narrative.md

Published August 12, 2026

# The Coca-Cola Company (KO) — Narrative, FY2026 Q2

Sources: FY2025 Annual Report on Form 10-K (accession 0001628280-26-010047, filed February 20, 2026); Quarterly Report on Form 10-Q for the quarter ended July 3, 2026 (accession 0001628280-26-050503, filed July 29, 2026); Current Reports on Form 8-K as cited.

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## Business

*From the FY2025 10-K, accession 0001628280-26-010047.*

**What the company is.** Coca-Cola is a total beverage company. Its trademarked products, sold in the United States since 1886, are now sold in more than 200 countries and territories. Beverages bearing trademarks owned by or licensed to the company account for 2.2 billion of an estimated 65 billion servings of all beverages consumed worldwide every day. The Coca-Cola system sold 33.8 billion unit cases in 2025 versus 33.7 billion in 2024. Incorporated in Delaware in September 1919, succeeding a Georgia corporation of the same name organized in 1892.

**Two lines of business.** The economics of the company split cleanly:

- **Concentrate operations** — selling beverage concentrates ("beverage bases"), syrups (including fountain syrups) and certain finished beverages to authorized bottling operations, which combine them with water and sweeteners, package the result and sell to retailers. This is the high-margin core and sits inside the four geographic operating segments.
- **Finished product operations** — selling sparkling soft drinks and other finished beverages directly to retailers, distributors and wholesalers. Higher revenue, lower gross margin. This is primarily the consolidated bottling and distribution operations reported in the Bottling Investments segment, plus non-bottling finished product operations in certain markets, Costa retail stores (reported in EMEA regardless of the physical location of the store), and U.S. fountain syrup sales (reported in North America).

In most markets the company uses an **incidence-based concentrate pricing model**: the concentrate price charged is a function of bottler pricing, the channels in which the finished product is sold, and package mix — meaning Coca-Cola's revenue participates in downstream pricing rather than being a flat per-unit charge.

**Operating segments.** Effective January 1, 2025, the Global Ventures segment was sunset. Costa (excluding ready-to-drink), innocent and doğadan moved into EMEA; Costa's ready-to-drink business and the Monster distribution-coordination fees moved into the applicable geographic segments. The structure is now:

- EMEA
- Latin America
- North America
- Asia Pacific
- Bottling Investments
- Corporate (a strategy/policy/governance center plus a platform services organization)

Beneath the four geographic segments sit operating units focused on regional and local execution.

FY2025 revenue mix by segment: North America 40.8%, EMEA 22.6%, Latin America 13.2%, Bottling Investments 12.0%, Asia Pacific 11.1%, Corporate 0.3%.

**Brands.** Categories are Trademark Coca-Cola; sparkling flavors; water, sports, coffee and tea; juice, value-added dairy and plant-based beverages; and emerging beverages. Named brands include Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes, Sprite and Thums Up; Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Crystal, Dasani, Fuze Tea, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, I LOHAS, Powerade and Topo Chico; and Core Power, Del Valle, fairlife, innocent, Maaza, Minute Maid, Minute Maid Pulpy, Santa Clara and Simply.

The company has entered the alcohol category directly in numerous markets outside the U.S.; in the U.S. it operates through a wholly owned, indirect, firewalled subsidiary using third-party manufacturers and distributors, plus licensing of trademarks to alcohol-licensed third parties. Focus is on three alcohol ready-to-drink segments: pre-mixed cocktails (Jack Daniel's & Coca-Cola), flavored alcohol beverages (Lemon-Dou) and hard seltzers (Topo Chico Hard Seltzer).

**Volume concentration.** Sparkling soft drinks were 69% of worldwide unit case volume in both 2025 and 2024; Trademark Coca-Cola was 47% in both years. The U.S. was 16% of worldwide unit case volume (61% sparkling, 42% Trademark Coca-Cola); non-U.S. was 84% (70% sparkling, 48% Trademark Coca-Cola). Mexico, China, Brazil and India together were 33% of worldwide unit case volume.

**Bottling system.** The five largest independent bottling partners by 2025 unit case volume — Coca-Cola FEMSA, Coca-Cola Europacific Partners (CCEP), Coca-Cola HBC (CCHBC), Arca Continental and Swire Coca-Cola — together represented 44% of total worldwide unit case volume. Bottlers are independent contractors, not agents. In 2025 one bottler accounted for 10% of net operating revenues (reflected in EMEA and Asia Pacific).

Bottler's agreements outside the U.S. are generally of stated duration and typically authorize bottlers to manufacture and distribute fountain syrups on a nonexclusive basis. In the U.S., most bottlers operate under Comprehensive Beverage Agreements (CBAs) with 10-year terms, renewable indefinitely for successive 10-year terms, including a binding national governance model, mandatory incidence pricing and core performance requirements; "expanding participating bottlers" (EPBs) hold additional exclusive territory rights. A small number of bottlers remain on legacy agreements with no stated expiration, with pricing formulas tied to a baseline price adjusted quarterly for sugar/sweetener prices — that volume is not material. U.S. bottlers are generally not authorized to manufacture fountain syrups; the company manufactures and sells fountain syrups to authorized wholesalers and some retailers.

The company periodically acquires or takes control of bottling operations in underperforming markets, then refranchises them back to independent bottlers to improve system efficiency — a recurring driver of "structural changes" in reported results.

**Equity method investments.** As of December 31, 2025 the company owned 18% of CCEP, 21% of Monster, 20% of AC Bebidas, 28% of Coca-Cola FEMSA, 22% of CCHBC and 24% of Coca-Cola Bottlers Japan Holdings. Investments in equity method investees exceeded the proportionate share of their net assets by $8,744 million (not amortized). Equity income was $2,031 million in 2025.

