Coca-Cola (KO.US) Q3 Conference Call: Price increases remain manageable, but destocking and foreign exchange headwinds reduce visibility for Q4 and next year; CCBA divestiture restructures revenue profile

Zhitong Finance APP has learned that Coca-Cola (KO.US) has released its financial results for the third quarter of 2026 and held an earnings conference call.

In the third quarter, Coca-Cola's unit case volume grew by 5%, organic revenue increased by 7%, and concentrate sales outpaced unit case volume by 2 percentage points (due to timing of shipments). Price/mix grew by only 1%—with pricing contributing 4 percentage points, offset by a negative 3 percentage points mix impact, which the company attributes to geographic mix, investment timing, and category mix. Comparable gross margin improved by about 170 basis points, and comparable operating margin by around 110 basis points. Management cited underlying business expansion, foreign exchange tailwinds, and the favorable structural impact from last year's divestment of the Nigeria finished goods business as key drivers, emphasizing that margin expansion was not achieved at the expense of investment. Comparable EPS for the third quarter was $0.91, up 11% (including a 2 percentage point FX tailwind). Free cash flow for the first three quarters was $11.4 billion, net debt leverage was 1.3x EBITDA, below the target range of 2–2.5x. Full-year guidance was raised: organic revenue growth of at least 5% (factoring in mild destocking and 6 fewer sales days in Q4), comparable currency-neutral EPS (excluding M&A and divestitures) growth of at least 9%, comparable EPS growth of at least 11% (compared to 2025’s $3.00), and free cash flow of at least $13 billion; the effective tax rate for 2026 is expected at 19.7%. By region: North America saw revenue and value share increase but flat volume (July 4th holiday in Q2, some finished goods under pressure), with intra-quarter month-on-month improvement; Latin America saw volume rebound and value share rise; EMEA volume was up but several key Western European markets lost value share; Asia Pacific achieved simultaneous growth in volume, revenue, and profit, but price/mix was under pressure due to negative geographic mix and affordability initiatives. CEO James Quincey summarized three cross-market themes: Affordability initiatives are working, both sugar-free and classic lines are acquiring new customers, and execution combined with local relevance is helping the company win.

Key content from the analyst Q&A focuses on five main threads: First, lessons from major summer events and the high 2027 base—Quincey stated that the World Cup and the US 250th Anniversary were stress tests for end-to-end activation, with the technologies, data and AI capabilities used now extended to campaigns like Fanta Halloween (including tradeable connected packaging), and highlighted that value share has grown for 22 consecutive quarters. Second, the controllability of price/mix—CFO John Murphy acknowledged that this year’s price/mix may be around 2%, near a ten-year low, but after adjustment, the current quarter still has a 4-point base pricing component. The main drag comes from mix, of which about two-thirds derives from the company’s own actions or inherent mix changes this year (especially finished goods performance); excluding Topo Chico effects and investment timing, full-year price/mix is “basically within the range we want to deliver.” Third, reinvestment and margin—digital advertising spend achieved double-digit growth, in cooperation with bottlers, laying the groundwork for a strong 2027 start; Murphy expects future marketing investment will broadly track gross margin growth. Fourth, Q4 destocking and shipment rhythm—Murphy stated this is “the hardest year to align unit case volume and concentrate shipments in his tenure” (Q1 had 6 extra days; Q4 has 6 fewer days), and the current entry assumption is that full-year concentrate shipments will lag slightly behind unit case sales, with “several segments seeing destocking.” Fifth, cash flow and the IRS tax case—free cash flow is driven by business fundamentals, working capital improvement (cash conversion cycle at best levels in years), and capital expenditure timing (slow early in the year, catch-up in Q4); the company repeatedly referenced “optionality,” is waiting for a court verdict on the IRS case in coming months, and is prepared for both best and worst-case outcomes, with the current balance sheet “in the best state in years.”

The market’s focus is on three points. First is the debate over price/mix controllability: for the first time, management admits this metric could set a ten-year low this year, while stating about two-thirds of the drag is controllable—a key factor in judging whether the “2–3% volume + 2–3% price/mix” growth framework can be maintained in 2027. Second is visibility into Q4 and 2027: Murphy clearly stated that this is the hardest year in years to forecast shipping rhythm, destocking is built into guidance with “several segments” reducing inventory, and, given current FX rates and hedges, both 2027 revenue and EPS will face minor headwinds. Third are the CCBA divestiture and the potential India bottling IPO—CCBA (subject to regulatory approval) is expected to close in Q4, posing a 4-point revenue and 3-point EPS headwind for Q4, 8- and 2-point respective headwinds for 2027, though both positive for margins and returns; the India bottling IPO remains under exploration. One particular aspect: When asked if 2027 FX guidance includes the last 48 hours’ volatility, Murphy answered directly it does not; the numbers presented do not reflect very recent movement.

