Coca-Cola beats on Q1 earnings, cites steady demand

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss first-quarter earnings for Coca-Cola.

Video transcript

JULIE HYMAN: Coca-Cola out with a beat on the top and bottom line fueled by price hikes, while its sparkling soft drinks grew by 3%, led by strong performance in Asia-Pacific and Latin America. Those shares are up just about 1%.

And so what's different-- you know, I have to admit I was expecting a Procter & Gamble situation, right, where-- and what we've seen from Coke in the past and some of the other consumer packaged-goods companies is you raise prices, and so numbers beat, but unit volume goes down. But that doesn't seem to have been the case at Coca-Cola.

BRAD SMITH: No, and there was better performance on their zero-sugar products, at least on the volume side. And that was kind of what the interesting part was in P&G was where the volumes were actually down but prices were higher. Bye, bye, phone.

And so ultimately here as we're looking through some of those units that did do well, it was that Coke Zero product. It was the kind of sparkling-- there it is-- sparkling soft drinks. That was up. Water and sports did well.

And then at the end of the day as well, they decided to highlight at the beginning of this, which caught the attention of our newsroom, smartwater, which ensued a debate about who has the best bottled water. But a big-- a big multibillion dollar brand that is available in 28 markets and grew 8% on volume during the first quarter. So all that as we're discussing volume, and there was even, of course, the average selling price. That was up 11% year over year.

JULIE HYMAN: Yeah, I'm just looking at some of the early analyst commentary here. JPMorgan calling out the beat in unit volume, which we've just been talking about, but also gross margin. Which, you know, when you raise prices and your-- you know, that that, presumably, is helping things.

So we'll get some more as we talk to an analyst in the next hour and as we have a chance to sort of go through the call. I'll be interested to hear what they have to say about costs and where costs are moderating and where costs are continuing to go higher.

BRAD SMITH: Absolutely. And that interesting callout that we had mentioned earlier on in the show as well on the AI side here.

JULIE HYMAN: Oh yeah.

BRAD SMITH: This was one of the highlights. They said that they're collaborating with cutting-edge technology platforms to experiment, learn, and drive results. Specifically they've collaborated with OpenAI and Bain and Co to harness ChatGPT as well as DALL-E. And so this is going to be kind of integrated into their marketing elements and business operations there.

And if you were scratching your head trying to figure out what AI has to do with a soft-drink manufacturer--

JULIE HYMAN: Yes.

BRAD SMITH: --it has a play within the marketing elements for the company.

JULIE HYMAN: So here's the example that they-- they already did this, Create Real Magic. It allows consumers to become digital marketeers by leveraging AI to generate original artwork with iconic creative assets from the Coca-Cola archive. So I guess if you're anybody, you can go and play around with Coke stuff. [INAUDIBLE]

BRAD SMITH: If you want to have a different image of the Coca-Cola polar bear drinking it somewhere else, put him in the Amazon rainforest for me drinking Coca-Cola.

JULIE HYMAN: Well, that might be where he ends up if things keep going the way they're going.