A prolonged fiscal standoff in Washington could eventually hurt sales of Coca-Cola, CEO Muhtar Kent said Tuesday, though he thinks political leaders will eventually work through their issues.
In a conference call with journalists following Coke’s quarterly financial report, Kent said a continued government shutdown would cause consumers to pull back on spending.
“If it continues, there’s no question that the negative consumer sentiment is most likely going to impact businesses, of all nature,” Kent said. “I think that …where everyone is guardedly optimistic that logic is going to prevail, and we will move forward in a constructive, collaborative way.”
Atlanta-based Coke reported volume growth globally of 2 percent in the third quarter and 2 percent in North America, its largest market. But volume fell 1 percent in Europe, partly because of fiscal crises in central and southern Europe, where consumer confidence has declined.
The company also said third quarter profit was up 6 percent to $2.45 billion, compared to $2.31 billion a year earlier. However, revenue slipped 3 percent, from $12.34 billion to $12.03 billion.
House and Senate leaders worked on separate bills Tuesday to end the government shutdown, which began Oct. 1, and to avoid a national default if the debt ceiling is not raised by Thursday.
Erosion of consumer confidence in the U.S. would be another hurdle for Coca-Cola to overcome after a rough year in which the company faced government efforts to curtail consumption of sugary drinks, tighter consumer budgets because of payroll tax hikes and delayed income tax returns because of last minute changes in the tax code.
Overall volume for carbonated sodas in North America, the company’s main revenue generator, was flat. However, regular Coke, the brand’s namesake, grew 2 percent in the quarter, Coca-Cola said.
North American volume for the Coke Zero grew 5 percent as did still beverages, such as Dasani water, while teas hit double-digit percentage increases. But the company also maintained a 1 percent price increase.
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