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Coca-Cola forecast organic revenue growth of 6%-7% in 2024

Coca-Cola has beaten market expectations as higher prices continued to help the drinks giant to boost revenues. However, volumes declined in its domestic North American market in 2023.

Net sales increased 7% in the final quarter of 2023 to $10.8bn (£8.6bn), while the annual figure came in 6% higher at $45.8bn (£36.5bn) with full-year organic growth of 12%.

Volume in North America declined 1% for the quarter and 1% for the year as growth in juice, value-added dairy, plant-based beverages and trademark Coca-Cola was more than offset by a decline in water, sports, coffee and tea.

It follows a 6% fall in fourth quarter North American volumes at rival PepsiCo, which reported last week. Bosses blamed squeezed consumer budgets and trading down to own-label or smaller pack sizes.

Coca-Cola managed to grow volumes in the Europe, Middle East & Africa regions by 1% in the fourth quarter but the figure fell by 2% in 2023 as a whole. However, the group singled out the “strong performance” of Costa Coffee in the UK.

AJ Bell investment analyst Dan Coatsworth called the decline in volumes “worrying”.

“Both companies have been pushing their luck with regards to price hikes in the US and it looks like consumers are reaching a tipping point where they are turning their back on some brands or buying them less frequently,” he said.

“The environment has shifted in the US from consumers sitting on plenty of cash, helped by pandemic stimulus payments, to now having run down that money and relying more on credit. Naturally, that means people are giving more thought to how they spend money before opening up their wallet.

“The challenge now is for Coca-Cola and PepsiCo to arrest those volume declines and stabilise the situation. Shares in both companies are finding it harder to press ahead, which is the market’s way of saying it has concerns about future earnings growth in the current economic climate.”

Operating income at Coca-Cola grew 10% for the quarter and 4% for the full year.

The group forecast organic revenue growth of 6%-7% in 2024.

“During the year, our people and partners rose to meet new challenges, allowing us to excel globally and deliver in a dynamic world,” said CEO James Quincey.

“As we begin a new year, we’re confident that our all-weather strategy, powerful portfolio and harmonised system will continue to create value for our stakeholders in 2024 and for the long term.”