**Competition.** The commercial beverage industry is highly competitive. PepsiCo is the primary competitor in many countries; other named competitors include Nestlé, Keurig Dr Pepper, Danone, Suntory Beverage & Food, Anheuser-Busch InBev, Kirin Holdings, Heineken, Diageo and Red Bull, plus regional/local players, direct-to-consumer microbrands and retailer private label. Stated competitive strengths: leading brands with high consumer recognition and loyalty, a worldwide bottler/distributor network, marketing capability and people. Stated challenges: strong competitors in every region, a concentrated retail sector with powerful buyers, new entrants, and shifting shopping patterns from the digital landscape.

**Raw materials.** Water is a main ingredient in substantially all products. Principal nutritive sweeteners are HFCS (U.S.) and sucrose (outside the U.S.); non-nutritive sweeteners include aspartame, acesulfame potassium, sucralose (considered a critical raw material, sourced mainly from the U.S. and China), saccharin, cyclamate and steviol glycosides. Orange juice and concentrate are sourced from Florida and the Southern Hemisphere with Brazil as the primary location, principally through Cutrale Citrus Juices U.S.A.; citrus greening disease and weather affect supply. Milk for the dairy business is bought by fairlife from a concentrated set of dairy cooperatives. Coffee comes through Costa; tea from a diverse supplier base. Packaging inputs include PET (virgin, bio-based, recycled), glass, aluminum and steel cans — aluminum cans are available from a limited number of suppliers. In the U.S., bottlers purchase HFCS through Coca-Cola Bottlers' Sales & Services Company LLC (CCBSS), a bottler-owned procurement entity.

**Seasonality.** Sales of ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters historically the highest-volume periods. Weather affects volume.

**People.** Approximately 65,900 employees as of December 31, 2025, down from 69,700 a year earlier — the decrease primarily from 2025 divestiture activity. Approximately 8,900 were in the United States; approximately 400 North American employees were covered by collective bargaining agreements (typical terms of three to five years).

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## Risk factors

*From the FY2025 10-K, accession 0001628280-26-010047 — condensed to the substantive risks.*

### Operations and macro

- **Economic and geopolitical conditions.** Inflation, interest rates, unemployment, consumer confidence, commodity and energy prices, trade policy, currency and sovereign credit all bear on affordability of and demand for the products. Certain markets ran high inflation throughout 2025 and may continue in 2026. Under stress, consumers trade down to private label. The company faced operational disruption from international conflicts during 2025 and has faced product boycotts arising from political activism. New, expanded or retaliatory tariffs (including tariffs that raise suppliers' sourcing costs), price controls, profit limitations, import authorization requirements and cross-border transfer restrictions can compress profitability. U.S. trade sanctions could make sales to bottlers in designated countries difficult or impossible; retaliatory sanctions or retailer delisting of branded products in reaction to U.S. policy are also flagged.
- **Competition.** Competitive pressure can force price reductions or block needed price increases in the face of cost inflation, and raise marketing, slotting and in-store placement costs. E-commerce may create additional price deflation by facilitating comparison shopping and can threaten the value of legacy route-to-market strategies.
- **Innovation.** Growth objectives depend on evolving existing products and launching new ones; failure to anticipate consumer acceptance or to protect/avoid infringing intellectual property would hit results.
- **Retail landscape and key customers.** Consolidation and blurring of retail channels, particularly in Europe and the U.S.; retailers pushing for lower prices, more promotional spend, and their own private-label brands; rapid growth of discounters and value stores in developed markets, modern trade in emerging markets, and e-commerce everywhere. Loss of one or more key customers would have an adverse effect.
- **Emerging and developing markets.** Growth depends on local economic and political conditions, working with local bottlers on infrastructure, and access to talent; product price, limited purchasing power and cultural differences may block acceptance.
- **Productivity initiatives.** Restructuring may distract management, disrupt operations, hurt morale, weaken internal control structures over affected operations and generate negative publicity.
- **Talent.** Competition for talent has increased and the broader labor market has a shortage of qualified people, especially in advanced technology, AI, digital marketing and analytics. Succession planning for the management team is explicitly named.
- **Supply chain and input costs.** Some raw materials come from a limited number of suppliers or a sole supplier, or are short at peak seasonal demand. Named exposures include weather and climate effects on agricultural commodities, citrus greening disease, avian flu/cattle disease, port congestion, transport capacity, tariffs and sanctions. The company expects inflationary pressure on certain input and other costs to continue to affect the business in 2026, and warns that attempts to offset cost through price increases may reduce volume or fail to keep pace.
- **Acquisitions, joint ventures and strategic relationships.** Integration of acquired businesses, brands and bottling operations has produced increased costs and negative publicity in the past; extending Company controls (internal control over financial reporting, disclosure controls, data protection, cybersecurity, food safety, occupational safety) to acquired operations is called out as a difficulty. The relationship with Monster is named specifically among strategic relationships whose failure would hurt financial performance.
- **Third-party providers.** Reliance on cloud data storage and other IT providers, suppliers, distributors, contractors and joint venture partners, over whose governance and compliance systems the company has no control.
- **Labor.** Collective bargaining renewals, strikes and work stoppages at company or major bottler plants could impair the ability to supply concentrates and syrups or finished beverages, and could escalate into corporate campaigns.

