Coca-Cola downplays weight-loss drug fears as it raises revenue forecast

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Coca-Cola has emphasised that more than two-thirds of its portfolio is made up of low and no-calorie products as consumer groups respond to concerns that the growing use of obesity drugs such as Ozempic could erode sales if patients were to buy fewer unhealthy food and drinks. 

The drinks giant’s chief financial officer John Murphy told the Financial Times that Coca-Cola had not seen any discernible impact from the drugs and that it would continue to offer products for consumers looking to manage their calorie intake. 

“There’s a lot of different views out there as to whether it is or is not having an impact,” said Murphy, adding that for people looking to manage their calorie intake Coca-Cola had “a vast portfolio”. 

“Our overall total beverage strategy is one that will continue to allow us to develop and tailor solutions as these topics come up . . . 68 per cent of our portfolio today is low or no calorie,” he said.

Analysts have warned that the growth outlook for drugs such as Wegovy and Ozempic, which are prescribed for diabetes but often used for weight loss, could hit sales of packaged food and drinks.

Earlier this month, Walmart’s chief executive John Furner said that customers taking the obesity drugs were buying less food, leading to a modest sell-off in consumer staples stocks, with Mondelez and PepsiCo shares sliding 7 and 5 per cent in the following days. 

Coca-Cola shares also slid approximately 5 per cent following the Walmart comments.

PepsiCo’s chief financial officer Hugh Johnston made similar comments to those at Coca-Cola, saying the company had seen no impact on sales. “The adoption of these [drugs] are likely to be pretty slow . . . they’re obviously quite expensive and they’re injectable drugs,” he said.

Early studies and forecasts indicate that consumers taking the drugs are more likely to eat healthier, whole foods, and fewer foods high in salt, sugar and fat. Patients taking the drugs could reduce their daily calorie intake by up to 30 per cent, according to Morgan Stanley.

Coca-Cola’s share price has languished despite continued better than expected performance over the past few quarters.

The Fanta and Sprite maker raised its revenue forecast on Tuesday following strong third-quarter sales as consumers bought more fizzy drinks despite continued price rises. It raised prices 9 per cent in the three months to the end of September, while volumes rose 2 per cent.

Third-quarter revenue grew 8 per cent from a year ago to $12bn, beating analysts’ expectations. Coca-Cola now expects organic revenue growth of 10 to 11 per cent for the full year, compared with its previous forecast of an increase of 8 to 9 per cent.