--- title: "Zero-sugar lines are surging and AI-driven cost cuts are taking hold. Cola is winning big." type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40264009.md" description: "Earnings Beat Across the Board" datetime: "2026-04-28T14:22:11.000Z" locales: - [en](https://longbridge.com/en/topics/40264009.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40264009.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40264009.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # Zero-sugar lines are surging and AI-driven cost cuts are taking hold. Cola is winning big. The 'ultimate consumer bellwether' Coca‑Cola (KO) reported Q1 2026 results (through Mar 2026) pre‑market on Apr 28, 2026 Beijing time. $Coca Cola(KO.US) **1) Strong top-line; a clean start to the year.** Coca‑Cola delivered reported revenue of $12.47bn (+12% YoY), with organic revenue up 10% YoY. By volume/mix, concentrate sales rose 8% YoY while price/mix added 2%. Note that Q1 had six more trading days than a year ago, which lifted concentrate volumes by roughly 5pp. Even stripping out this calendar effect, underlying sell‑through remained very robust. **2) North America, the home market, rebounded.** With last year's drag from a Hispanic consumer boycott rolling off, North America case volume grew 4% YoY (vs. -3% a year ago), becoming the strongest engine for global results. High‑frequency scanner data indicate share gains across virtually all categories in the region. **3) Zero‑sugar is surging; mix keeps improving.** Within CSDs, zero‑sugar continued to grow at a double‑digit pace (+13% YoY) amid the global sugar‑reduction wave. Beyond CSDs, RTD tea stood out (+8% YoY), underscoring consumers' shift toward healthier and more functional beverages outside of carbonates. **4) Margins edged higher.** GPM expanded 40bps to a record 63%, helped by continued scale and mix from higher‑margin, healthier platforms such as zero‑sugar, ultrafiltered milk Fairlife and premium sparkling water. On costs, AI‑enabled efficiencies in media buying, supply chain, channel pricing and customer ops drove the opex ratio down 130bps to 27.8%. As a result, core OPM rose 90bps to 33.8%. **5) Outlook.** The company maintained its organic revenue growth guidance at 4%–5%. It raised comparable EPS growth to +8%–9% (from +7%–8%), mainly as FX flips from a headwind to an ~3pp tailwind. **6) Financial snapshot** **Dolphin Research view:** On the print alone, this is a solid first scorecard under new CEO Henrique Braun: 10% organic growth and 18% EPS growth are impressive for a mature staples giant. Stepping beyond the numbers, the results also carry several important signals given the current macro and competitive setup. 1) **Amid tariffs and inflation, KO's asset‑light model shines brighter.** With geopolitics and trade frictions pushing up costs, many global CPGs face significant input pressure. Because KO's cost base is concentrated in brand marketing and concentrate production, direct exposure to commodity inflation (PET, aluminum) and tariffs is largely passed through to local bottling partners. This is a key reason for KO's earnings stability. In Q1'26, core OPM reached 34% at KO, vs. 15.7% at PepsiCo (PEP), widening the profitability gap again. Behind this is the fundamental contrast between KO's asset‑light concentrate model and PEP's heavier, vertically integrated setup, especially under cost volatility and macro headwinds. 2) **Execution edge vs. peers is widening.** KO's 10% organic growth stands out versus near‑flat prints at staples peers like Procter & Gamble and Colgate, and against an approximate -4% decline for North America beverages overall. We see two main drivers. a: **Superior pricing power** — KO's brand strength and channel control in global CSDs, especially in EMs, allow smoother price transmission via mix architecture, with higher acceptance from retailers and consumers than peers. b: **Faster, sharper innovation cadence** — Coke Zero maintained 13%+ growth, mini cans posted high‑single‑digit growth in c‑stores, and localized packaging such as ultra‑light bottles in India and South Africa lifted purchase frequency and ticket size, quickly translating innovation into real volume. On valuation, the 2026 profit growth guide of 9% (to ~$14.3bn) implies ~24x 2026E P/E, slightly below the 10‑yr avg ~25x. With Fairlife capacity ramping from this year and the World Cup in Jun–Jul across the US, Canada and Mexico, KO as a global sponsor should see a classic consumption window in North America and LatAm. We therefore see strong allocation value at current levels. **I. Investment framework** KO reports revenue across five segments: EMEA, Latin America, North America, Asia Pacific and Bottling Investments, with growth decomposed into organic, structural (M&A) and FX effects. We follow that approach here. (1) The four geographic segments include both CSDs and NCBs; CSDs are primarily sold via concentrate (about 70% of mix) and are the core franchise, while many NCBs are sold as finished goods (about 30%). (2) Global Ventures was created in 2019 to acquire and scale promising brands globally. Since 2015 the unit has not disclosed standalone financials; acquired brands such as Costa (coffee), Innocent (juice) and Dogadan (tea) are consolidated into their respective regions. (3) Bottling Investments comprises KO‑controlled bottlers, with most revenue from manufacturing and selling finished beverages. Given its heavier capital intensity and lower profitability, KO has been refranchising this segment globally since 2015. Below, we focus on organic revenue growth, decomposed into concentrate volume and price/mix drivers: **II. Headline beat** By region: **North America**: revenue of $4.89bn (+12% YoY). The prior‑year base was depressed by ICE‑related rumors that hit Hispanic consumer sentiment and purchase behavior, and that headwind fully faded in Q1, creating a favorable comp. Separately, Fairlife, acquired in 2019, remains capacity‑constrained; the 30% capacity addition slated for 2026 is coming online, and early‑year price increases also provided a meaningful uplift to North America revenue. **EMEA**: revenue of $3.0bn (+13% YoY). Price/mix rose 5%, the strongest across all regions, reflecting high consumer acceptance of KO's brand premium. During Ramadan, KO ran campaigns around the themes of 'generosity, community and sharing' in markets such as Turkey, Egypt and Indonesia, effectively boosting penetration in festive consumption moments. **Latin America**: revenue of $1.68bn (+14% YoY). The key watch‑item is Mexico's IEPS on sugary drinks. Effective Jan 1, 2026, IEPS rose from MXN 1.65/L to MXN 3.08/L (+87%), and zero/no‑sugar CSDs, previously exempt, were levied MXN 1.5/L. Dolphin estimates a roughly 10% price increase is needed to fully offset the tax. In Q1, KO digested the policy smoothly thanks to strong channel control and price pass‑through. Bottlers Arca Continental and Coca‑Cola FEMSA have implemented price hikes in modern trade. **Asia Pacific**: revenue of $1.51bn (+6% YoY), a relatively weaker print. Aggressive rollout of ultra‑light bottles and other entry‑price packs lowered the purchase threshold, but price/mix fell 6%, making APAC the only region with a margin decline. **II. Zero‑sugar sprints; tea gains momentum** **Volume:** Q1'26 concentrate sales rose 8% YoY. Within CSDs, zero‑sugar remained a double‑digit grower at +13% YoY. **Juice, value‑added dairy and plant‑based -1% YoY:** Fairlife is the standout and now accounts for ~5% of KO's global sales. With a 30% capacity add in 2026, it can likely sustain 20%–30% organic growth, and its role has upgraded from a 'healthy adjunct' to the core North America growth engine. Traditional high‑sugar juices such as Pulpy/Qoo continue to carry an 'unhealthy' tag with consumers, and demand trends remain soft. **Water +5% YoY:** Premium sparkling and functional offerings like Smartwater and Topo Chico continue to grow on channel upgrades and flavor innovation. Value/pure water brands such as Dasani/Ice Dew are more prone to price wars, with thinner profitability. **Sports drinks +5% YoY, with QoQ acceleration:** BODYARMOR's March Madness push — the 'Fan Work is Thirsty Work' campaign co‑launched with the festival — performed well. **RTD tea +8% YoY**, with sustained global growth reflecting consumers' search for healthier and more functional options beyond CSDs. **Price/mix:** up 2% overall, driven by a higher mix of premium platforms such as Fairlife, Coke Zero, BODYARMOR and Powerade. Pack/price architecture — mini cans, smaller packs and returnables — also supported price/mix gains. Dolphin expects KO to move from broad inflation‑led pricing to data‑ and algorithm‑driven actions that squeeze out irrational price froth while preserving sustainable, structural premium. **III. Operating leverage lifts profitability** GPM expanded 40bps to a record 63%, driven by scale and mix from higher‑margin, healthier platforms such as zero‑sugar, ultrafiltered milk Fairlife and premium sparkling water. The opex ratio fell 130bps to 27.8% on AI‑enabled efficiencies in advertising, supply chain, channel pricing and customer operations. Core OPM consequently improved 90bps to 33.8%. Dolphin Research | past work on KO: **Earnings season** Feb 12, 2025 post‑print take: [KO: Buffett was right — the 'happy soda' keeps winning](https://longportapp.cn/zh-CN/topics/27142942?channel=t27142942&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN) Apr 29, 2025 post‑print take: KO — Do harsher tariffs make 'happy soda' more precious? Jul 22, 2025 post‑print take: Is 'happy soda' still the safest harbor? Feb 10, 2026 post‑print take: [KO: Betting on AI — a long game for the 'happy soda'?](https://longbridge.cn/zh-CN/topics/38641731?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=70b75c70-7aa0-4a08-a751-e359d06e1b82) **Deep dives** [KO: Why the 'happy soda' became the Oracle's favorite](https://longportapp.com/zh-CN/topics/26089386?invite-code=032064) [KO: Past its prime? Still delivering 'steady happiness'](https://longportapp.cn/zh-CN/topics/26314447?invite-code=398924&channel=t24781114&app_id=longbridge&utm_source=longbridge_app_share) Risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [CL.US](https://longbridge.com/en/quote/CL.US.md) - [PEP.US](https://longbridge.com/en/quote/PEP.US.md) - [PG.US](https://longbridge.com/en/quote/PG.US.md) - [KO.US](https://longbridge.com/en/quote/KO.US.md)