Coca-Cola (KO) delivered a robust fourth-quarter performance, exceeding Wall Street estimates and solidifying its position ahead of rival PepsiCo (PEP).
The beverage giant reported revenue of $11.5 billion, surpassing analyst expectations of $10.67 billion. Adjusted earnings per share (EPS) came in at $0.55, beating the forecasted $0.52.
The strong results were driven by a 9% increase in price/mix and a 2% rise in unit case volume, marking a return to volume growth after a decline in the previous quarter. CEO James Quincey credited the company’s ability to navigate a volatile global economy, citing its combination of global reach and localized market expertise.
Outperforming PepsiCo in Key Markets
Coca-Cola’s strong Q4 figures outshone those of its closest competitor. While KO reported a 2% increase in unit case volume, PepsiCo managed just a 1% gain, with North American beverage volumes contracting by 3% for the second consecutive quarter.
KO’s pricing strategy played a key role in its success. The company implemented price hikes across several regions, with North America seeing a 12% increase and Latin America experiencing a 23% jump, driven by Argentina’s hyperinflation. Despite higher prices, volume gains were recorded in key markets, including a 6% increase in the Asia-Pacific region.
In the U.S., Coca-Cola capitalized on partnerships with major fast-food chains like McDonald’s (MCD) and Costco (COST), reinforcing its stronghold in the food service sector. Costco’s recent decision to switch its food court fountain business back to Coca-Cola from PepsiCo underscores KO’s competitive advantage.
Steady Outlook for 2025 Amid Inflation and Currency Pressures
Looking ahead, Coca-Cola expects organic revenue growth of 5% to 6% in 2025, a slowdown from 2024’s 12% growth. Adjusted EPS is projected to grow 2% to 3%. The company acknowledges potential headwinds, including foreign exchange fluctuations and rising costs of key agricultural commodities such as orange juice and coffee.
Despite these challenges, KO continues to demonstrate resilience. Its growing portfolio of non-carbonated beverages, including Fairlife dairy products, has been a significant contributor to sales. Fairlife, which represents just 5% of Coca-Cola’s U.S. business, accounted for 35% of its sales growth in 2024 and is expected to expand by 20% annually over the next five years.
Shares of Coca-Cola have climbed 7% over the past year, significantly outperforming PepsiCo’s 16% decline. While the stock still trails the broader S&P 500’s 20% gain, its strong Q4 results and market positioning suggest continued long-term growth.
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