Statements Section

Operator: Hello everyone, thank you for joining The Coca-Cola Company’s Q3 2026 earnings conference call. After today’s prepared remarks, we will begin the Q&A session.

If you wish to ask a question, please press star one (*1). To withdraw your question, press star one again.

I now turn the call over to Vice President and Head of Investor Relations, Mr. Todd Bergler. Mr. Bergler, please begin.

Todd Bergler (Head of Investor Relations): Good morning and thank you all for joining. With me today are CEO James Quincey and President and CFO John Murphy.

We have posted related schedules, for the reconciliation of any non-GAAP financial metrics to GAAP results potentially referenced this morning, in the “Investors” section, “Financial Information” of our company website.

You can also find schedules providing gross margin and operating income analysis on the same site. Today’s call may contain forward-looking statements, including those regarding long-term earnings targets, which should be considered in conjunction with cautionary statements in our earnings news release and periodic filings with the US SEC.

After the prepared remarks, we will answer your questions. Please limit to one question at a time, and re-queue for follow-ups.

Now, I will turn it over to James.

James Quincey (CEO): Thank you, Todd, and good morning everyone. Our third-quarter results once again demonstrate the sustained strength of the Coca-Cola system.

We moved quickly and with discipline, enabling us to deliver strong results in an uneven environment. First, I’d like to thank all colleagues and our bottling partners worldwide.

Every day, they serve customers, support communities, and bring our brands to life. This year required resilience, agility, and strong execution, and our teams consistently rose to the challenge.

Their efforts make me more confident in our updated 2026 guidance and our long-term opportunities. This morning, I’ll start with an update on the global landscape and review our Q3 business performance.

I’ll then discuss how our system delivers at scale while remaining locally relevant to drive sustainable growth. John will then present the quarter’s financial results, full-year 2026 guidance, and early thoughts for 2027.

First, the global operating environment continues to evolve. Geopolitical disruptions are impacting many regions, cost pressures are accelerating, and all of these are affecting many consumers.

Despite this, our confidence in the long-term opportunity remains unchanged. We have a strong portfolio of 32 billion-dollar brands, and together with our bottler partners, an unparalleled system reach.

These advantages are critical, but how we use them matters just as much. Over the years, we’ve strengthened capabilities in consumer recruitment, digital, revenue growth management, and system execution.

By staying close to consumers and maintaining constructive dissatisfaction, we continue to adapt in a dynamic environment. We’re seeing more of this reflected in results—including this quarter’s.

Volume grew 5%; organic revenue by 7%. Stepping back, our longer-term trajectory reflects more balanced drivers of revenue growth.

We are investing in the business even as we expand margins. We achieved double-digit comparable EPS growth and won value share.

What encourages me more than the top-line numbers is how we are growing. Disciplined investment and digital capabilities are driving momentum across many markets and brands.

But we know there’s more work to do. We’re still learning how to translate consumer insights into innovation and balance scale with local relevance to drive stronger execution across the system.

Our focus is simple: keep learning, and keep getting better every day. This quarter, I spent lots of time with colleagues and bottling partners in several markets.

Such field experiences reinforce the vital importance of understanding local needs and responding to consumers—that’s a true advantage for our global system. While each market is unique, three themes are consistent: First, affordability initiatives are working; second, both sugar-free and classic lines are recruiting consumers; third, execution and local relevance are helping us win.

Let me elaborate across our business. Starting in North America, we delivered revenue growth and gained value share.

Volume was flat, partly due to July 4th timing and temporary difficulty in some finished goods businesses, but month-on-month this improved across the quarter. In our total beverage portfolio, many brands had strong volume growth, including the Coca-Cola trademark, fairlife, Powerade, Fresca, and smartwater.

Mr. Pibb continued its success with another quarter of double-digit volume growth.

