Coca-Cola turns to refillable glass bottles in fight against inflation

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A man walks past shelves of Coca-Cola bottles and cans at a Shoprite store inside Palms shopping mall in Lagos
A man walks past shelves of Coca-Cola bottles and cans at a Shoprite store inside Palms shopping mall in Lagos, Nigeria November 5, 2019. REUTERS/Temilade Adelaja/File Photo

April 25 (Reuters) - Coca-Cola Co (KO.N) warned on Monday consumer demand could slow as rampant inflation shows no sign of cooling and said it was focusing on more affordable and refillable glass bottles in markets facing the biggest pinch from price increases.

Demand for sodas and other packaged foods has so far held strong despite price increases that resulted from higher costs for everything from aluminum cans to sugar, labor and transportation.

Coca-Cola Chief Executive Officer James Quincey said the resilience in demand will not last forever.

"I do not expect (price) elasticities to be inelastic going forward. I expect elasticity to increase at some point in the future. Will that be next quarter? Or will that be next year? I can't give you the answer to that," Quincey said on call with analysts.

Procter & Gamble (PG.N) earlier this month said it expected demand for its U.S. feminine, home and oral care products to soften as summer price increases feed through to shop shelves. read more

To prepare for the expected drop in consumer purchasing power, Coca-Cola said it was expanding the distribution of cheaper returnable or refillable glass bottles in emerging markets in Latin America and Africa.

It is also experimenting with returnable bottles in the Southwest United States.

Coke's net revenue rose 16% to $10.5 billion in the first quarter and its shares were up 1.6% in morning trading.

The company said suspension of its operations in Russia would impact its annual profit by 4 cents per share and annual net revenue by about 1% to 2%.

It reported a first-quarter profit of 64 cents per share, beating estimates of 58 cents, according to Refinitiv data.

Reporting by Uday Sampath and Praveen Paramasivam in Bengaluru; Editing by Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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Uday has been reporting on U.S. retail and consumer companies for over five years and has written multiple analysis pieces on the space, including about a flurry of mergers in the toy industry, how an aging population benefited the golf industry and how weak sales from retailers spooked global markets. Uday has a bachelor's degree in commerce from Christ University Bangalore, India.

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