Coca-Cola Europacific Partners (LSE:CCEP) expects next year's cost pressures to exceed this year's, though its finance chief stressed they remain far below the peaks of 2022 and 2023, leaving the market to wait until February for hard numbers.

"Nowhere near the levels that we saw back in 2022 or 2023." That was how Ed Walker, chief financial officer of Coca-Cola Europacific Partners (LSE:CCEP), characterised the cost headwinds the company expects to face in 2027. The reassurance came with a caveat: management also expects those 2027 headwinds to be higher than the ones it is absorbing in 2026.

The comments accompanied CCEP's third-quarter trading update on Tuesday 3 November 2026. Despite Revenue that beat forecasts and full-year guidance left unchanged, the shares closed 2.1% lower in London, Reuters reported, after the company flagged cost pressures. The FTSE 100 as a whole fell 1.14% to 10,638.43, its steepest one-day fall in a month.

What a cost headwind is

In corporate language, a headwind is any Factor that pushes against profit growth. A cost headwind specifically refers to rising expenses, whether for raw materials, packaging, energy, transport or labour, that a Business must either absorb, offset through efficiency or pass on to customers through higher prices.

For a bottler, the list of inputs is long: sweeteners and other ingredients, aluminium for cans, plastic for bottles, glass, energy for production lines and fuel for distribution fleets. According to Walker, commodities account for about 25% of CCEP's total cost of goods. The remaining three-quarters covers other costs of producing and delivering drinks.

For illustration only, imagine a hypothetical business with €100 of cost of goods, of which €25 is commodities. If Commodity prices rose by 10%, that would add €2.50 to costs (10% × €25), equivalent to 2.5% of the €100 total. The example uses round, made-up numbers and does not represent CCEP's actual cost structure or any forecast; it simply shows how a commodity share of around a quarter dampens the effect of price moves on total costs.

Why 2026 is protected and 2027 is less certain

CCEP said its commodity needs are more than 95% hedged for 2026. Hedging involves fixing prices for future purchases in advance, typically through contracts with suppliers or financial instruments. It gives a company greater certainty over its costs for the hedged period.

The flip side is that hedges eventually expire. As a company moves into a new year, it must lock in prices for that period at whatever levels prevail in the market at the time. If prices have risen since the old hedges were put in place, costs step up. That is one general reason why a company can be well protected in the current year while still expecting higher costs in the next.

The broader environment helps explain the caution. Chief executive Damian Gammell said the geopolitical situation "has impacted operating costs" and described the consumer backdrop as challenging. Energy markets have been especially volatile. Brent Crude settled at $104.77 a barrel on Monday 2 November after a fall of more than 7%, and Reuters reported a further slide of about 2% on Tuesday as investors weighed talks aimed at ending the wars in Ukraine and Iran. Reuters also noted that elevated oil prices have fuelled Inflation fears, prompting many central banks to raise interest rates.

Before the conflict, which began in late February 2026, roughly a fifth of the world's Crude Oil and Natural Gas shipments passed through the Strait of Hormuz. Disruption on that scale can ripple through energy, transport and packaging costs, all of which matter to a drinks producer.

What the company has and has not said

CCEP has been explicit that it will not give 2027 guidance until its full-year results in February. That means there are no official numbers yet for revenue, profit or cost growth next year, and none should be inferred from Walker's comments.

What the company has provided is a direction of travel (higher headwinds than in 2026) and a sense of scale relative to recent history (well below 2022 and 2023). Those two years were marked by steep input-cost inflation across consumer goods, so the comparison suggests management sees next year's pressure as meaningful but more manageable.

The business also enters 2027 with some momentum. Third-quarter revenue rose to €5,764m, up 5.8% FX-neutral, with Volume up 3.6% and revenue per unit case up 2.2% to €5.46. Energy drink volumes rose 17.3%, Coca-Cola Zero Sugar 9.7% and water 10.8%. Pricing and mix, along with volume, are among the levers a company can pull when costs rise, although how much any of them can offset next year's headwinds remains to be seen.

For 2026, CCEP reaffirmed guidance for revenue growth of 3% to 4%, operating profit growth of around 7%, comparable free Cash Flow of at least €1.7bn and a Dividend payout of about 50% of comparable earnings per share. It also declared a €1.42 second-half dividend, with a Record Date of Friday 20 November, and expects to conclude its €1bn buyback this year, with about €880m completed by 30 October.

Key dates to watch

Thu 5 Nov:Bank of England MPC decision, with a 25bp rise to 4% widely expected, the first increase since August 2023.

Fri 6 Nov:US October jobs report.

Thu 12 Nov:ONS first quarterly GDP estimate for July–September 2026 (7:00am).

Fri 20 Nov:CCEP record date for the €1.42 interim dividend.

February 2027:CCEP full-year results, with first 2027 guidance.

The bottom line

CCEP's message on 2027 costs was carefully balanced. Headwinds are expected to rise compared with 2026, when the company is more than 95% hedged on commodities, but they are described as far smaller than the surge of 2022 and 2023. With commodities making up about a quarter of cost of goods, energy and geopolitical developments will feed into how that picture evolves.

The market's initial response, a 2.1% fall on a day when revenue beat forecasts, suggests investors are giving weight to the uncertainty. Clarity is unlikely before February, when CCEP sets out its first guidance for 2027. Until then, oil prices, Interest Rate decisions and consumer conditions across its markets may be the most useful indicators of the pressures the company faces.