INFLATION: Consumers Will Pay More for Their Favorite Brands

Coca Cola Christmas Truck Tour in Southend High Street. Thursday 15th December 2016. Photo courtesy of Southend-on-Sea City Council.

There is value in a long, branded relationship with your customer. Coca-Cola has one of the world’s best brand images, and the value of that shows in questionable economic times. Despite declining consumer sentiment, Coca-Cola reported strong second-quarter sales. Connar Hart reports for The Wall Street Journal:

Consumers are still filling up on soda even if they have to pay more.

Coca-Cola Co. on Tuesday reported strong second-quarter sales and raised its revenue outlook for the year as people return to theme parks, movie theaters and travel destinations despite price increases.

“We continue to see resilience and a lot of demand not just in the U.S. but across the world,” Coke Chief Financial Officer John Murphy said in an interview.

Consumers who missed experiences such as dining out and entertainment during the first two years of the Covid-19 pandemic are willing to spend more now, Coke Chief Executive James Quincey said on a call with analysts. Executives said the company is preparing for consumers’ purchasing power to come under increasing pressure in the second half of the year.

With talk of an impending recession hanging over the marketplace, Coca-Cola is closely monitoring changes in consumer behavior, Mr. Murphy said. Coke isn’t seeing much evidence of shoppers switching to lower-priced products, but the company is spending more on marketing better-value items, such as refillable glass bottles in Latin America and a new 1.25-liter bottle in the U.S., he said.

Coke is also spending more on digital marketing than traditional advertising channels to better reach consumers, Mr. Murphy said.

In addition to its namesake cola and other soft drinks, Coca-Cola makes Simply orange juice, Dunkin’ bottled iced coffee and smartwater bottled water. Last year, Coke bought full control of BodyArmor sports drinks. And the company last month announced it was partnering with Brown-Forman Corp. to launch a premixed, canned-cocktail version of Jack and Coke.