### Consumer demand

- **Obesity and health-related concerns.** Ongoing concern among consumers, public health professionals and governments; recent U.S. federal and state activity focused on drivers of childhood chronic disease; the effects or perceived effects of weight-loss drugs on consumption patterns; potential new or increased taxes on sweetened beverages; restrictions on inclusion of products in benefit programs such as SNAP; and litigation/negative publicity around marketing, labeling or sale of sweetened beverages.
- **Evolving product and shopping preferences.** Health/wellness and nutrition, perceived undesirability of processed and artificial ingredients, ingredient origin, sustainability and recyclability of packaging, animal welfare in the dairy supply chain, and the shift of shopping to mobile apps and e-commerce platforms reshaped by data analytics and AI.
- **Product safety and quality.** Recalls have happened and could happen again — mislabeling, misbranding, spoilage, undeclared allergens, contamination or adulteration, or failure to meet regulatory requirements. A widespread recall would cause losses from recall costs and destroyed inventory, lost sales from unavailability, liability claims and negative publicity.
- **Ingredient/substance debate.** Synthetic colors, nutritive (sugar, HFCS) and non-nutritive sweeteners, biotechnology-derived substances, 4-MEI formed in the manufacture of certain caramel colorings, BPA in can coatings, and alleged presence of PFAS in packaging. Public statements by government officials about alleged risks are specifically identified as an amplifier.
- **Digitalization of the Coca-Cola system.** A stated top priority; failure would limit sales growth and margin improvement while the spend is already incurred.
- **Brand image and social license.** Counterfeit or "spurious" products in some emerging markets; public policy engagement by the company and its executives drawing criticism and boycotts; sponsorships and influencer associations; social media; allegations regarding human rights, supplier labor practices, migrant workers and animal welfare.
- **New product launches**, including the alcohol category, bring execution risk, higher costs, lower category knowledge, and new regulatory exposure (licensing, trade and pricing practices, labeling, advertising, distributor relationships).

### The Coca-Cola system

- **Dependence on bottling partners.** A significant portion of revenue comes from selling concentrates and syrups to independent bottlers who make their own business decisions, some of whom may manufacture or distribute competing products. Bottler actions on product quality, safety, marketing, labor, regulatory compliance or sustainability can damage the brands even where the company is not directly responsible.
- **Bottler financial condition.** The ability to raise concentrate prices is materially limited by bottlers' financial condition and their ability to pass increases along. Deterioration at a major equity method investee bottler would also reduce equity income and could force impairment of the equity method investment.
- **Refranchising and divestitures** require significant senior management attention, may not be completed on favorable terms, and may leave the company unable to offset lost revenue.

### Regulatory and legal

- **Income tax.** Effective rate depends on local rates, treaties and geographic mix of income. The IRS is seeking to increase U.S. taxable income for 2007–2009, creating a potential additional federal income tax liability of approximately $3.3 billion for that period plus interest; the Tax Court predominantly sided with the IRS in its November 18, 2020 Opinion and again in a November 8, 2023 supplemental opinion on the blocked-income regulations as applied to Brazilian legal restrictions. If unfavorable portions are upheld, the company would be subject to significant additional liabilities for the years at issue and potentially subsequent years, with a material adverse impact on financial position, results and cash flows; there may also be an impact on the transition tax payable under the 2017 Tax Cuts and Jobs Act. OECD Pillar One (reallocation of profits of groups above €20 billion revenue with over 10% margin) and Pillar Two (15% per-country global minimum tax) remain live.
- **Indirect taxes** — import duties, tariffs, excise, sales/VAT, taxes on sweetened or aerated beverages, packaging and carbon taxes.
- **Containers and packaging regulation** — deposits, ecotaxes, recycling and recycled-content mandates, tethered caps, extended producer responsibility, prohibitions on certain plastic products and packaging containing PFAS.
- **Labeling and warning requirements**, including California Proposition 65; a required Proposition 65 warning on one or more products sold in California could damage sales both in California and elsewhere.
- **Litigation** in the ordinary course covering advertising and marketing, product claims and labels, competition, distribution and pricing, ingredients, privacy, intellectual property, tax and environmental/employment matters.
- **High-risk compliance environments** — bottling and other operations in markets where improper conduct by employees or agents could bring civil or criminal penalties and disgorgement.
- **Intellectual property** — trademarks, formulas and other IP are described as essential to the business.
- **Changing laws generally**, including machine learning and generative AI regulation, personal data protection, recycled content and extended producer responsibility, greenhouse gas reporting and water use limits.

### Finance, accounting and investments

- **Foreign currency.** In 2025 the company derived $28.8 billion of net operating revenues from operations outside the United States. Translation exposure is direct and material; hedging only partly mitigates it.
- **Interest rates and credit ratings.** Rating agencies factor in the financial information of certain major bottling partners even though the company has no legal obligation for their debt; a downgrade of the company or of certain equity method investee bottlers would raise borrowing cost or reduce equity income.
- **Long-term growth objectives.** Publicly announced objectives may not be achievable given product mix and pricing realities.
- **Counterparty default.** Derivative counterparties and banks holding cash and investments.
- **Impairment.** Trademarks, goodwill, other intangibles, equity method investments and long-lived assets — the company has recorded significant impairment charges before and may again, including its proportionate share of investee impairments.

### Cybersecurity and data privacy

Information systems support procurement, supply chain, manufacturing, distribution, invoicing, collections, employee processes, marketing, M&A and R&D. Named threat vectors include deepfake and social engineering schemes, phishing, spyware, ransomware and other malware, business email compromise, cyber extortion, denial of service, and exploitation of zero-day vulnerabilities, with cybercriminals increasingly using generative AI. The company states that cybersecurity incidents experienced to date, including those reported by third-party partners, had not had a material effect, but that future incidents could. Bottling partners, distributors, joint venture partners, suppliers and acquired businesses run separate systems whose security the company can only monitor to a limited extent. Cybersecurity insurance has been purchased with no assurance it would be sufficient in type or amount. Separately, privacy and data protection laws across many jurisdictions, including data localization/residency requirements, impose operational cost and penalty exposure.