We’re applying learnings from sports marketing to our “Fan Work is Thirsty Work” upgraded platform, using team packaging, retail activation, and locally relevant fan experiences to embed Coca-Cola in football fan communities. For Halloween, we combined Fanta’s “Haunted Universe” with limited Ghost Face punch flavor and collectible packaging, bringing the experience from screen to shelf.

We’re also creating new opportunities across the portfolio. fairlife expanded the Nutrition Plan line and brought back fan-favorite Vanilla. BODYARMOR Flash I.V. extended hydration occasions from training into broader use, with sparkling, zero-sugar forms and added caffeine, electrolytes, and metabolic support. In Latin America, teams responded to early-year challenges with targeted market actions, leading to clear acceleration in Q3.

We achieved volume growth, balanced revenue growth, and won value share on broad regional improvement. In Mexico, the environment remains challenging, but progress is encouraging—we combined affordability, strong RGM capabilities, local marketing, and disciplined execution.

In Brazil, total beverage portfolio momentum stayed strong. The Coca-Cola trademark turned in another strong quarter, with Sprite and sports drinks also performing well.

We continue connecting brands to local interests, including Rock in Rio, and investing in growth opportunities across the beverage portfolio. In Argentina, the backdrop remains challenging.

We have effective plans in place; there’s more to do, but we’re encouraged by progress in the region. Turning to EMEA, starting with Europe: volume increased, but several key Western European markets lost value share and we’re taking action to improve.

After the World Cup, we pivoted to football activation around the Premier League and Bundesliga, building everyday consumption via our “Meals” platform. We supplemented these with affordable 500ml “super cans” and focused on price-pack architecture to help recruit consumers and drive transactions.

In Africa, despite lapping a tough volume comparison, we won value share and achieved high-single-digit volume growth. In Nigeria, we marked the system’s 75th anniversary with end-to-end activation.

To meet South Africa’s evolving needs, we adapted an affordable single-serve pack from India, giving it a local name, Masheshe (meaning “fast”). We also activated our partnership with rugby’s Springboks, launching the “Be a Bok” campaign and limited collector player cans.

In Eurasia and the Middle East, continued geopolitical conflict disrupts parts of the region. Our system showed resilience, delivering another strong quarter with volume and value share growth.

From inviting Pakistani Coke Studio artists, to affordability drives, to local flavor innovations like Sprite Cucumber Mint and Fanta Pomegranate, our teams continue adapting to the dynamic regional environment. In Asia Pacific: performance varied by OU, but we are encouraged by progress in many markets.

We gained value share, grew volume, revenue, and profit, but price/mix was under pressure from negative geography and affordability initiatives. India delivered strong volume expansion; every one of our top ten brands posted double-digit growth.

We’re expanding affordability and premiumization at once, ramping execution, and growing in emerging channels. For example, Sprite with “Spicy” messaging extended into India’s QSR channel, with meal deals, social content, and influencer tie-ups, nearly driving 20% volume growth in the region.

In China, consumption remains subdued, spending is cautious, and domestic demand is soft. Still, we achieved strong volume growth again, led by Coca-Cola and Fanta.

We continue building digital capabilities to create more consumption occasions and connect consumers in new ways. These are supporting RTD pack sales and driving significant digital commerce and emerging channel growth.

In Japan, volume declined—consumers remain under macro pressure, exacerbated by adverse weather. This quarter we gained share, expanded Coca-Cola’s consumer base, and accelerated sugar-free volume growth.

We’re adjusting product and execution to changing demand. In ASEAN and South Pacific, many key markets saw broad-based volume gains.

Affordability, zero-sugar, innovation, and stronger execution are recruiting consumers and creating new opportunities, such as the launch of Coca-Cola Zero Zero in Thailand. In Vietnam, we’re rolling out affordable single-serve packs, now in over 400,000 outlets with high repeat rates.

In summary, despite an uneven global environment, we’re encouraged by the momentum in our business and are confident we can get more from more markets and brands. Progress across the Coca-Cola system gives me energy.

We keep learning, keep raising the bar, and always look for new ways to create value. The actions we’re taking help us perform now, but also strengthen our long-term value-creation capability.

With that, I’ll hand it to John.

John Murphy (President & CFO): Thanks James, and good morning everyone. Our performance once again demonstrates the strength and adaptability of the business.

For the quarter, organic revenue grew 7% and unit case volume 5%.

