Coca-Cola Flexes Volume Growth, but Posts Fizzless Quarter on Home Turf

There’s no place like home. For Coca-Cola, that was the problem in the third quarter.

On Tuesday, the beverage giant reported flat North American sales volume in the three months ending Oct. 2, down from 3% in the second quarter and contrasting with bubbling demand in the rest of the world. It left investors just a tad worried about just how addic—er, brand loyal Coke fans are on the company’s home turf, sending its shares down 1.6%.

A ‘Fridge Cigarette’ Break

Coca-Cola’s stock is up 32% this year, more than double the 14% gain of the S&P 500 Consumer Staples sector. Given how food and drink makers have been pitted against the souring sentiment of inflation-plagued shoppers, it is an impressive run. The fact that shares in heated rival PepsiCo are in a fizzless, negative 6% slump makes it extra aspartame sweet.

On Tuesday, however, Coca-Cola’s strong fundamentals were pitted against the home turf stagnation. On the plus side, its quarter profit of $4 billion, up 10% year over year, and revenue of $13.4 billion, up 7%, both came in ahead of Wall Street’s expectations. And, while higher prices contributed to some of those gains, beverage volumes rose 5% globally. This is crucial because it means customers all over are flat out buying more drinks. Diet Coke and Coke Zero, in particular, sold 6% and 16% more in the quarter. Executives can thank the TikTok-inspired trend that has Gen Z consumers calling its sugarless colas “fridge cigarettes” for their utility as a refreshing, tobacco-free replacement for smelly old smoke breaks.

In another testament to its bedrock strengths, Coca-Cola proved more profitable as its operating margin climbed to 33.4% from 32% in the third quarter. Leaders at Procter & Gamble, Nestle and Reckitt have cautioned in recent weeks that consumer goods companies could resort to new price hikes as their margins come under pressure from higher costs related to the US war with Iran. “Our commodity exposure overall remains manageable,” CEO Henrique Braun said on Coca-Cola’s earnings call. Executives are ending the year bullish:

• Coca-Cola hiked its organic revenue growth forecast for 2026 to at least 5% and its adjusted earnings growth guidance to at least 11%. Braun blamed the slow North American quarter on the timing of July 4 this year, which meant that part of the shipping and sales volume related to the holiday ended up in the second quarter.
• Still, Coca-Cola acknowledged the squeeze Americans are facing from rising gas and grocery prices. “Cost pressures have accelerated, and all of this has an impact on many consumers,” Braun noted. Pepsi’s North American beverage volume fell 2% in its latest quarter, offering additional evidence that consumers could be cutting back or trading down to generic brands.

Bubbly Bubbly: US consumer confidence unexpectedly rebounded to the highest level in four months in October, the Conference Board said Tuesday. And even if traders were a bit skittish on Tuesday, Wall Street remains bullish on Coca-Cola in any case: Of 26 analysts surveyed by Zacks Investment research, 19 of them rate it as a strong buy.