### Environmental and social

- **Sustainability regulation and expectations** — mandatory due diligence, disclosure and reporting requirements across non-converging standards; simultaneous exposure to "anti-ESG" scrutiny, boycotts, lawsuits and market access restrictions.
- **Plastic packaging** — accumulation of plastic bottles and packaging in the environment; failure to act, or to report accurately on voluntary goals, could reduce demand and raise production and distribution costs. Tariffs and trade policy may raise the cost of alternative packaging and force greater reliance on plastic than desired.
- **Water scarcity and quality** — water is a main ingredient in substantially all products and is vital to agricultural inputs and manufacturing.
- **Agricultural supply** — sugarcane, corn, sugar beets, citrus and other fruits, coffee and tea, exposed to demand growth, weather, biodiversity loss and ingredient sourcing due-diligence regulation.
- **Climate change** — agricultural productivity, water scarcity and flooding, extreme weather impairing production and distribution, and regulatory/disclosure responses.
- **Weather** — unusually cold or rainy summers reduce demand.

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## Management's discussion — full year 2025

*From the FY2025 10-K, accession 0001628280-26-010047.*

**Framing.** Management describes six key strategic challenges and risks: obesity and health-related concerns; evolving consumer product preferences; the evolving competitive landscape and competing in the digital marketplace; product safety and quality; sustainability matters; and talent acquisition and retention. Growth pillars are: shaping a portfolio of loved brands; transforming the marketing and innovation agenda; optimizing the Coca-Cola ecosystem; building talent and capabilities; and enhancing the license to win.

**Volume.** Worldwide unit case volume was even in 2025 and concentrate sales volume grew 1%. By segment (unit cases / concentrate sales): EMEA +3% / +3%, Latin America even / (1)%, North America (1)% / (1)%, Asia Pacific even / even, Bottling Investments (8)% / n/a. After structural changes, Bottling Investments unit case volume was even; after divestitures EMEA concentrate sales grew 4%; after structural changes Asia Pacific concentrate sales grew 1%.

Unit case detail: EMEA +3% led by Eurasia and Middle East +7% and Africa +3%, with Europe down 1%; Latin America even with Brazil +2% and Argentina +6% offset by Mexico (4)%; North America (1)% with Trademark Coca-Cola, juice/dairy/plant-based and sparkling flavors all down; Asia Pacific even with Greater China and Mongolia +1% and ASEAN and South Pacific (3)%. Bottling Investments (8)% reflecting refranchising in the Philippines, Bangladesh and certain territories in India.

**Revenue.** Net operating revenues were $47,941 million in 2025 versus $47,061 million in 2024, up $880 million or 2%. Components: volume +1%, price/mix +4%, currency (2)%, acquisitions and divestitures (1)%. By segment total change: EMEA +5%, Latin America (2)% (an 11% price/mix gain swamped by a 12-point currency drag), North America +4%, Asia Pacific +1%, Bottling Investments (8)%. Price/mix was favorable in every segment; Latin America's included inflationary pricing in Argentina. Currency was unfavorable primarily from a stronger dollar against the Mexican peso, Argentine peso, Ethiopian birr and Turkish lira, partly offset by a weaker dollar against the euro, British pound, South African rand and Japanese yen.

**Margins and expenses.** Gross profit margin rose to 61.6% from 61.1%, driven by favorable pricing and the prior-year refranchising in the Philippines, Bangladesh and India, partly offset by currency and higher commodity costs. SG&A was $14,521 million versus $14,582 million — down $61 million on lower contributions to The Coca-Cola Foundation and lower annual incentive expense, offset by higher severance from organizational optimization and higher advertising. Advertising expense was $5.4 billion in 2025 versus $5.1 billion in 2024.

**Other operating charges** were $1,261 million in 2025 versus $4,163 million in 2024. The 2025 charges: $960 million BodyArmor trademark impairment; $97 million productivity and reinvestment program; $47 million remeasurement of the fairlife contingent consideration liability — the earnout from the company's 2020 acquisition of fairlife, a milestone payment contingent on fairlife hitting agreed financial targets through 2024 with no ceiling on the resulting value, which had to be re-marked to fair value every quarter until settlement (the remeasurement brought the total liability to $6,173 million, paid in March 2025); $44 million Latin America trademark impairment; $41 million trademark and PP&E impairment in Asia Pacific; $35 million refranchising indemnification agreement; $15 million BodyArmor noncompete amortization; $12 million divestiture transaction costs; $10 million tax litigation expense. The 2024 figure was dominated by a $3,109 million remeasurement of that same fairlife earnout and a $760 million BodyArmor impairment — the single largest reason 2025 operating income looks so much better year over year.

**Operating income** was $13,762 million versus $9,992 million, up 38%; consolidated operating margin 28.7% versus 21.2%. Currency was a 12-point headwind to operating income. By segment: EMEA $4,298 million (from $4,255 million), Latin America $3,742 million (from $3,792 million, with a 21-point currency headwind), North America $5,070 million (from $4,556 million), Asia Pacific $2,042 million (from $2,156 million), Bottling Investments $426 million (from $496 million), Corporate operating loss $1,816 million (from $5,263 million).

