Coca-Cola Consolidated Grows Sales as Aluminum Squeezes Margins
Additional aluminum costs of about $45 million outpaced annual pricing actions.
Coca-Cola Consolidated (COKE), the beverage bottler, reported higher second-quarter sales and volume, while rising aluminum costs sharply compressed margins. Gross margin fell 210 basis points to 37.9%, extending a deterioration that accelerated over the past four quarters.
Net sales rose 10.6% to $2.052 billion, moderating from reported growth of 16.9% in the first quarter. Excluding six extra selling days, first-quarter growth was 8.5%, putting the latest period ahead of that adjusted pace. Volume increased 7.6% to 97.6 million cases, compared with adjusted first-quarter growth of 6.4%; roughly one percentage point of the second-quarter increase reflected Fourth of July timing.
Revenue continued to grow faster than case volume, with the three-percentage-point spread primarily due to annual pricing actions. Still beverages led the portfolio, posting sales growth of 11.5% and volume growth of 9.4%, compared with respective gains of 9.7% and 7.0% for Sparkling beverages.
Still's growth advantage narrowed from the first quarter, while lower-priced Dasani casepack water continued to support volume and weigh on mix. Coca-Cola Consolidated gained market share for a fifth consecutive quarter, led by zero-sugar and flavored Sparkling products and Sports Drinks.
The top-line gains translated into slower profit growth as additional aluminum costs of about $45 million exceeded the benefit from pricing. Gross profit rose 4.8% to $778.4 million, less than half the rate of sales growth, and adjusted gross margin contracted 150 basis points to 38.4%.
Operating income slipped 0.3% to $271.3 million after rising 25.1% in the first quarter, when six extra selling days contributed about $30 million. Adjusted operating income increased 5.5% to $284.9 million, though its margin declined 70 basis points to 13.9%. Selling, delivery and administrative expense rose 7.8%, slower than revenue, as higher wages, benefits, fuel and volume-related costs lifted spending.
Net income fell 15.2% to $158.8 million, while adjusted net income declined 3.8% to $187.7 million. Net interest expense increased to $30.5 million from $5.9 million after the company used a $1.2 billion term loan to help fund its $2.4 billion purchase of Coca-Cola shares in November 2025.
Coca-Cola Consolidated repaid $125 million of term-loan principal early during the quarter, bringing first-half early repayments to $275 million. The company maintained its 2026 capital-spending expectation at approximately $300 million.