At a Glance

  • Atlanta-based Coca-Cola is seeking to "stay relevant" to a broad customer base—including those feeling financial pressure—by continuously balancing price, volume, and mix of its products. Coca-Cola CFO and President John Murphy said this at a conference on Wednesday.
  • Murphy noted that behind headlines of "resilient consumers," the reality is more complex, with some consumers "less resilient than expected" and unable to afford the typical basket of goods and services.
  • According to the transcript of his remarks, those earning less than $50,000 or $60,000 a year are feeling the pressure and lack purchasing power, so "something has to give." He said: "The challenge is how to be the last thing they give up."

Deep Dive

Consumer price sensitivity is rising across industries, with 57% of CFOs reporting growth in their sectors, as previously reported by CFO Dive. On May 22, a University of Michigan survey showed that surging gas prices pushed consumer sentiment to historic lows.

On Wednesday, Deutsche Bank equity analyst Steve Power asked Murphy what issues need attention to sustain the company's performance amid the turmoil. Murphy emphasized relationships with partners, suppliers, bottling partners, customers, and other stakeholders, as well as the company's employees, resources, and talent. Another focus is that the company is not immune to major unexpected events, such as a war with Iran.

"In December, we didn't have the latest version of the Middle East crisis on our radar," Murphy said, "but so far, our system is responding, not perfectly, but without fear or hesitation."

The beverage giant also faces headwinds in adapting to changing consumer tastes away from sugary drinks and toward more water and sports drinks, as reported by Food Dive, a sister publication of CFO Dive.

In his remarks, Murphy emphasized that the energy drink segment is very important and part of a long-term strategy for non-sparkling beverages, including sports drinks. "This is not a problem you solve at breakfast; it's an issue that requires ongoing attention and performance management," he said.

In April, Coca-Cola reported first-quarter net income rose to $3.9 billion for the period ending April 1, with net operating revenue of $12.4 billion, compared with net income of $3.3 billion and revenue of $11.1 billion in the same period last year.