**Below the line.** Interest income $786 million (down 20% on lower average investment balances); interest expense $1,654 million (flat); equity income $2,031 million (up 15%). Other income (loss) — net was income of $1,073 million, including a $1,952 million gain on the sale of the ownership interest in Coca-Cola Consolidated, a $409 million net gain on equity and debt securities, a $331 million gain on selling part of the CCEP interest, $159 million dividend income, a $102 million gain on the India refranchising and a $31 million gain on liquidating a China joint venture — against a $1,274 million charge on the Africa bottling operations becoming held for sale, a $393 million charge on the sale of the Nigeria finished product operations, $40 million and $25 million other-than-temporary impairments in Latin America, a $36 million charge on refranchising bottling operations in Ghana, $48 million net FX losses and $60 million of receivable factoring costs.

**Taxes.** Income taxes of $2,861 million, a 17.9% effective rate, versus $2,437 million and 18.6%. Tax incentive grants in Brazil, Costa Rica, Singapore and Eswatini (expiring 2031 to 2045) benefited tax expense by $383 million. Gross unrecognized tax benefits were $857 million at year end. The One Big Beautiful Bill Act, signed July 4, 2025, did not materially affect the 2025 rate. Management guided to an approximately 20.9% effective rate for 2026 excluding the IRS litigation outcome.

**Bottom line.** Consolidated net income $13,137 million; net income attributable to shareowners $13,107 million versus $10,631 million. Diluted EPS $3.04 versus $2.46. Diluted shares 4,313 million.

**Liquidity and capital.** Cash, cash equivalents, short-term investments and marketable securities were $15.8 billion at December 31, 2025, plus $6.2 billion in unused backup credit lines expiring at various times through 2030. Long-term debt rated A+ (S&P) and A1 (Moody's); commercial paper A-1/P-1. Supplier payment terms with the majority of suppliers are 120 days, supported by a voluntary supply chain finance program. The trade receivable factoring program sold $14,710 million of receivables in 2025 (down from $21,873 million), at a cost of $60 million.

Operating cash flow was $7,408 million versus $6,805 million, up 9% — but 2025 absorbed $6.1 billion of the $6.2 billion final fairlife milestone payment, and 2024 absorbed the $6.0 billion IRS deposit. Investing used $67 million (2024: provided $2,524 million); capital expenditures were $2,112 million. Financing used $8,140 million. Debt issuances of $4,980 million against payments of $4,967 million. The company repurchased 9.4 million shares under the 2019 Plan at an average $67.42 for $634 million (total treasury outflow $746 million). Dividends paid were $8,779 million. In July 2025 the company sold a 40% noncontrolling interest in its India bottling operations to a local partner for approximately $1.3 billion, raising total equity by $1.1 billion net of direct costs.

At its February 2026 meeting the Board raised the quarterly dividend to $0.53 per share — $2.12 annualized for 2026, the 64th consecutive annual increase (2025: $2.04; 2024: $1.94).

Capital allocation priorities as stated: investing to support business operations, growing the dividend, enhancing the portfolio and capabilities through consumer-centric acquisitions, and using excess cash to repurchase shares over time. 2026 capital expenditures were guided to approximately $2.2 billion, with repurchases expected to offset stock-compensation dilution.

**Critical estimate to watch.** In Q4 2025, BodyArmor's operating results plus lowered expectations triggered an impairment analysis that produced a $960 million charge, driven by revised projections, a slower projected long-term category growth rate, an intensifying competitive environment and more focused innovation and international rollout plans. Remaining carrying value of the trademark is $2,440 million.

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## Current quarter — three and six months ended July 3, 2026

*From the Form 10-Q for the quarter ended July 3, 2026, accession 0001628280-26-050503, and the second quarter 2026 earnings release furnished on Form 8-K, accession 0001628280-26-049922 (July 28, 2026).*

**Headline.** Net operating revenues of $13,380 million for the quarter, up $845 million or 7% from $12,535 million. Operating income $4,672 million, up 9%. Net income attributable to shareowners $4,425 million versus $3,810 million; diluted EPS $1.03 versus $0.88, up 16%. Six-month revenues $25,852 million, up 9%; six-month operating income $9,031 million, up 14%; six-month diluted EPS $1.94 versus $1.65. In management's framing, comparable operating margin (non-GAAP) was 35.6% versus 34.7% and comparable EPS (non-GAAP) grew 11% to $0.97.

**Volume.** Worldwide unit case volume grew 5% in the quarter (concentrate sales +4%); six months, unit cases +4% and concentrate sales +6%. Worldwide unit case volume was *even* for the whole of 2025 — no geographic segment grew more than EMEA's 3%, Latin America and Asia Pacific were flat and North America fell 1%. A 5% quarter with all four geographic segments positive is therefore a reacceleration off a flat year rather than a continuation of it, and it is volume, not price, that carried the quarter's revenue bridge: volume contributed 4 points against 2 from price/mix, the reverse of 2025's full-year mix of +1 volume and +4 price/mix. By segment for the quarter (unit cases / concentrate sales): EMEA +4% / +1%, Latin America +3% / +1%, North America +3% / +3%, Asia Pacific +8% / +10% (+11% after structural changes), Bottling Investments +5% unit cases (+8% after structural changes). Growth was led by India, China, the United States and Brazil. Coca-Cola Zero Sugar grew 16% and Diet Coke/Coca-Cola Light grew 7%; Trademark Coca-Cola grew 5% with growth in all geographic segments; sparkling flavors +4%; water +6%, sports drinks +5%, tea +6%, while coffee declined 2% on Asia Pacific weakness.

