Yahoo Finance Coca-Cola has a 'right' to compete in the alcohol industry, CFO says
Coca-Cola continues its push into alcohol by teaming up with Jack Daniels, Constellation Brands, and Molson Coors.
Coca-Cola (KO) is moving beyond the experimentation stage when it comes to ready-to-drink alcohol.
"There is a lot of white space out there [in alcohol]," Coca-Cola CFO John Murphy said on Yahoo Finance Live (video above). "We believe that we have a right to both compete and to play in that space, and we are exploring. We are exploring in a number of areas."
One of Coke's opportunities with the highest potential is already rolling out globally.
Coca-Cola and Jack Daniels owner Brown-Forman (BF-A, BF-B) announced an agreement in late June 2022 to distribute the Jack & Coke canned cocktail. The product, which channels a favorite drink ordered at bars for decades, contains about 5% alcohol and comes in full-sugar and zero-sugar options.
Murphy told Yahoo Finance Live the product will begin flowing in the U.S. in March ahead of the spring break season.
Earlier in 2022, Coca-Cola inked a deal with beer and wine maker Constellation Brands (STZ) to distribute alcoholic Fresca.
And then around the same time, Coca-Cola also unveiled a deal with Molson Coors to roll out Topo Chico hard seltzer.
Murphy says Coke has found "good traction" with the Topo Chico beverage in the marketplace, though he didn't reveal sales figures.
"It's going to be a cumulative impact on a number of initiatives that I believe will give us the wherewithal to see this as a material source of long-term growth," Murphy says of the alcohol push.
Coke's expansion into alcohol arrives as its core portfolio of sodas and other beverages continues to see demand recover from the depths of the pandemic.
On Tuesday, the company's key measure of adjusted organic revenue growth easily surpassed analyst forecasts on the back of strong demand for Coke Zero, coffee beverages, and higher prices. Adjusted operating margins improved by 60 basis points from a year ago.
The company said it expects to see full-year organic sales growth of 7% to 8%, above analyst estimates of 7.2%. Earnings are expected to rise 4-5%.
Coca-Cola stock fell slightly on Tuesday, and the company had the third most visited ticker page on the Yahoo Finance platform.
"Investor expectations heading into today’s print were high, particularly following PepsiCo's recent strong results, and Coca-Cola delivered with an impressive top line beat, although headwinds from the BODYARMOR acquisition and higher operating costs drove EPS in-line with our/FactSet cons estimates," explained Goldman Sachs beverage analyst Bonnie Herzog in a client note. "We believe Coke's top line momentum and strong FY23 guidance suggests confidence in its ability to execute in a challenging environment."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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