Recent trends in weight loss medications and non-alcoholic beverage options have led to a decline in soda purchases among U.S. consumers. Despite this, Coca-Cola reported strong earnings for the second quarter, largely due to increased global demand for its beverages, which led the company to enhance its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance during the earnings call, noting significant growth in revenue and operating income despite an evolving market landscape. However, the North American region experienced a 1% drop in volume sales during the same period. Quincey attributed this decline in the U.S. market to lower sales in “away-from-home” channels, which encompass products like water, sports drinks, coffee, tea, and soda.
Coca-Cola’s losses were somewhat mitigated by the success of its Fairlife milk brand and its flagship soda, which performed well in retail sales growth rankings. To combat the downward trend, the company is collaborating with food chains to include its sodas in combo meal deals, including an initiative with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, Coca-Cola’s second-quarter results surpassed analyst expectations, reporting revenues of $12.4 billion, equating to approximately $0.84 per share. This performance exceeded Wall Street’s projections of $11.76 billion in revenue, or about $0.81 per share. The company has also adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from the previous estimate of 8% to 9%.
Pepsi, similarly, has faced challenges in appealing to U.S. consumers who are gravitating towards healthier lifestyles and weight management products. In July, Pepsi cited a series of product recalls as a factor contributing to its lackluster performance in the second quarter.