Coca-Cola generated better-than-expected earnings as consumers continued to pay higher prices for soft drinks and juices, defying worries that Americans would cut back on spending because of inflation and faltering economic growth.
The company, whose brands include Sprite and Minute Maid, said on Tuesday that third-quarter revenues increased by 10 percent and profit grew by 14 percent versus the same period last year.
The biggest driver was a 12 percent jump in growth linked to higher prices and the mix of products sold in the quarter. At the same time, the volume of products sold rose by 4 percent, showing consumers’ willingness to pay more for the company’s products. When rival PepsiCo reported its third-quarter earnings this month, price increases were accompanied by weaker growth in volumes.
“Our business is resilient amidst a dynamic operating and macroeconomic environment,” James Quincey, Coca-Cola’s chief executive, said in a statement.
Coca-Cola’s results highlighted consumers’ capacity to continue buying preferred products despite being squeezed by higher prices at the grocery store and the gas pump.
“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 inflation by increasing interest rates, which raises the cost of borrowing for companies and consumers.
Coca-Cola raised its forecasts for revenue and profit growth this year and said it was “encouraged by the underlying topline momentum” going into next year, when it expects to sustain its growth. “The company expects global inflation to continue to impact its expenses across the board, and also expects commodity prices to remain volatile,” it said.
Coca-Cola’s shares rose 1 percent in early trading on Tuesday. They are down about 2 percent this year, versus a 20 percent fall in the S&P 500 index over the same period.