An extra-caffeinated version of Mr. Pibb is helping Coca-Cola win over cash-strapped shoppers

By Bill Peters

Coca-Cola's stock is bucking consumer weakness as it heads toward a record high

Volume growth for Mr. Pibb topped 20% in the second quarter.

As the biggest beverage makers battle for relevance among budget-conscious consumers, Coca-Cola is seeing early signs of a payoff from new drinks billed as beverage "innovation."

Management at the soft-drink giant said Tuesday that a new version of Mr. Pibb, which has 30% more caffeine and extra cherry flavoring, saw more than 20% volume growth in the second quarter. Volume is a gauge of the amount of soda sold.

The resurrection of that soda line also includes a zero-sugar version. Mr. Pibb was launched in 1972 to compete with Dr Pepper and was renamed Pibb Xtra in 2001. Coca-Cola announced the revival of the soda under the original Mr. Pibb name and the new offerings in October, with a nationwide rollout taking place this year.

Executives on Tuesday further noted that Sprite + Tea had landed in China after showing success in the U.S. They added that Bodyarmor Fit - a new sparkling sports drink with zero sugar that combines electrolytes and caffeine - has helped expand Coca-Cola's "functional" offerings.

Those creations, they said, helped drive global volumes 5% higher overall during the period. The company's second-quarter results on Tuesday broadly topped Wall Street's estimates, and management nudged its financial outlook higher for the year.

Coca-Cola shares jumped 4.8% on Tuesday and were trading at around $88, tracking toward a record high. The stock is up 27.5% so far this year.

During the company's quarterly earnings call on Tuesday, CEO Henrique Braun said the new Mr. Pibb helped it "stay relevant," while Sprite + Tea helped drive momentum for Sprite overall.

More broadly, management said minicans and things like variety packs helped make products more affordable and accessible to consumers.

The food-and-beverage industry has been cranking out new products to cut through consumer malaise and compete with retailers' store-brand products, which are cheaper but at times just as innovative. As lower-income consumers face more difficulty following years of price increases, executives at Albertsons (ACI), during the grocery chain's earnings call last week, said they were "seeing a shift to private label."

This year, companies like PepsiCo (PEP) and Kraft Heinz (KHC) have highlighted creations like fiber drinks and snacks, as well as products geared toward "functional hydration" and the nation's emerging obsession with protein. Interest in wellness and uptake of GLP-1 drugs have driven those trends.

Coca-Cola on Tuesday also said that its marketing efforts during the World Cup translated into more consumer data. And following a cyberattack on its Fairlife milk segment, the company said most production had resumed at its four U.S. facilities, with availability on store shelves "largely unimpacted."

Coca-Cola on Tuesday raised its adjusted earnings-per-share outlook for this year to an increase of 9% to 10%, up from earlier expectations for an 8% to 9% gain. The company said it expected a roughly 5% increase in organic revenues, when factoring out things like currency fluctuations. That forecast was a bit more optimistic than a prior forecast for 4% to 5% growth.

During the second quarter, Coca-Cola's sales rose 7% year over year to $13.4 billion, above FactSet analyst estimates for $13.17 billion. The company reported adjusted earnings per share of 97 cents, up 11% and topping estimates for 93 cents.

-Bill Peters

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07-28-26 1443ET