Coca-Cola reported robust demand in the fourth quarter despite implementing price increases, a trend largely driven by consumers in the United States, Japan, and Brazil. The company observed a 1% global increase in unit case volumes, with North America reversing previous flat or declining sales trends. While popular products like Coca-Cola Zero Sugar, water, sports drinks, coffee, and tea saw significant growth, juices and dairy items experienced a downturn. Despite these positive sales figures, the company's revenue of $11.8 billion fell short of Wall Street's $12.05 billion expectation, leading to a nearly 4% drop in share prices before the market opened. Net income, however, increased by 3% to $2.3 billion, with adjusted earnings per share exceeding analyst predictions.
In the final quarter of last year, Coca-Cola enacted a 4% price increase across North America and a 1% increase globally. This strategy, while boosting demand, also revealed a divide in consumer behavior. Higher-income individuals in North America and Europe showed a preference for premium brands such as Smartwater, Topo Chico, and Fairlife, while middle and lower-income consumers were more sensitive to pricing. In response, Coca-Cola introduced 7.5-ounce mini cans in North American convenience stores to offer more affordable options to budget-conscious buyers.
Looking ahead to 2026, Coca-Cola projects an organic revenue growth of 4% to 5%. This forecast, however, is slightly below the 5% growth achieved in the previous year and the expectations of some analysts for the current year. The company's stock decline highlights investor concerns about future growth despite recent demand surges. In a significant leadership change, Henrique Braun, the current chief operating officer and a long-standing executive, is set to become CEO on March 31, 2026. James Quincey, the current Chairman and CEO, will transition to executive chairman, marking a new chapter for the beverage conglomerate.
Despite a strong fourth quarter showing increased consumer demand even with higher pricing, Coca-Cola's stock experienced a downturn due to a cautious financial outlook. The company's strategic price adjustments and product diversification efforts, particularly with Coca-Cola Zero Sugar and other non-soda beverages, contributed to its volume growth. The impending leadership transition to Henrique Braun signals a period of strategic evolution for the company as it navigates varying consumer purchasing patterns and aims for sustained organic revenue growth in the coming years.