James Gard: Welcome to Morningstar. Earnings season continues and we’ve just had results from Coca-Cola, one of the world’s most enduring consumer brands. Investors were keen to hear about price increases, inflation, the retreat from Russia – and why it’s retiring a famous drinks brand. Of which more later. One of the most important concepts in the high inflation era is “pricing power”. Can top brands keep rising prices without putting off custimers? The answer, in Coca-Cola’s case, appears to be yes. Prices will continue to rise this year, it warned consumers, but these should ease off as inflation cools. For 2022, revenue was higher than 2021 but net income was lower.
Looking ahead, emerging markets like Brazil, Mexico and India will be key to the company’s fortunes. One market it won’t be focusing on, though, is Russia. Coca-Cola joined the exodus of consumer brands from the country last year – and it’s put a figure of nearly 100 million dollars on that withdrawal. On a lighter note, shoppers of a certain age will mark the passing of Lilt, which was introduced in 1975 and promised a taste of the Caribbean. It’s now to be known as Fanta Pineapple and Grapefruit. Morningstar analysts are maintaining the fair value estimate of 58 dollars per share after the results, similar to its current market price. For Morningstar, I’m James Gard.