Segment volume detail for the quarter: EMEA +4% including Trademark Coca-Cola +4% and water/sports/coffee/tea +7%, but juice, value-added dairy and plant-based down 9% on the Nigeria disposal; Eurasia and Middle East +6%, Europe +3%, Africa +4%. Latin America +3% with Brazil +6%, Colombia +20%, Peru +16% and Mexico even. North America +3% with Trademark Coca-Cola +5%. Asia Pacific +8% with India and Southwest Asia +13%, Greater China and Mongolia +8%, ASEAN and South Pacific +8%, Japan and South Korea +2%.

A calendar quirk matters here: the first quarter of 2026 had six additional days versus 2025 and the fourth quarter of 2026 will have six fewer days. Unit case volume is computed on average daily sales and is unaffected; concentrate sales volume is not. For the full year 2026 management expects worldwide concentrate sales volume growth to run slightly behind unit case volume growth.

**Revenue bridge, quarter.** Consolidated: volume +4%, price/mix +2%, currency +2%, acquisitions and divestitures (1)% — total +7%. EMEA +2% (currency +2%, acquisitions/divestitures (3)%), Latin America +16% (currency +11%), North America +7%, Asia Pacific +1% (volume +11% against price/mix (9)%), Bottling Investments +8%. Price/mix drivers: favorable pricing including inflationary pricing in EMEA and Latin America; favorable pricing in North America; unfavorable mix and affordability initiatives in Asia Pacific; favorable mix and pricing in Bottling Investments.

Currency helped 2% at the revenue line and 5% at operating income for the quarter (4% for the six months), from a weaker dollar against the Mexican peso, Brazilian real, euro and South African rand, partly offset by a stronger dollar against the Indian rupee, Japanese yen, Turkish lira and Argentine peso.

**Margins and costs.** Gross profit margin rose to 62.9% from 62.4% (six months: 62.9% from 62.5%) on pricing, currency and the Nigeria disposal, partly offset by higher commodity costs. SG&A was $3,720 million, up 7%, primarily from increased marketing spending partly due to timing, with currency adding 1 point, partly offset by lower annual incentive expense and the Nigeria disposal. Advertising expense was $1,565 million in the quarter versus $1,328 million, and $2,942 million for six months versus $2,417 million — an 18% step-up in the quarter and 22% for the half. The company does not break advertising out by program, but the timing is hard to separate from the FIFA World Cup activation described below, which management presented as the quarter's flagship marketing event and which ran across more than 180 markets. Read that way, the marketing line is a deliberate, event-driven push against a volume reacceleration rather than a defensive response to share loss — the company gained value share in total nonalcoholic ready-to-drink beverages in the same period. Other operating charges were only $23 million in the quarter ($44 million for six months) versus $71 million and $144 million a year earlier.

**Segment operating income, quarter.** EMEA $1,309 million (from $1,325 million — down on marketing and operating expense despite +4% currency); Latin America $1,177 million (from $957 million, +15% currency tailwind); North America $1,695 million (from $1,621 million); Asia Pacific $656 million (from $647 million); Bottling Investments $91 million (from $59 million, despite a 24-point currency headwind); Corporate loss $256 million (from $329 million). Consolidated operating margin 34.9% versus 34.1%.

**Below the line.** Interest income $198 million (+6%); interest expense $369 million (down 17% on lower average short-term debt); equity income $604 million (+8%). Other income — net was income of $370 million, including a $320 million net gain on securities, $38 million dividend income, $37 million net FX losses, a partial reversal of the previously recorded impairment on the Africa bottling operations held for sale (quantified under Portfolio moves below), and $14 million of receivable factoring costs.

**Tax.** Income taxes of $1,037 million, an 18.9% effective rate (prior year 20.7%); six months $1,682 million at 16.7% (prior year 19.4%). The six-month rate carried $319 million of net discrete tax benefits, including $98 million of net interest income on the IRS deposit and a $181 million net benefit primarily from return-to-provision adjustments. Management expects the full-year 2026 effective rate to be approximately 19.9% before significant items — down from the approximately 20.9% guided in the 10-K — excluding the IRS litigation outcome. In January 2026 the OECD issued administrative guidance introducing a side-by-side framework under Pillar Two that largely exempts U.S.-headquartered companies.

**Liquidity.** Cash, cash equivalents, short-term investments and marketable securities were $16.4 billion at July 3, 2026, with $6.6 billion in unused backup credit lines expiring at various times through 2031. There were no outstanding commercial paper borrowings at July 3, 2026, versus $1,495 million at December 31, 2025. Total debt was $43.5 billion — $48 million of loans and notes payable, $6,494 million of current maturities of long-term debt and $37,001 million of long-term debt — against $45.5 billion at December 31, 2025 ($1,551 million / $1,822 million / $42,119 million). The company repaid $1,559 million of debt in the half against just $9 million of issuances. The repayments were $1,027 million of commercial paper and short-term debt maturing within 90 days, $500 million maturing beyond 90 days and $32 million of long-term debt. Net of the $16.4 billion cash and investments balance, net debt is roughly $27 billion. On the maturity profile, current maturities more than tripled as roughly $5 billion of long-term debt rolled inside twelve months, so $6.5 billion comes due within a year against a company generating over $7 billion of operating cash flow in six months.

Operating cash flow for the six months was $7,543 million, against $1,391 million *used* in the prior-year period — the swing is largely the prior year's $6,069 million fairlife milestone payment, plus stronger cash operating results, a factoring program benefit, lower income tax payments, currency and lower net interest and incentive payments. Investing provided $1,104 million (capex $684 million versus $751 million). Financing used $6,535 million. The company repurchased 7.3 million shares under the 2019 Plan at an average $75.53 for $549 million (total treasury outflow $663 million); 59,685,114 shares remained available under the 2019 Plan at quarter end. Dividends paid were $4,562 million — inflated versus the prior-year $2,283 million by reporting-calendar timing, since all of the 2026 second quarterly dividend fell in Q2 while substantially all of the 2025 second quarterly dividend fell in Q3.

