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Globe and Mail
3 days ago
- Business
- Globe and Mail
Can Coca-Cola's Emerging Market Growth Offset Flat U.S. Volume?
The Coca-Cola Company KO reports its operational results by geographic segments, broadly classified into two market categories based on economic status and growth dynamics — developed (including the United States, Canada, Western Europe and the mature Asia-Pacific countries) and emerging markets (comprising Latin America, Africa and the Middle East, Eastern Europe and Eurasia, and the emerging Asia-Pacific). The company's first-quarter 2025 results underscore a clear divergence between these two markets, highlighting contrasting dynamics in developed and emerging markets. Coca-Cola delivered robust performance across emerging markets. India stood out with strong volume growth, expanded outlet reach and increased digital penetration. China returned to growth as portfolio realignments and effective Lunar New Year campaigns paid off. Africa also showed resilience, growing volume despite inflation, through affordable packaging and local campaigns like Sprite Spicy Meals and Schweppes Born Social. In Latin America, markets like Brazil and Argentina offset softer results in Mexico, where Coca-Cola has already launched corrective affordability strategies. While revenues and profits grew in North America, flat volumes pointed to soft consumer sentiment, especially among Hispanic consumers. External factors like severe weather, calendar shifts and misinformation campaigns affected the Trademark Coke, particularly in the southern United States despite resilience from brands like fairlife, Coke Zero and Topo Chico, the company acknowledges a need for stronger execution and agility to reignite volume growth domestically. The beverage giant's local-first model and deep market integration across emerging economies offer a valuable cushion against developed-market stagnation. With more than 30 billion-dollar brands and a strong innovation pipeline, Coca-Cola appears well-positioned to leverage high-growth geographies to balance short-term headwinds in the U.S. market. KO's Competition in the Emerging Markets PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP remain key competitors for Coca-Cola in the United States and emerging markets. PepsiCo's emerging market performance outpaces its developed markets on strong demand, expanding middle-class populations and localized strategies. While developed markets like North America face volume softness and consumer trade-downs, PEP is capturing growth in emerging regions such as India, Mexico, Brazil and Africa through tailored pricing, localized flavors, and increased investments in manufacturing and distribution infrastructure. The company focuses on affordability, local flavors and digital go-to-market strategies to boost access and penetration. PepsiCo's footprint overlaps significantly with Coca-Cola's in key markets, but its dual-category model offers a strategic edge. As consumption rises in emerging markets, PEP is well-positioned to capture sustained, long-term growth. Keurig Dr Pepper remains primarily focused on the United States, with limited emerging market exposure compared with Coca-Cola. While it performs well in developed markets, anchored by strong brand portfolios in coffee, carbonated soft drinks and flavored waters, KDP is gradually expanding internationally. Its emerging market strategy includes targeted partnerships, selective brand rollouts and the leveraging of its successful U.S. beverage models in markets like Mexico and parts of Central America. Keurig Dr Pepper's emerging market footprint overlaps with KO's in regions like Mexico, but Coca-Cola holds a stronger position with deeper distribution and broader offerings. Though still in the early stages globally, KDP's focused approach and strong brand portfolio can support steady growth as it builds scale in key high-potential markets over time. The Zacks Rundown for Coca-Cola KO shares have rallied 11.8% year to date compared with the industry 's growth of 7.2%. From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 22.62X, significantly higher than the industry's 18.59X. The Zacks Consensus Estimate for KO's 2025 and 2026 earnings implies year-over-year growth of 3.1% and 8.2%, respectively. Earnings estimates for 2025 have been northbound in the past 30 days, whereas that for 2026 have been unchanged in the same period. Image Source: Zacks Investment Research Coca-Cola currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis Report Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report
The Independent
12-06-2025
- Business
- The Independent
Coca-Cola and other companies losing sales as Hispanic residents stay home and skip shopping over arrest fears
Coca-Cola and other major brands have seen sales slip in recent months, partly due to Hispanic customers pulling back from stores and staying home amid 'a fear of Immigration and Customs Enforcement raids.' The soft drink giant expressed concern after its sales volume in North America fell 3 percent in the first quarter of 2025. While there is no data that unequivocally links Hispanics' immigration fears to pulling back from spending, executives at big brands acknowledged those concerns are likely having some impact on sales, The Wall Street Journal reports. The company emphasized the importance of the 64 million U.S. Hispanic consumers who hold $2.1 trillion in spending power. 'In addition to challenges with severe weather and calendar shift, volume was impacted by weakening consumer sentiment as the quarter progressed, particularly among Hispanic consumers,' Coca-Cola's CEO James Quincey said during an earnings call on April 30. 'Some of the geopolitical tension and Hispanic pullback also affected the Mexican [market], particularly the border region, which is very connected to the U.S.,' Quincey added on the call. The sentiment was backed by Jim Sabia, the president of Constellation Brands, which owns Modelo and Corona. Sales of Modelo, which overtook Bud Light as America's best-selling beer in 2023, have also dipped slightly lately. 'There is a fear of the ICE raids,' Sabia said at the Goldman Sachs Global Staples Forum last month. 'There's a fear out there, so these consumers are changing their behaviour,' Sabia said of Hispanic consumers. 'That's in the off-premise trade. In the on-premise trade, they're cutting back on social events. They're cutting back on restaurants.' President Donald Trump's trade tariffs are also likely impacting Hispanic consumers' shopping habits. In one of the company's monthly surveys earlier this year, Hispanic consumers said they were worried about the Trump administration's immigration crackdown and inflation from the tariff war. The survey found 75 percent of Hispanic consumers were scaling back on eating out and going to social gatherings where beer was served, The Journal noted. Likewise, the retailer JD Sports said it was noticing a 'huge decline in traffic' in its Shoe Palace stores, which have a large Latino customer base. CEO Regis Schultz said he could 'definitely' see the impact of the immigration policy on footfall. Coca-Cola's CEO said the company was also suffering following false rumors the company laid off Latino staff and reported them to ICE agents. The fake claims prompted Hispanic customers to boycott the drinks. 'It wasn't the first piece of misinformation, disinformation, or anything else nefarious about the Coca-Cola brand, and I'm sure it won't be the last,' Quincey said. 'But we are very focused on recovering from it.'
Wall Street Journal
12-06-2025
- Business
- Wall Street Journal
ICE Raids Have Sent Latino Shoppers Into Hiding and Big Brands Are Hurting
Coca-Cola has long looked to Hispanic consumers for sales growth—a group the company has said holds an annual $2.1 trillion in spending power. Now Coke and other brands are discovering what it means to lose them.
