Dive Brief:
- Coca-Cola reported lower sales in the U.S. as the soda giant faces weaker consumer demand particularly among Hispanic consumers, CEO James Qunicey told investors on the company’s earnings call this week.
- The soda behemoth reported a 3% decline in volumes in North America in its most recent quarter amid an 8% increase in price mix, driven by muted sales for Coca-Cola and its water, sports drinks, coffee and tea category. Overall sales in the region declined 4%, it said.
- A false viral video claimed that Coca-Cola reported undocumented workers to Immigration and Customs Enforcement, and called on Latino consumers to boycott the soda giant. Quincey in an earnings call said the video is “completely false,” and that the company is “very focused on recovering from it,” although the impact is “largely in the rearview mirror.”
Dive Insight:
Consumers’ political and economic concerns are being felt across the food and beverage industry, as inflation and pushback on U.S. trade and immigration policy has exacerbated a slowdown in spending in markets around the world.
As President Donald Trump ramps up deportation action, Hispanic consumers have retreated from social gatherings and other outings, leading to a decline in spending on food and beverage. Other CPG companies are noting the impact of a pullback among Hispanic consumers amid socioeconomic tensions, including beer giant Constellation which saw sales of brews like Corona, Modelo and Pacifico decline in recent months.
The February viral video was determined to be untrue by Reuters. Quincey said the false video impacted flagship Coca-Cola soda sales in states along the southern border, along with economic volatility and cold weather.
Beyond the video, affordability concerns have led to a decline in spending in both the U.S. and in Mexico. Although the effect of President Donald Trump’s tariffs have yet to be known, many consumers are already spending less in anticipation, Coke executives said.
“We’re focusing on winning back some of the Hispanic consumers, both from a consumer and a channel point of view and reinforcing some of our affordability options,” Quincey said.
The company believes its “Share a Coke” campaign for Coca-Cola, which it relaunched last month, will drive continued sales this summer among Gen Z and multicultural consumers. The soda giant plans to play up the fact that it produces its sodas locally.
Even as Coke struggled among Hispanic consumers, the brand notched some wins with new products. Quincey pointed to strong sales for its most recent Coca-Cola flavor Orange Cream, which totaled $50 million in the last quarter. Simply Pop, the prebiotic soda it launched in select regions this spring, gives the company a chance to “test and learn and scale successes over time” in the better-for-you beverage category, the executive said.
Wall Street signaled confidence in the soda company’s ability to deliver value to shareholders amid economic turmoil.
In a note to investors, Morgan Stanley analysts said Coca-Cola remains in a stronger position to withstand a weaker U.S. dollar than many of its beverage industry peers. Coca-Cola sees “little tariff exposure with local sourcing and costs borne by its bottling network,” the bank said, but it noted away-from-home product sales could provide some risk for the soda giant.
Bank of America said in a note Coca-Cola is “solidly on track to deliver on its financial targets, in our view, a rarity in consumer staples this earnings season.”