Receivables sold under the factoring program were $7,011 million for six months versus $8,400 million.

**Portfolio moves in progress.** The October 2025 definitive agreement to sell a portion of the interest in the Africa bottling operations to Coca-Cola HBC AG remains subject to regulatory approvals, with closing expected by the end of 2026 and deconsolidation on closing; a separate option lets CCHBC acquire the remaining 25% interest within six years of closing. These operations are classified as held for sale: assets held for sale of $5,438 million and liabilities held for sale of $2,442 million at July 3, 2026 (including $3,432 million of goodwill and a $1,207 million allowance for reduction of assets held for sale). The FY2025 impairment charge of $1,274 million on this disposal group — driven mainly by negative cumulative translation adjustments that will be reclassified to income on sale — was reduced by gains of $66 million in the quarter and $56 million for six months on revised estimates. The consideration for the Africa transaction is not disclosed in the filings.

Acquisitions of businesses, equity method investments and nonmarketable securities were $199 million for six months, including $112 million of additional investment in an equity method investee in Japan and $75 million in alternative energy limited partnerships. Proceeds from disposals were $1 million. In May 2025 the company refranchised bottling operations in certain territories in India, and in October 2025 sold its finished product operations in Nigeria; both flow through the 2026 comparisons as structural change/divestiture effects.

**BodyArmor.** As of July 3, 2026 the fair value of the BodyArmor trademark approximates its carrying value of $2,440 million. Management states that if near-term results miss revised projections, or if macro conditions push the discount rate up without offsetting operating improvement, an additional impairment charge is likely.

**Tax litigation.** The U.S. Court of Appeals for the Eleventh Circuit heard the 2007–2009 transfer pricing appeal on June 25, 2026.

Two different numbers circulate in this dispute and it is worth being clear which is which. The $3.3 billion figure is what the IRS *asked for*: its September 17, 2015 Statutory Notice of Deficiency reallocated over $9 billion of income from foreign licensees to the U.S. parent for 2007–2009, producing roughly $3.3 billion of additional federal tax before interest, and that is the number the 10-K risk factors still cite as the exposure for those years. The $2.7 billion figure is what the Tax Court *entered* on August 2, 2024 after litigation narrowed the claim — chiefly because the November 18, 2020 Opinion, while predominantly siding with the IRS, agreed with the company that dividends previously paid by the foreign licensees to the U.S. parent in reliance on the 1996 Closing Agreement should continue to offset the royalties the Opinion imputed. Two smaller pre-trial movements ran in opposite directions: the IRS raised its transfer pricing adjustment by $385 million (an added $135 million of tax) before trial, and the company won summary judgment on an unrelated Mexican foreign tax credit question that cut the potential tax adjustment by $138 million. Consistent with the Closing Agreement, the IRS did not assert penalties and has not since.

With applicable interest, that $2.7 billion became a $6.0 billion total liability for 2007–2009, invoiced September 3, 2024 and paid September 10, 2024 as a deposit (recorded in other noncurrent assets, with accrued interest receivable of $514 million at July 3, 2026). The October 1, 2025 Eighth Circuit decision reversing the Tax Court in the 3M case — holding the blocked-income regulation inconsistent with IRC Section 482 — is described by the company as highly supportive of its position. Management estimates potential aggregate remaining incremental tax and interest liability for tax years 2010 through 2025 of approximately $14 billion as of December 31, 2025, growing by roughly $450 million in the quarter and $900 million for six months, and projects that continued application of the Tax Court methodology in 2026 would add approximately 3.8 points to the effective tax rate. The company believes it is more likely than not that it will prevail on appeal.

**Legal.** The Baltimore plastic packaging suit — the company's most prominent environmental litigation — was resolved just after the quarter closed; the full history is set out in the Subsequent events section below.

**Guidance (raised).** Full year 2026, as of July 28, 2026, with the prior guidance in parentheses:

- Organic revenues (non-GAAP): approximately 5% growth (prior 4% to 5%)
- Comparable net revenues (non-GAAP): approximately 1% currency tailwind and a 2% to 3% headwind from acquisitions and divestitures (prior: 1% to 2% currency tailwind, approximately 4% headwind)
- Underlying effective tax rate (non-GAAP): 19.9% (unchanged)
- Comparable currency neutral EPS excluding acquisitions and divestitures (non-GAAP): 7% to 8% growth (prior 6% to 7%)
- Comparable EPS (non-GAAP): 9% to 10% growth, including an approximately 3% currency tailwind and approximately 1% headwind from acquisitions and divestitures (prior 8% to 9%)
- Free cash flow (non-GAAP): approximately $12.4 billion, from approximately $14.6 billion of cash from operations less approximately $2.2 billion of capital expenditures (prior approximately $12.2 billion from $14.4 billion less $2.2 billion)

The acquisitions-and-divestitures assumption now has the pending Africa bottling sale closing toward the end of the third quarter or during the fourth quarter of 2026, versus "during the second half of 2026" previously. Third quarter 2026 considerations: approximately 1% currency tailwind and approximately 1% acquisitions/divestitures headwind to comparable net revenues; approximately 3% currency tailwind and minimal acquisitions/divestitures headwind to comparable EPS.

Management also expects currency to be favorable to full year 2026 net operating revenues, operating income and operating cash flow based on current spot rates and hedge coverage.

