US merchants can no longer raise prices! This time it's the "last line of defense" essential product - Coca-Cola.

Coca-Cola Company announced on Wednesday that it will no longer raise prices for its products in developed markets such as the United States and Europe. In the past two years, Coca-Cola has been increasing beverage prices to cope with rising costs. For example, in the second quarter of this year, Coca-Cola's prices increased by 10% compared to the same period last year.

Coca-Cola's move follows its competitor, PepsiCo. PepsiCo announced in February of this year that there will be no further price increases, apart from the regular fourth-quarter price hike.

Previously, the price increases of Coca-Cola and PepsiCo's products led to strong sales growth, but consumer demand actually weakened, although not as much as expected.

Coca-Cola's unit case volume in the United States decreased by 1% in the second quarter. PepsiCo experienced a more severe decline in demand compared to Coca-Cola. PepsiCo reported that its North American beverage sales volume decreased by 4.5%, while North American Quaker food brand sales volume decreased by 5%. The only bright spot was its subsidiary, Frito-Lay North America, which saw a 1% increase in sales due to consumers' enduring snacking habits.

Coca-Cola CEO James Quincey stated during the company's conference call on Wednesday that consumers in the United States and Europe are shifting towards private label bottled water and juice. "Consumers are increasingly cost-conscious in the entire industry. They are looking for high-value products and stocking up on discounted goods."

Coca-Cola plans to continue raising product prices in developing markets such as Latin America to keep up with inflation trends.

According to the earnings report released by Coca-Cola on Wednesday, the company's revenue in the second quarter was $11.972 billion, a year-on-year increase of 6%, exceeding the market's expected $11.75 billion. Operating profit was $2.401 billion, a year-on-year increase of 3%. Net profit was $2.521 billion, a year-on-year increase of 33%. Earnings per share were $0.78, a year-on-year increase of 11%, higher than the market's expected $0.72. The company expects organic revenue growth for the full year to be 8%-9%, higher than the previous estimate of 7%-8%; and earnings per share growth to be adjusted to 5%-6%, higher than the previous estimate of 4%-5%.

Although Coca-Cola raised its full-year expectations and announced profits and revenues that exceeded Wall Street's expectations, the company's stock price initially fell during early trading but later turned positive, influenced by its pricing power.

Coca-Cola's inability to raise prices is cause for concern. Companies like Coca-Cola and McDonald's are considered to be the last to feel the impact of consumer tightening. Consumers only reduce their purchases of beverages like Coca-Cola when they truly feel financially strained.

Quincey previously stated that during difficult times, consumers tend to postpone purchases of big-ticket items such as cars or mattresses. As the situation continues to worsen, they may start reducing purchases of private label groceries, but the reduction in beverage purchases will occur even later, when people truly feel financially strained. Companies like Coca-Cola often have a long preparation time when entering an economic recession. This week, Mike Wilson, the renowned US stock strategist and chief of Morgan Stanley, one of Wall Street's most prominent bearish investors, issued a warning regarding the profit potential of American companies. He expressed caution and believed that the cooling of inflation signifies a weakening in the pricing power of businesses.

Wilson explained that while the decrease in US inflation has boosted market optimism by alleviating concerns of an overly hawkish Federal Reserve, it also implies a reduction in the pricing power of companies. Pricing has been a significant factor in the sales growth of many companies this year. If the ability to set prices becomes ineffective, it will pose a significant obstacle.