By Michael E. Kanell, The Atlanta Journal-Constitution
Troy Warren for CNT #Business
When it comes to the highs and lows of global consumer sentiment, Coca-Cola is a pretty good barometer.
With operations in about 200 countries, the 135-year-old beverage giant takes continual readings through customers’ purchases of its wide array of soft drinks, sports drinks, water, coffee, tea and juice.
And worldwide consumption has been telling the story of upbeat consumers trudging steadily back toward some semblance of normality even as the coronavirus continues to circulate.
Atlanta-based Coke said Thursday it sold more “away from home” products in the fourth quarter than it did in 2019, the first time that’s happened since the pandemic began.
That suggests consumers increasingly are comfortable venturing out in public to drink at restaurants, sporting events and concerts after many stayed at home in 2020 and parts of 2021.
But the world’s largest maker of nonalcoholic drinks also warned that inflation is clouding its 2022 outlook as supply chain problems and other factors push up costs for businesses and consumers alike.
That worry was underscored Thursday in the monthly inflation snapshot from the Bureau of Labor Statistics, which showed the U.S. Consumer Price Index up 7.5% during the past year — the highest annual increase in 40 years.
Coke reported higher-than-expected sales and profits for the last three months of 2021. Net revenues rose 10% to $9.46 billion from the same period a year earlier. Net income soared 66% to $2.41 billion.
“In 2021, our system demonstrated resilience and flexibility by successfully navigating through another year of uncertainty,” James Quincey, the company’s chairman and chief executive officer, said in a statement.
Coke in 2020 suffered its steepest decline in the volume of drinks sold since just after World War II. Sales and profits rebounded early last year, but the company relied more heavily than usual on sales of products consumed at home, such as cases of soda bought at supermarkets.
News of the better-than-predicted fourth-quarter results spurred Coke stock upward in early Wall Street trading Thursday, reaching an all-time high of $62.20 a share, before dipping slightly by mid-day.
But looking forward, Coke sees a challenge: inflation.
Rising prices for commodities will cut profit margins amid higher costs for paper, plastic, fuel and transportation. The company said it expects to see revenue growth this year to slow to between 7% and 8%, with earnings growth of 5% to 6%.
Businesses typically pass along higher costs to consumers, as reflected in the surging Consumer Price Index. And those higher prices at the cash register could dampen consumer spending habits, especially when it comes to discretionary purchases.
Optimists say inflation may have peaked: The CPI was up 0.6% in January, which was the same pace as December and less than the increases of the two prior months. But pessimists fear inflation has become embedded in the economy.
And just about no one predicts a rapid end to rising prices.