Atlanta-based Coca-Cola said new tariffs on aluminum announced by the Trump administration will increase the cost of cans for its business of selling beverages in the U.S., but CEO James Quincey said the company has a series of strategies to adapt.
The company can shift to make more plastic bottles and raise prices. It can also make changes in its supply chain and use hedging on key materials — such as aluminum — to manage costs and supply, according to Quincey, speaking during a Tuesday conference call with analysts on the company’s financial results.
“If aluminum cans become more expensive, we can put more emphasis on PET (plastic) bottles,” he said.
And, he added, “it’s all about relative pricing,” he said. “We can seek to adapt.”
Quincey’s remarks came as the company reported net operating revenues of $47 billion in 2024, up 3% year-over-year.
Coke’s net income was $10.6 billion for the year, down 1% as it saw growing sales of soft drinks while facing economic volatility in some regions around the world.
Quincey said the aluminum tariffs affect its U.S. business, while Coke sells its beverages around the world, with major segments in Latin America; Asia Pacific; and Europe, Middle East & Africa.
“We are predominantly a local business when it comes to making each of the beverages,” he said. “While it’s a global business, it’s very local.”
Coca-Cola’s beverages are distributed through about 200 bottling partner firms with nearly 1,000 production facilities around the world. Bottling partners buy concentrates and syrups from Coca-Cola to make many of the beverages, including Coca-Cola and Sprite.
“The vast majority of everything that’s consumed in the U.S. is made in the U.S., similarly with virtually every country around the world,” he said. “Every bottler will be importing something from somewhere as a piece of the puzzle. But the economics are more predominantly local than they are global, and so (tariffs are) a piece of the puzzle we need to manage through.”
Beyond aluminum tariffs, the company is also preparing for other factors that include rising prices on agricultural products, like orange juice and coffee, and currency exchange pressures.
He said the 25% tariff on aluminum is “not insignificant, but it’s not going to radically change a multibillion-dollar U.S. business,” he said. “It’s a cost. It’ll have to be managed. It would be better not to have it relative to the U.S. business. But we are we are going to manage our way through.”
Looking forward, the company expects to see revenue continue to grow this year.
“I think we control enough variables that we can adapt and mitigate our way through what is happening,” Quincey said.
Ozempic effect
Another dynamic that could affect soda sales is the soaring popularity of weight-loss injectables Ozempic, Wegovy and other GLP-1 prescription drugs.
“We continue to see anecdotal evidence of the impact of GLP-1s on consumption of food and beverages,” Quincey said. “So far, our take is it’s not a big aggregate factor for the beverage industry or the nonalcoholic beverage industry,” he said, citing a 1% increase in Coca-Cola’s North America sales volume in the fourth quarter.
Quincey also nodded to the fact that Coke sells not only sugary sodas but diet soft drinks, iced tea, juice, Fairlife milk and bottled water.
“We are a total beverage company,” he said. “We believe we can adapt to anything that comes at us.”
Competition from ‘modern sodas’
Among Coca-Cola’s competitors is not just its biggest rival PepsiCo or a new wave of diet drinks, but also a growing force of new soda makers like Poppi and Olipop. One analyst asked Quincey about Walmart adding “modern soda” shelves.
Quincey took a collegial approach to the relative newcomers in the soda industry.
“Look, it’s great news that people are innovating and willing to create new brands and dedicate more shelf space to the beverage industry,” he said. “In the end, these are, these are soda beverages that are great tasting. That’s the central idea. And I think, you know, to the extent that’s enduring, we’ll take a really hard look at it.”
A report in Ad Age in December speculated that Coca-Cola and PepsiCo plan to launch products to compete with Olipop and Poppi.
“But I think the most important thing to take from this is (that) the confidence in the overall industry of beverages continues to grow,” he said. When it comes to creating and growing beverage brands, “We are, by far and away, the clear leaders in the industry and the winners,” he added.
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