Two-year average volume growth is 2% YTD, reflecting more durable and balanced revenue growth drivers. Due to concentrate shipment timing, concentrate sales outpaced unit case volume by 2 percentage points.

Price/mix increased 1%, driven by 4 points of pricing, partly offset by 3 points of unfavorable mix, mainly from geographic, timing, and category mix.

Comparable gross margin improved about 170 bps, and comparable operating margin about 110 bps. Both reflect business expansion, FX tailwind, and favorable structural mix from last year’s Nigeria divestiture.

Importantly, margin expansion did not come at the expense of investment. We are investing in brands and executing RGM strategies to better serve consumers with brands, packs, price points, and occasions.

Overall, comparable EPS for Q3 was $0.91, up 11%, including a 2-point FX tailwind. Free cash flow year-to-date was $11.4 billion, up year-over-year.

We maintain a strong balance sheet, with net debt leverage at 1.3x EBITDA, below our 2–2.5x target. While we await court resolution on our IRS dispute, we continue to prudently manage the balance sheet.

We have confidence in our long-term free cash flow generation and the optionality it provides heading into Q4 and 2027. Priorities are unchanged: invest in the business and return capital to shareholders.

Turning to full-year 2026 guidance. We now expect organic revenue to grow at least 5%, reflecting mild Q4 destocking and 6 fewer selling days.

Our overall commodity exposure remains manageable. However, cost pressures are rising, mainly from higher logistics and transport.

We expect comparable currency-neutral EPS, excluding M&A and divestitures, to grow at least 9%. Divestitures are expected to be a roughly 2-point headwind to comparable net revenue and about a 1-point headwind to comparable EPS.

This assumes the pending sale of Coca-Cola Beverages Africa (CCBA) will close in Q4, subject to regulatory approval. Based on current FX and hedge positions, we still expect FX to be about a 1-point tailwind to comparable net revenue and about a 3-point tailwind to full-year comparable EPS.

We now expect the underlying effective tax rate for 2026 to be 19.7%, reflecting some favorable items this year we do not anticipate recurring.

Together, we now expect comparable EPS to grow at least 11% versus 2025’s $3.00. Finally, we now expect to generate at least $13 billion in free cash flow for 2026.

A few points for the balance of the year: Reminder, Q4 will have 6 fewer days compared to last year.

We also expect mild destocking in Q4, thus full-year concentrate shipments will lag unit case sales slightly.

For Q4, when CCBA is expected to complete refranchising (divestiture), we see a 4-point headwind to comparable net revenue, 3-point headwind to comparable EPS, with minor margin benefit. While it’s early for specific 2027 guidance, we do wish to share some considerations based on what we know today.

Overall, we expect consumer behaviors to be broadly stable—value will remain a critical consideration in all markets and income segments. Our investments and actions to date put us in position to enter and execute in 2027.

For commodities, we will continue managing cost pressures and, together with our cross-enterprise procurement team’s productivity initiatives and RGM, look for ways to navigate the environment. At the same time, we’ll continue investing in brands, maintaining disciplined cost management, and focusing on long-term margin expansion.

With CCBA refranchising expected, we anticipate an 8-point headwind to comparable net revenue and a 2-point headwind to comparable EPS for 2027, though both will be positive for margins and return structure. As previously announced, we continue to explore a potential IPO for the India bottling business and will update when appropriate.

On FX, under current rates and hedges, 2027 full-year comparable net revenue and EPS will both face mild headwinds. Many factors could affect our FX and broader business outlook between now and expected guidance in February.

In summary, we are pleased with Q3 performance. Our time-tested “all-weather” strategy remains our best ally to sustain momentum through the rest of this year and into 2027.

Across our many markets and operating contexts, our teams continue to rise to challenges, and we are grateful for what they do, every day. Operator, we are ready to begin Q&A.

Q&A Section

Operator: Ladies and gentlemen, to ask a question, please press star one on your phone. To withdraw your question, press star one again.

Due to time constraints, please ask one question at a time. For further questions, please re-queue.

Our first question comes from Dara Mohsenian at Morgan Stanley. Go ahead, your line is open.

Dara Mohsenian (Morgan Stanley): Hi, good morning. Clearly, this was another strong unit case result on top of robust Q2, but summer results were boosted by the World Cup and favorable weather events.

