Premium drinks and mini cans help Coca-Cola boost third quarter results despite tepid demand

Key Points

• Coca-Cola's third-quarter revenue increased by 6% to $12.41 billion, primarily driven by a 6% price increase.
• The company reported a 30% rise in net income to $3.69 billion, exceeding analysts' expectations with adjusted earnings of 82 cents per share.
• Coca-Cola is refranchising its bottling operations in Africa, selling a 75% controlling interest in Coca-Cola Beverages Africa to Coca-Cola HBC AG, while retaining a 25% stake.
• The transactions related to the bottling operations are anticipated to close by the end of 2026.

The Coca-Cola Co. said sales of premium beverages and mini cans helped boost its third-quarter results despite tepid demand in the U.S. and elsewhere.

The Atlanta beverage giant said Tuesday it continues to see a divergence among consumers in North America and Europe, with higher-income buyers opting for its more expensive brands like Smartwater, Topo Chico and Fairlife while middle- and lower-income consumers are under more pressure.

Henrique Braun, Coke's chief operating officer, said the company has focused on affordability by shrinking package sizes and leaning into sales of mini cans. Earlier this month, Coke announced it will sell individual, 7.5-ounce mini cans for the first time at North American convenience stores starting Jan. 1. The mini cans have a suggested retail price of $1.29.

“We're pivoting accordingly. We know that the consumer landscape has not changed,” Braun said during a conference call with investors.

Coca-Cola said its organic revenue rose 6% to $12.41 billion in the July-September period. That was in line with what Wall Street expected, according to analysts polled by FactSet.

Unit case volumes were up 1% worldwide, reversing a 1% slide in the second quarter. Case volumes were flat in North America and Latin America and down 1% in Asia. But they rose 4% in the company’s Europe, Middle East and Africa region. Coke said prices grew 6% in the quarter, partly due to the mix of beverages sold.

Coca-Cola Zero Sugar was a standout in the third quarter, with unit case volumes up 14% globally, while Diet Coke and Coca-Cola Light sales grew 2%. Case volumes for water, sports drinks, coffee and tea rose 3%, while dairy and juice volumes fell 3%.

The company’s net income jumped 30% to $3.69 billion. Adjusted for one-time items, Coke earned 82 cents per share. That was also higher than the 78 cents analysts forecast.

Coca-Cola reiterated its full-year financial guidance, including organic revenue growth of 5% to 6% and adjusted earnings-per-share growth of 3%. Coke also said it continues to expect the impact of tariffs to be “manageable.”

Coca-Cola shares rose 3.5% in morning trading Tuesday.

Coca-Cola also said Tuesday it is refranchising its bottling operations in Africa. Coke and Gutsche Family Investments, a private South African company, have agreed to sell a 75% controlling interested in Coca-Cola Beverages Africa to Coca-Cola HBC AG, a major bottler for the company based in Switzerland. The deal is worth $2.55 billion.

Coca-Cola will retain a 25% stake in Coca-Cola Beverages Africa. The transactions are expected to close by the end of 2026.

Coca-Cola Beverages Africa is the largest bottler on the continent, operating in 14 countries and accounting for 40% of Coke’s product volume in Africa. Coca-Cola HBC operates in 29 countries in Europe and Africa, including Nigeria and Egypt.

Coca-Cola Chairman and CEO James Quincey said Tuesday that the deal in Africa and a similar transaction in India in July were the last two big pieces of a bottler refranchising plan that Coke set in motion a decade ago.

Quincey said the strategy helps Coke focus more on brand building and innovation while bottlers can invest in the manufacturing system.

“The bottler performs better and it helps us drive overall growth for the total system, so that the combination grows faster and is more profitable,” Quincey said.

Rival PepsiCo is under some pressure from an activist investor, Elliott Investment Management, to refranchise its bottling operations in North America.