**Company-level campaigns.** Management highlighted a globally connected FIFA World Cup campaign, the marketing event behind the advertising step-up noted above: a trophy tour with more than 70 stops in roughly 30 markets reaching approximately 700,000 fans, activations spanning more than 20 million retail outlets, more than 60 billion digital impressions and over 9 billion views with more than 2,500 content creators, and connected packaging engaging more than 80 million consumers and collecting more than 25 million first-party data records. It also described innovation hubs in each operating unit, the rollout of Coca-Cola Zero Zero from Europe into Asia Pacific and Latin America, a China-adapted Sprite+Tea, and BODYARMOR FIT.

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## Subsequent events

The quarter ended July 3, 2026 and the Form 10-Q was filed July 29, 2026. Events after the quarter end:

- **fairlife ransomware incident (announced July 16, 2026; Form 8-K, accession 0001628280-26-048466).** fairlife, LLC, the dairy business owned by the company, identified unauthorized access by a third party to a portion of its systems, including production-related systems, in connection with a ransomware event. The company activated incident response and business continuity protocols, engaged outside advisers and cybersecurity experts, and notified law enforcement. Product quality and safety were not impacted, but production operations at fairlife in the United States were temporarily suspended; Canadian production was not affected. At the time of the 8-K the company had not determined whether the incident was reasonably likely to be material. In the 10-Q filed July 29, 2026 the company added that the event involved the taking of certain data, that a majority of production operations have resumed, and that based on information available and the investigation to date it believes the incident has not had, and is not reasonably likely to have, a material impact on financial condition or results of operations. fairlife sits in the North America operating segment.

- **Dividend declared (July 2026 Board meeting).** The Board approved the regular quarterly dividend of $0.53 per share, payable October 1, 2026 to shareowners of record at the close of business on September 15, 2026. This is the rate set by the February 2026 increase to $2.12 annualized.

- **Baltimore plastic packaging lawsuit fully dismissed (July 23, 2026).** On June 20, 2024 the Mayor and City Council of Baltimore sued the company and several unrelated parties in the Circuit Court for Baltimore City, Maryland over the environmental impacts of plastic packaging on the city's lands and waterways, asserting littering and improper-dumping statutes and ordinances, unfair/abusive/deceptive trade practices, trespass, design defect, public nuisance, failure to warn and negligence, and seeking injunctive relief plus compensatory and punitive damages in an unspecified amount. On July 21, 2025 the court dismissed all claims with prejudice except public nuisance; on July 23, 2026 it dismissed the remaining public nuisance claim. No damages were awarded against the company.

- **Second quarter results and raised full year guidance (July 28, 2026; Form 8-K, accession 0001628280-26-049922).** Results and the raised 2026 outlook are set out in the Current quarter section above.

- **North America leadership change taking effect (announced June 25, 2026; Form 8-K, accession 0001552781-26-000366).** Jennifer Mann, Executive Vice President and President, North America Operating Unit, stepped down from those positions effective July 31, 2026 and continues as a senior adviser until April 30, 2027. Effective August 1, 2026, John Murphy, President and Chief Financial Officer, assumed responsibility for the North America Operating Unit on an interim basis. Ms. Mann entered into a Separation Agreement dated June 25, 2026 providing severance under The Coca-Cola Company Severance Pay Plan; she remains eligible for a 2026 annual incentive award if employed through December 31, 2026, is not eligible for a 2027 award, receives no additional equity grants, and has outstanding performance share unit and stock option awards treated under existing plan terms.

No acquisitions, divestitures or financings were completed after the quarter end and before the filing date beyond those described above; the Africa bottling transaction with Coca-Cola HBC AG remains pending regulatory approval.

### Earlier corporate developments providing context

- **Chief Executive Officer transition (announced December 10, 2025; Form 8-K, accession 0001552781-25-000454).** The Board elected Henrique Braun, then Executive Vice President and Chief Operating Officer, as Chief Executive Officer effective March 31, 2026, on which date James Quincey transitioned to Executive Chairman. Mr. Braun, age 57 at the time of the announcement, had been Executive Vice President and Chief Operating Officer since January 2025, Executive Vice President since 2024, Senior Vice President and President, International Development from 2023 to 2024, and President of the Latin America operating unit from 2020 to 2022.
- **Further leadership changes (announced January 14, 2026; Form 8-K, accession 0001552781-26-000017).** The company created a Chief Digital Officer role; effective March 31, 2026 the responsibilities then overseen by John Murphy transitioned to Sedef Salingan Sahin, previously President of the Eurasia and Middle East Operating Unit. Customer and Commercial Leadership responsibilities transferred from Mr. Murphy to Manolo Arroyo, who became Executive Vice President and Chief Marketing and Customer Commercial Officer effective March 31, 2026. Mr. Murphy continued as President and Chief Financial Officer.
- **Board addition (October 16, 2025; Form 8-K, accession 0001628280-25-045223).** Max Levchin, a PayPal co-founder and founder and chief executive of Affirm, was elected a director.
- **2026 Annual Meeting of Shareowners (April 29, 2026; results reported on Form 8-K, accession 0001628280-26-029230).** Shareowners elected the nominated slate of twelve directors, approved the advisory vote on executive compensation (90.84% for), and ratified the appointment of Ernst & Young LLP as independent auditors (93.56% for). All five shareowner proposals were defeated: a sustainability committee by-law amendment (0.87% for), a report evaluating the company's plastics packaging policies (0.81% for), a report on the extent of the company's diversity, equity and inclusion efforts (11.27% for), a report on risks related to ingredients (11.37% for), and a report on the company's plans to increase sustainability disclosure (22.31% for — the highest support any of the five drew).