First, I’d like to discuss these events. What did you learn from the World Cup and even the US 250th anniversary—how have you used tech investment to enable the system to better activate these events, and how do you retain incremental customers or drive higher demand from existing ones across the portfolio during these events?

Second, a bit more macro: for 2027’s global business, can you talk about the challenges to unit case volume growth as you lap tough comps, and your view on the system’s capacity to sustain volume growth? Thank you.

James Quincey (CEO): Thanks, Dara, good to hear from you.

First, we’re very encouraged by Q3, as it shows sustained momentum from H1. Carrying that momentum into Q3 was important.

The numbers show we are getting more from more markets and categories. This also shows in value share gains globally.

That’s 22 consecutive quarters of value share gains. It feels we have the right momentum.

In a highly dynamic environment, our strategy is working. Regarding the World Cup and the US 250th campaign, these were great stress tests for our end-to-end activation—from brand strategy, field execution and innovation, RGM, to implementation in a highly integrated way.

As a system, we performed well—not just in North America but globally. We leveraged that in Q3 and will continue to do so into Q4 and 2027.

The tech, data, and AI used during the World Cup are already in campaigns like Fanta Halloween—connected packaging, great content, and a seamless transaction loop. This lets us stress test “interaction to transaction” opportunities and drive more consumer interaction through to purchase. Plans are progressing by market—the environment stays dynamic, but we’re happy about where we are for Q3 and 2027 planning.

For your question about next year: I always start with the energy I see from bottlers and customers—when they see how our YTD plans are unfolding and what we’re setting up for the remainder of this year and next. Yes, comps will be tough, but we earned our growth through deeper consumer connection and flexible planning, laying the foundations that brought us here.

We believe in our momentum and our plans. A lot can still happen before next year, but for everything we control, we should be able to keep delivering our long-term growth framework.

Operator: Next question from Chris Carey at Wells Fargo. Go ahead, your line is open.

Chris Carey (Wells Fargo): Hi, good morning everyone.

James Quincey (CEO): Morning, Chris.

Chris Carey (Wells Fargo): One key strategy this year was to drive more balanced revenue between volume and price/mix. As discussed in Dara’s question, you’re on pace for a remarkable volume year.

And as you just noted, next year comparisons are tough. I’d like to dig into the price/mix side—if it lands around 2% this year (we’ll see), that’s possibly one of the lowest in about a decade.

The question is: heading into 2027, how do you see price/mix evolving to keep delivering on your revenue growth framework? Within that, can you provide perspective on your level of control over the price/mix line?

There’s obviously geographic and category mix, and also pricing investments this year. I guess the root question is: how much control do you have over revenue composition, rather than these headwinds being out of your control as you enter next year?

Any background is appreciated. Thanks.

John Murphy (CFO): Thanks Chris, this is something we care a lot about.

Let me step back to this and last quarter—two-year average volume growth is still around 2%, maybe a bit higher. We continue to feel good about delivering on balanced revenue framework goals.

Going forward, it’s 2–3% volume, plus 2–3% price/mix. Looking at recent factors affecting our price/mix, worth a quick breakdown.

We mentioned 4 points of base pricing this quarter. That’s consistent with our YTD figures.

Some emerging markets show a bit higher inflation, but that’s largely steady.

The bigger impact is in mix. About two-thirds of the mix impact came from actions we either took ourselves or inherent changes this year—particularly in finished goods.

If you factor in this year’s Topo Chico issue, timing of investments, and strip those out, full-year price/mix is basically within our target range. As for 2027, it’s a bit early for specifics, but looking at compounding volume growth and the s momentum we keep delivering, we’re closely watching global pricing as we head into 2027. Inflation is one factor, but we’ll also weigh market-by-market consumer status, competition, customer environment, etc.

We’ll provide more clarity in February. Mix-wise, we’ll keep seeing some geographic headwinds—that’s just the nature of the global portfolio; emerging markets likely to outpace developed in volume.

As I said, two-thirds of mix headwind this quarter is from factors we believe can be managed as we move into next year.

Operator: Next up: Lauren Lieberman at Barclays. Go ahead, your line is open.

Lauren Lieberman (Barclays): Great, thanks, good morning.

I’d like to talk about reinvestment. I know your mantra is “More for More,” and it looks like SG&A reinvestment was quite strong this quarter.

Can you speak to how much advertising and marketing grew, and how much of that is to pave the way for 2027? You mentioned base gross margin up 70 bps in your deck. Curious how to think about that given mix is actually a headwind?

