Beverage giants report strong Q2s despite slight slips in demand

Beverage giants cracked open solid second-quarter results over the past month, reporting rising sales and revenues on the back of price hikes—but flat and slightly dipping volumes signal some consumer pullback and trading down to cheaper private label products.

The Coca-Cola Company: Coke’s net revenues rose 6% to $12 billion, and it increased its full-year guidance to 8%–9%. US volume fell 1% for the quarter—most categories were flat, with a decline in water, sports drinks, coffee, and tea, though there was a rise in Coca-Cola Zero Sugar.

Chairman and CEO James Quincey said the company has seen “some willingness” from consumers to trade down to private label products, particularly water and juice, as they become “increasingly cost conscious.” Quincey said price hikes are largely affecting developed markets like North America and Western Europe, noting it’s “more important than ever to be consumer centric.”

Keurig Dr Pepper: The maker of 7-Up, Snapple, and Canada Dry raised its full-year net sales outlook after reporting a net sales bump of 6.6% YoY to $3.79 billion. The beverage company also said its gross margins grew for the first time since Q3 2021.

The company’s US Refreshment Beverages segment saw 11.8% sales growth but flat volume, while US Coffee, which includes Green Mountain and Donut Shop, saw declining sales and volume. Chairman and CEO Robert Gamgort said the corporation’s new partnership with La Colombe—it took a $300 million 33% stake in the coffee company last month—will strengthen its position in the coffee segment.

PepsiCo: The beverage company reported a 10.4% net revenue boost in its second quarter, bumping up its full-year revenue outlook from 8% to 10%. Volumes dropped across North American Quaker Foods and PepsiCo beverages divisions, as CEO Ramon Laguarta noted consumers are “shopping in more stores” and “looking for better deals.”

“We’re seeing lower-income consumers strategizing around obviously optimizing their budgets, but we’re seeing the majority of consumers staying within our categories, staying within our brands,” Laguarta said.—EC