Coca-Cola CEO points to 'cost-conscious' consumer despite earnings beat

Coca-Cola's (KO) CEO noted on Wednesday that consumers globally were getting increasingly cost-conscious as inflation weighs on pocketbooks and economists debate the likelihood of a recession ahead.

"They're looking for value and stocking up on items on sale," said CEO James Quincey during the company's second quarter earnings call.

"We have seen some willingness to switch to private-label brands in certain categories. Across the sector, consumers are increasingly cost-conscious," he added.

He said the trade-down trend is happening primarily in Europe and to some extent the US with certain products.

"It’s, in our view, highly related to the strength of the brands in any specific category. So we see it more in terms of beverages happening in water and juices rather than soft drinks, and certainly less when you get to colas," added Quincey.

"However, the growth outlook remains intact," he added. "In a world with a wide spectrum of market dynamics, from inflation to currency devaluation to shifting consumer needs, our business is proving to be very resilient."

Coca-Cola stock climbed 1% midday on Wednesday after the soft drink maker raised its full-year revenue and earnings guidance and topped Wall Street estimates on second quarter earnings.

Coke now estimates full-year organic revenue growth of 8% to 9%, up from its prior projection of 7% to 8%. The midpoint of that range is higher than Wall Street’s consensus estimate of 8.36%.

Adjusted earnings are expected to increase between 5% and 6% versus a prior range of 4% to 5%.

Coke said it raised guidance due to a strong first half of the year. The Atlanta-based company's second quarter revenue came in at $12 billion, higher than analysts' estimates of $11.74 billion. Adjusted profit rose to $0.78 a share versus Wall Street estimates of $0.65.

Coca-Cola has been able to raise the prices of its drinks amid higher inflation. The company reported a 10% increase in price/mix, a metric that incorporates price, product, and package size.

"Volume was flat, and after a slower start, it sequentially improved, with June being our strongest month in the quarter," said Quincey.

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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