What’s driving that impressive margin—with spend, SG&A—where is that money going, and what drove that 70 bps in base gross margin? Thanks.

John Murphy (CFO): Sure, Lauren, thanks. Starting with gross margin—

As you know, we split margin into three buckets: business fundamentals, structural factors, and FX. We benefited from some FX tailwinds this year.

For business fundamentals, that’s about revenue quality and continued cost focus. As you look ahead, our growth framework implies modest margin expansion, and we believe we can keep delivering on that.

On marketing spend—yes, we’ve been making several moves in recent months to set up a strong start for 2027. Our digital (mass media) spend was up double digits, and a lot of programs are in collaboration with bottlers, as I mentioned, to ensure a strong start for 2027.

I expect as we move forward that marketing will broadly grow in line with gross margin, tuning the P&L not just for 2027 but for the long term as well.

Operator: Next, Steve Powers at Deutsche Bank. Go ahead, your line is open.

Steve Powers (Deutsche Bank): Great, thanks, good morning.

We’ve spoken before about this, but the reality is, much of today’s inflationary pressure falls heavier on bottlers than the concentrate side. I’d like to ask how, as you plan holistically for 2027, you’d characterize bottler economics and their stance facing these inflation pressures? What effect might this have on future pricing, investment levels, or your view on profit share across the system?

Thanks.

James Quincey (CEO): Thanks Steve. We always look at this systemically.

Everything starts with how we’ll grow our plans by market. Our plans for 2027 are strong, and indeed we’re investing ahead in the year, as we’ve done in recent years, to stay ahead of the curve—leveraging this year’s momentum and flexibility.

Cost—an input to planning—remains very fluid. Commodities are manageable for us right now.

Going forward, we’re working with bottlers, using all the levers the system has. One is our cross-enterprise procurement team, where we buy major commodities together; we layer in other levers, such as productivity, cost management, and RGM tools, ensuring the operational context can fully support next year’s growth plans.

There’ll be more to discuss as we learn more in the months ahead. So far, it’s manageable in the broader context.

Operator: Next is Filippo Falorni from Citi. Go ahead, your line is open.

Filippo Falorni (Citi): Hi, good morning all.

I’ll return to North America. James, you said volumes were flat this quarter due to factors like July 4th timing and some finished business changes.

Can you elaborate? Noting robust consumption data in tracked channels—do you expect improvement going forward? Also, on price/mix: you’re still cycling tough Topo Chico and fairlife comps.

How should we think of that, especially for the mix part in North America? Thanks.

James Quincey (CEO): Filippo, thanks.

On North America, stepping back to the quarter and year so far—North America has remained solid.

This quarter we grew revenue and gained value share.

We widened margins. Our pricing stayed in line with inflation.

This is very important—it shows these brands have pricing power, and we keep investing in them. The price/mix pressure you flagged was dragged by very strong comps in premium brands last year in finished goods, such as Topo Chico and BODYARMOR.

With those in mind—and excluding the July 4th effect falling in Q2 (as previously discussed)—we actually see volume growth; the momentum is there.

In terms of our strategy and brands’ strength, we’re confident in momentum, with Coca-Cola up again this quarter, Diet Coke, and Coke Zero showing double-digit gains. fairlife is performing very well, Powerade is growing; and of course, there are areas to work on, but that matches our “constructive dissatisfaction” mindset.

Areas to improve: growing Sprite and BODYARMOR and the supply chain—work for next year. All in all, we believe the system has good momentum and the right plans to navigate the rest of the year into 2027.

John Murphy (CFO): I’ll just add, Filippo, if you look at the overall volume picture, away-from-home channels remain pressured. If you look at scanner data, home channel business outperforms away-from-home—mostly due to consumer pressure.

Though there’s momentum across channels in our business, I do think that underlying consumer stress will persist through year-end and into 2027.

James Quincey (CEO): Yes.

Operator: Next question from Andrea Teixeira at JP Morgan. Go ahead, your line is open.

Andrea Teixeira (JP Morgan): Hi, good morning. I want to ask about the “affordability” theme.

Of course, you have significant brand equity relative to other CPG names. How do you think about list pricing? Bottling partners have a history of low-single-digit pricing.

Ignoring geo mix, can you still use RGM to selectively price up while protecting entry price points? And one clarification for Q4: You’ve raised guidance despite 6 fewer sales days.

