In the United States, the popularity of weight loss drugs and non-alcoholic beverages is causing consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola announced strong second-quarter earnings, driven by high global demand for its beverages, prompting the company to raise its full-year guidance. CEO James Quincey expressed optimism about the solid growth in both revenue and operating income amid changing market conditions.
However, in North America, volume sales were down by 1% during the quarter. Quincey noted that this decline was primarily due to weaknesses in away-from-home channels, including water, sports drinks, coffee, tea, and sodas. The drop was somewhat mitigated by the popularity of Fairlife milk and Coke, which ranked first and second in retail sales growth for the quarter.
To combat the volume decline, Coca-Cola is collaborating with restaurant chains to promote its sodas in combo meals. Reports indicate that the company is working with McDonald’s to enhance its $5 meal deal that features a soft drink.
Overall, the beverage giant surpassed Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, equating to about $0.84 per share, while analysts had anticipated revenue of $11.76 billion, or roughly $0.81 per share. Coca-Cola has also revised its forecast for organic revenue growth upwards, now estimating an increase between 9% and 10%, from its previous prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers, who are increasingly opting for products that support weight loss and healthier lifestyles. Additionally, in early July, Pepsi cited a series of product recalls as contributing factors to its lackluster second quarter results.