In the United States, the rise of weight loss medications and non-alcoholic beverage options is leading to a decrease in soda consumption among consumers.
Despite these trends, Coca-Cola delivered strong second-quarter earnings, benefiting from high global demand for its beverage products, which prompted the company to revise its full-year forecast upwards.
“We are encouraged by our second-quarter results, which showed solid revenue and operating income growth amid a changing market,” stated James Quincey, CEO of Coca-Cola.
However, Coca-Cola reported a 1% decline in volume sales in North America during the quarter. Quincey explained to investors that this drop was due to “softness in away-from-home channels,” which encompass categories such as water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the performance of its Fairlife milk product and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth for the quarter.
To combat the decline, Quincey noted that Coca-Cola is collaborating with food chains to integrate its sodas into combo meals, including efforts with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, the company surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to earnings of approximately $0.84 per share. Analysts had anticipated revenues of $11.76 billion, or about $0.81 per share.
Coca-Cola has adjusted its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly favoring products that focus on weight loss and healthier lifestyles. Early in July, Pepsi cited a series of product recalls as a reason for its disappointing performance in the second quarter.