John, you also mentioned destocking, and in Q3 noted the same. Was that a prior quarter event?

I’d like to understand demand versus destocking and whether that’s a few percentage points of headwind—though “at least 5%” gives you a wide range. Thanks.

James Quincey (CEO): Andrea, I’ll take the affordability strategy and John can add the outlook. Look, affordability is just one leg of our full RGM approach.

It’s how we stay close to consumers now. Premiumization is equally important; we do both.

Globally, value still matters everywhere—something I especially experienced as John and I visited different regions this quarter. Value means different things to different people—so affordability and premiumization both play in our plans.

Our approach on affordability asks: Do we have the right value, is the brand relevant, and do we offer a “worth choosing” option to keep consumers in the franchise?

If yes, we keep pushing and build out that pack’s distribution. If not, we adjust and execute.

A great example is Africa: We imported a learning from India, where a single-serve PET pack uses plasma tech to maintain shelf life for long routes. Now we’re bringing that to Africa, supporting affordability in both markets.

This will remain important as consumers love these brands but need price points they can reach. On premiumization—which is just as critical—we do work on category mix.

Certain brands help us here. In North America, Core Power and smartwater; elsewhere, different packs enable us to compete on convenience, which also matters for consumer value.

The combined RGM strategy means we deliver what we need. It’s parallel: affordability and premiumization.

You will see this the rest of this year, and as we build 2027. John, anything to add?

John Murphy (CFO): Andrea, this year’s unit case / concentrate “marriage” is the trickiest in my tenure for several reasons: Q1 and Q4 have six extra and six fewer days, respectively.

Globally as we’ve seen, the external environment is hard to predict. Our system tends to be forward-leaning.

Our guidance reflects the best info we have so far. We do expect to see destocking in a few segments, based on events so far.

There’s still some road ahead, and we’re watching closely. Dropping 6 days makes end-of-year timing hard.

This is the best info we have, factoring in global inputs. If things change intra-quarter, we’ll of course update near the year end.

Operator: Next, Robert Ottenstein at Evercore. Go ahead, your line is open.

Robert Ottenstein (Evercore): Thanks very much.

Your free cash flow guidance is up meaningfully, leverage ratio down to 1.3x. Can you talk about the drivers; you mentioned in your remarks strong FCF and balance sheet giving increased optionality for 2027—can you discuss that, especially in the context of the IRS case? Thanks.

John Murphy (CFO): Thanks, I’ll address these in turn.

Year-to-date FCF has three main drivers. First and foremost, strong business fundamentals.

We’re making progress on working capital initiatives—cash conversion cycle is at the best level in years, if I’m not mistaken.

Then, there are timing factors, which will come through the rest of the year—for example, YTD capex was below typical expectations; we expect to catch up in Q4.

Key takeaway: FCF is strong, with momentum heading into next year. We’ve consciously used “optionality” lately as we expect a ruling on the IRS case in coming months, we’re preemptively considering all outcomes, and feel ready for both best and worst cases.

The focus has been on strengthening the balance sheet. I believe today our balance sheet is as strong as it’s been in years.

This is to be ready to deliver on the priorities outlined for 2027 and beyond. We’ll keep investing in the business, mainly organically for now.

We remain open to other opportunities, but see no near-term need.

As always, we’re here to return capital to shareholders, currently primarily through dividends. Strengthening the balance sheet, being prepared for a ruling, doing what’s right for the business, and being ready for what 2027, 2028, and beyond might bring remain our focus.

Operator: Next question is from Peter Grom at UBS. Go ahead, your line is open.

Peter Grom (UBS): Thanks, and good morning.

To follow up Filippo’s North America question: you called out some timing factors, but also said volume improved month-on-month through the quarter.

Can you elaborate? Has this momentum carried into Q4? Also, John, you discussed at-home vs. away-from-home mix. As the year progresses, have you seen this shift meaningfully? Thanks.

James Quincey (CEO): On volume, yes, we saw month-on-month improvement. The biggest impact was the July 4th effect in Q2, which made the first month of Q3 softer.

As previously discussed, we are also lapping a strong Topo Chico performance from last year. We’ve just returned Topo Chico to Texas.

I think that’s great news for everyone, especially long-waiting consumers. This is the first step, and we’ll proceed gradually for 2027.

