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Why Coca-Cola ETFs Are Good Bets After Q3 Earnings Beat

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Key Takeaways

  • Coca-Cola beat Q3 earnings estimates, with revenue rising 7% year over year.
  • Global unit case volume grew 5% for the second consecutive quarter.
  • KO-heavy ETFs offer diversified exposure while reducing company-specific risk.

Coca-Cola (KO - Free Report) reported adjusted EPS of 91 cents, surpassing the Zacks Consensus estimate of 87 cents. Revenue climbed 7% year over year to $13.4 billion, beating the consensus estimate of $12.93 billion. Organic revenue, which excludes acquisitions, divestitures and currency fluctuations, also increased 7%.

Second Consecutive Quarter of 5% Growth in Overall Unit Case Volume

Global unit case volume grew 5%, exceeding expectations for growth of roughly 3%, per Yahoo Finance. Coke Zero led the gains, with volume increasing approximately 16% year over year, while Diet Coke and Coca-Cola Light recorded 6% growth. This marked the second successive quarter of 5% growth in overall unit case volume, supported by stronger demand in markets outside North America, per CNBC.

However, Coca-Cola's North American unit case volume remained flat, reflecting pressure on consumers from inflation and economic uncertainty.

Coca-Cola Raises Full-Year Outlook for Third Straight Quarter

Coca-Cola raised its full-year guidance for the third consecutive quarter on Oct. 27, 2026, despite subdued demand in its home market, per CNBC. The beverage giant now expects comparable earnings per share (EPS) to grow at least 11% for the full year, up from its previous forecast of 9% to 10% growth. It also projects organic revenue growth of at least 5%, slightly higher than its earlier outlook of approximately 5%.

Looking ahead to 2027, Coca-Cola expects consumer behavior to remain largely unchanged, CFO John Murphy said. Executives have repeatedly highlighted the financial pressures facing North American consumers, who are grappling with inflation and economic uncertainty and increasingly seeking value. Nevertheless, demand for Coca-Cola's beverages remains resilient, spanning premium offerings such as Fairlife and its flagship soda.

Diet Coke Resurgence and KFC Deal Support Growth

Coca-Cola is benefiting from renewed interest in Diet Coke, particularly among younger consumers. Gen Z consumers in the United States have nicknamed the beverage a “fridge cigarette,” while Diet Coke parties have gained popularity in India. Supply shortages linked to the U.S.-Israeli war with Iran have also made the beverage harder to find in some markets.

During the quarter, Coca-Cola also struck a deal with Yum! Brands' (YUM - Free Report) subsidiary KFC to supply beverages to thousands of its restaurants. PepsiCo is reportedly expected to continue supplying KFC's international locations, as reported by Yahoo Finance.

Strong Demand for Smartwater

Beyond carbonated beverages, Coca-Cola's water, sports, coffee and tea division recorded 5% volume growth, driven primarily by stronger water demand, including for premium brand Smartwater. Tea and coffee volumes remained flat, while sports drinks recorded a decline.

Meanwhile, the company's juice, value-added dairy and plant-based beverages division reported flat volume, despite continued growth in brands such as Fairlife and Minute Maid.

Bottom Line

Overall, Coca-Cola's stronger earnings, resilient global beverage demand and improved full-year guidance underscore its ability to navigate a challenging consumer environment.

However, subdued North American demand, rising input costs and continued pressure on restaurant spending remain key factors to monitor.

Hence, investors can gain exposure to Coca-Cola through a basket of stocks or an ETF, which can help reduce company-specific concentration risk.

KO-heavy ETFs include the likes ofiShares U.S. Consumer Staples ETF (IYK - Free Report) ,Vanguard Consumer Staples ETF (VDC - Free Report) , Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report) , First Trust Nasdaq Food & Beverage ETF (FTXG - Free Report) and State Street Consumer Staples Select Sector SPDR ETF (XLP - Free Report) .

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