It was the second-largest price increase among Coke’s divisions, behind a 16% hike in Latin America.
Quincey explained to Yahoo Finance, “If you look at the US business, the weakness in volume in Q1 was concentrated in what we call future consumption packaging, which is much more predominant in supermarkets or in kind of independent trade outlets, rather than either convenience or the kind of away-from-home quick-serve restaurants and all the away from home channels. So that’s where the weakness was focused, which I think is partly an indication of some of the affordability pressure for the lower-income consumer and some of the geopolitical reaction.”
Earnings analysis
Net sales: -2% year over year to $11.2 billion vs. estimates for $11.14 billion
Organic sales growth: +6% year over year vs. estimates for +5.2%
Core EPS: +1% year over year to $0.73 vs. estimates for $0.72
What else caught our attention: Mixed guidance
Key comment: Said tariff impact is “manageable”
Organic sales growth: +5 to +6% vs. estimates for +5.63% (previous guidance: +5% to +6%)
Core EPS: +2% to +3% to $2.96 vs. estimates for $2.96 (previous guidance: +2% to +3%/$2.94 to $2.97)
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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