Coca-Cola and PepsiCo Post Upbeat Earnings Despite Cost Headwinds

Looking at the Beverage Giants’ Boosted Sales

Both Coca-Cola (KO) and PepsiCo (PEP) reported increased sales for the most recently completed quarter. Looking at organic revenue, Coke’s sales grew by 9% largely in part to a 10% increase in prices. Meanwhile, PepsiCo credits sales of Frito-Lay products, as organic revenue grew by 11.9%, driven by a 7% price hike across the board.

While both companies reported a decline in profits, the figures came in above analyst expectations. Executives say rising costs for raw materials, packaging, and trucking continue to be a drain on the bottom line. On the upside, Coke notes Q4 2021 marked the first time sales at places like restaurants and movie theaters eclipsed pre-pandemic levels since lockdowns first went into effect.

Coke and Pepsi in Demand, Ad Spending Roars On

Higher prices haven’t led to a major drain on demand, according to PepsiCo executives. For the time being, consumers haven’t pivoted to less-known brands. That said, there’s an expectation costs will continue to rise into next year with inflation a major factor, meaning upward pressure on prices will remain. Coke specifically mentioned the supply chain is unlikely to fully snap back into shape by the end of 2022.

With robust demand, both Coke and PepsiCo are leaning into advertising. PepsiCo expanded its marketing budget in and around this weekend’s Super Bowl. Coke is running an Olympics-themed ad campaign in China.

Both Companies Focused on Product Diversification and Logistics

Both beverage giants are part of the business world’s ongoing efforts to overcome supply-chain problems. Executives explain the pandemic uncovered long-standing issues including tight aluminum supply and limited numbers of truckers. PepsiCo says it has observed an improvement in the North American supply chain over the past few months.

Product diversification is another major focus for both PepsiCo and Coke. Coke now owns Smartwater, Minute Maid, Costa Coffee, and Gold Peak Tea. PepsiCo’s product offerings include Quaker Oats, Gatorade, Cheetos, and Mountain Dew. Analysts have long argued it is vital that both companies insulate themselves from the potential decline of sales in the sugary drinks category. The beverage giants hope to build off the strong quarter moving forward.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender