World Cup hydration breaks help Coca-Cola lift its annual forecasts

While fans complained about World Cup hydration breaks ??slowing the pace of the games, top sponsor Coca-Cola was pleased with the boost they provided to its energy drinks sales that drove strong quarterly results and a raise in annual targets. 

The hydration breaks that split the matches into four segments created additional advertising opportunities for brands and lined the pockets of ‌broadcasters, such as Fox.

  "I'm not sure whether these hydration breaks are ​going to be a permanent feature of the soccer world, ​but we were not unhappy with them in the World Cup," CFO John Murphy told Reuters in an interview, noting a particular boost ​for the company's Powerade brand.

 

  Increased consumption during the World Cup added to the momentum for Coca-Cola's trademark beverages and zero sugar sodas that have enjoyed resilient demand despite a broader softening in spending on non-essential items, particularly from lower-income consumers in the United States.

  The beverage giant's second-quarter comparable revenue rose about 6% to $13.37 billion, beating estimates of $13.16 billion, according to data compiled by LSEG.

  The most important thing would be how much of the ​World Cup, whether it was the hydration breaks or otherwise, drives a sustainable increase in demand, rather than it being a one-time bump, said Kevin Grundy, analyst ‌at BNP Paribas.

Coca-Cola's shares hit a record high of $90.13 and were up as much as 7% on Tuesday, on track for ​their best day since June 2009.

 

RISING COSTS

  The company reported a broadly positive quarterly performance, with volume and margin growth offset by higher input costs. Murphy said aluminum and PET costs this year increased more than Coca-Cola had anticipated.

  Those costs were sparked by the war in Iran that has disrupted energy supplies and spiked fuel ‌prices. Coca-Cola said in April while it was working with ​its bottling partners to mitigate the impact, it had also locked ‌in some lower prices from before the disruption began in February.

  But costs may still rise as the conflict drags on. Several companies have ‌warned ??of input cost inflation in the second half of the year, including PepsiCo. Coca-Cola's Murphy said the company would have more to say ​on expectations around these costs for 2027 in October.

  Coca-Cola's shares have risen about 20% so far this year and outperformed rival PepsiCo, which has suffered from weak snacking demand in the United States in recent quarters.

  Coca-Cola has ​previously raised prices and offered smaller pack sizes, as well as invested in some beverages in its portfolio, including ready-to-drink teas as well as milk products from its fairlife brand, which boosted revenue.

  On an adjusted basis, Coca-Cola's second-quarter operating margin grew ‌to 35.6% from 34.7% a year ago. Its adjusted earnings per share of 97 cents also beat estimates by 5 cents.

  The company now ‌expects 2026 organic revenue growth of about 5%, compared with its prior target of a 4% to 5% rise. It also sees 9% to 10% growth of comparable earnings per share, up from its earlier target of an 8% to 9% increase. One weak spot for the company was, however, India, where Coca-Cola has faced aluminum can shortages. Murphy said the company lost market share in India in the past quarter.