That part of the volume will come back—certainly our expectation. Other momentum: growth in Coca-Cola, and strong growth in zero-sugar variants mentioned before.

fairlife continues to grow, Powerade as well, Fresca; Mr. Pibb is another nice surprise—it’s still a small part of North America volume, not enough to move the total number, but we’re excited about its innovation pipeline.

Overall, we have momentum, the right plan, but entering Q4—a key point—last year’s Q4 was North America’s biggest, plus we have six fewer days. Factor that in, but on daily sales run rates we have good momentum built up for the quarter.

Operator: Next is Peter Galbo from Bank of America. Go ahead, your line is open.

Peter Galbo (BofA): Hi, good morning, and thanks for the questions.

John, a clarification, then a question: For 2027 FX guidance, does it reflect rates as of yesterday? Because even in the past 48 hours, some major markets have seen meaningful swings.

I know you caveated that things could change before February, but have you already baked in any of the recent volatility to your current “mild headwind” view for 2027? Thanks very much.

John Murphy (CFO): Good question, and the short answer is: no. We need to factor in what’s happened in the last 24–48 hours and will continue to do so.

There have been big swings this year—a point we watch closely.

If there’s significant movement in the coming weeks, we’ll want to update. As noted, there’s been a lot of volatility this year—something to keep a close eye on.

The numbers in my remarks do not reflect the most recent exchange rate movements of the past few days.

Operator: Next up, Kaumil Gajrawala at Jefferies. Go ahead, your line is open.

Kaumil Gajrawala (Jefferies): Hi, all. Sorry to press the point, but for clarity: for full-year, on concentrate shipments vs. sales, do you intend for shipments to be below, equal, or above?

And if destocking is expected in specific regions, that’d be helpful. Then on margins: your concentrate shipment numbers are very strong.

Can you give color on margin leverage, and SG&A leverage, and how it works top-down? Since you probably won’t always have this price gap, can you help us project what margins might look like when shipments and sales are more aligned?

Thanks.

John Murphy (CFO): Sure. On destocking: as with my prior answer, this year is anomalous and hard to call.

If you asked today, we expect full-year shipments to lag sales slightly. That’s our entry assumption, and keyed to our guidance.

There’s a lot happening globally that could change that, but it’s our entry point for the year’s remainder. On margin: assuming alignment on volume, shipments, and other factors, we expect margin expansion for the year.

The exact degree will match the trends we’ve seen YTD.

Operator: Next, Kevin Grundy at BNP Paribas. Go ahead, your line is open.

Kevin Grundy (BNP Paribas): Thanks.

Good morning, and congrats on another solid quarter. You’ve mentioned fairlife a couple times, but not spent much time on it—a clear success story.

Capacity was added this year, and we’ve seen scanner data re-accelerate. A few questions on the brand.

First, can you discuss updated plans and what success looks like? Second, what occasions are driving demand for the brand?

Third, can you update on opportunities for the brand outside the US, knowing there are supply chain complexities? Thanks.

James Quincey (CEO): Thanks, Kevin. We love the brand; it’s performing incredibly well—first, another quarter of strong double-digit growth across fairlife, Nutrition Plan, and Core Power. Very encouraging.

You recall that early this year, we lagged in matching demand due to Webster plant ramping. Production now up; we launched new Vanilla for Nutrition Plan, which is performing well, and have announced banana for 2027, which is great—it’s back. Many fans love banana; expansion was always a goal. The good news: we’re getting product back on shelf to meet demand, and the 2027 pipeline looks very strong.

Beyond the US and Canada, input is progressing. The brand is valuable, a major asset, and will be a long-term play—with more ahead.

For now, our priority is meeting demand in these markets, which still offers substantial growth. It’s a key growth driver for our future.

Operator: The last question today is Bonnie Herzog at Goldman Sachs. Go ahead, your line is open.

James Quincey (CEO): Bonnie, perhaps on mute?

John Murphy (CFO): With no voice from Bonnie, I guess that’s it then.

James Quincey (CEO): I think we’re at the end. Yes.

Good, very good.

Closing Remarks

James Quincey (CEO): In closing, our results reflect the hard work of teams and partners around the world—remaining close to consumers and getting better every day—we’re very proud. We are confident in delivering on our 2026 and long-term goals.

Thank you for your attention, thank you for investing in our company, and thank you for joining us this morning. Much appreciated.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you for joining.