Coke Offering Smaller Packaging as Inflation Changes Consumer Behavior

Investing

Published: October 26, 2022 8:01 pm

On Tuesday, Coca-Cola (US:KO) said it would unveil new, smaller packaging to meet the reality of consumer inflation.

The products include quarter-liter bottles and multi-packs with fewer cans in the US, refillable bottles in South Africa and new 750 ml and 350 ml bottles in Japan, Coke said.

The beverage giant also raised its 2022 sales outlook after reporting earlier that third quarter revenue rose ten percent on seven percent higher prices, Chief Financial Officer John Murphy said Tuesday.

“In an environment where consumer preferences are rapidly evolving, the company is focused on expanding its offerings to fit all consumers’ budgets. The Coca-Cola Value Bundle, launched in North America during the third quarter, is an example of how the company offers more choices to cost-conscious consumers,” the company said in a Tuesday news release.

The company said inflation is driving US and European consumers to other drinks and private-label brands. In Europe and the US, Coke sees signs that inflation is pushing consumers to change their buying habits, shifting to private-label water and juice brands and shopping more in dollar stores, Coke Chief Executive James Quincey said on a conference call with analysts Tuesday.

Murphy said it is clear to him we’ll see a recession, but it’s hard to plan for consumer reactions to economic slowdowns.

“We’ve got to have the ability to pivot and adapt as we learn on the fly as to how consumers will react,” he said in an interview. He said the company would build on lessons from the past three years, when Covid-19 lockdowns closed restaurants, stadiums and movie theaters, forcing the beverage company to pivot.

Coke expects organic revenue to grow 14% to 15% this year. Organic revenue growth excludes things like currency effects, acquisitions and divestitures, to increase from 14% to 15% this year.

Earlier this month, Pepsi (US:PEP) said it raised by 17% on average from last year and said organic revenue grew 16%.

This article originally appeared on Fintel

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