Coca–Cola surprised the market, beating market estimates on both earnings and revenue in Q2. Organic revenue increased 16%, while net revenue increased 12% as currency headwinds weighed on the top line.
This multinational giant has a beverage basket portfolio in excess of 200 brands, achieving exceptional financial results, on the back of strong pricing power, and has also benefited from product diversification. It has achieved robust results despite challenging operating conditions, such as spiraling inflation, supply side impediments and weak global markets.
· Product innovation has proved to be a major plus factor, with a move into low sugar beverages, health drinks, energy sports drinks, and Vitamin Waters amid the relatively new beverage innovations.
Operating margins were maintained through strong top-line growth, offsetting higher operating costs and marketing spend, which was scaled up to create global brand campaigns.
Coke's nutrition juices, dairy, coffee and tea also showed good growth as did hydration beverages, also benefiting from a recovery in away-from-home channels, with an opening up of global economies. The group gained additional market share in most categories.
The cherry on the top was the strong guidance, with the company expecting to deliver full-year organic revenue growth of 12-13%, up from its previous guidance of 7%-8%.
Coke is a high-quality share, which I hold in our segregated portfolios. I have recently added to the position as I believe this is not only a defensive investment but should also reward shareholders with increasing dividends.