Coca-Cola beats third-quarter expectations on volume; next year's growth depends on price and mix
Coca-Cola raised its 2026 guidance, and Bernstein sees little execution risk remaining this year. But once the volume boost from the World Cup enters the comparison base, price and mix will need to improve to sustain growth in 2027.
Original source：Bernstein Société Générale GroupFirst published on Unhidea：Original source date：
Key takeaway
Coca-Cola's third-quarter volume drove better-than-expected results, but Bernstein believes 5% organic sales growth has become the baseline hurdle for 2027; further upside depends on improvements in price and mix and performance in North America.
Why did the third quarter exceed expectations?
Coca-Cola reported third-quarter comparable earnings per share of $0.91, above the Visible Alpha consensus of $0.88; organic sales rose 7%, also above the consensus estimate of 4.4%.
Growth was driven mainly by volume: concentrate sales volume rose 7%, above the consensus estimate of 2.2%; unit case volume rose 5%.
The company raised its full-year 2026 guidance: organic sales growth of at least 5%, comparable earnings per share growth excluding the impact of acquisitions, divestitures and currency of at least 9%, and comparable earnings per share growth of at least 11%. Bernstein sees little execution risk remaining this year and has shifted its focus to 2027.
What needs to change to sustain growth next year?
Bernstein forecasts 5% organic sales growth in 2027. As the volume boost from the 2026 World Cup enters the year-on-year comparison base, the firm believes price and mix will need to improve to offset the higher volume comparison base.
Price and mix have contributed about 1.5% year over year so far this year. Management broke down the third quarter into a 4-percentage-point contribution from pricing and a 3-percentage-point drag from mix, and said two-thirds of that mix drag can be managed.
Bernstein believes that if those two-thirds of the drag fade next year, 5% organic growth is achievable; however, the firm also considers that growth rate the baseline hurdle.
What opportunities and constraints emerge from regional performance?
Latin America's third-quarter organic sales rose 16%, concentrate sales volume rose 8%, and price and mix contributed 7%; Brazil performed strongly, while Mexico improved but still faced challenges. Inflation in Argentina pushed up prices, while local volume was under pressure.
Asia-Pacific organic sales rose 6% and concentrate sales volume rose 8%, but price and mix were a drag of 2 percentage points. Developing markets such as India and China grew faster and continued to create an unfavorable geographic mix effect.
North American organic sales rose 3% in the third quarter, while unit case volume was flat; Coca-Cola Zero Sugar and fairlife continued to grow, and fairlife's trend improved during the quarter as new capacity increased supply. Away-from-home consumption in the United States was weaker than at-home consumption, and the restaurant channel remained under pressure; Bernstein believes North America could provide upside to growth, but the specific drivers remain unclear.
How does the sale of the bottling business affect earnings and valuation?
Bernstein expects the sale of CCBA to weigh on year-on-year sales by about 8 percentage points in 2027 and slow comparable earnings per share growth to 3.8%; its model forecasts earnings per share rising from $3.34 in 2026 to $3.46 in 2027.
The firm forecasts the operating margin will rise from 32.5% in 2026 to 34.6% in 2027, mainly due to the CCBA divestiture, with some additional help from operating leverage in operating segments outside Asia-Pacific.
Bernstein maintained its market-perform rating and raised its price target from $93 to $95. The firm increased its target price-to-earnings multiple from 25.5 to 26 to reflect the recent rise in valuation multiples across the consumer staples sector.
