Weight loss medications and non-alcoholic beverage alternatives are causing consumers in the U.S. to reduce their soda purchases. Despite this trend, Coca-Cola reported strong financial results for the second quarter, benefiting from robust global demand for its products, which led the company to raise its full-year revenue forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, noting solid topline and operating income growth amid changing market conditions. However, the company experienced a 1% decline in volume sales in North America during the quarter, attributed to weaker performance in away-from-home channels, which encompass water, sports drinks, coffee and tea, as well as soda.
This decline was mitigated somewhat by strong sales of Fairlife milk and Coca-Cola itself, with both products seeing significant growth in retail sales. To further combat the downturn, Quincey mentioned that Coca-Cola is collaborating with fast food chains to incorporate its soda into combo meal offerings, including partnership efforts with McDonald’s to enhance the appeal of their $5 meal deal.
Coca-Cola exceeded Wall Street’s expectations with second-quarter revenues of $12.4 billion, translating to earnings of about $0.84 per share. Analysts had predicted revenues of $11.76 billion, or roughly $0.81 per share.
Additionally, Coca-Cola has increased its forecast for organic revenue growth to between 9% and 10%, revising its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in appealing to U.S. consumers, who are favoring healthier options amidst growing weight loss trends. According to a Gallup poll, young adults in the U.S. are also consuming significantly less alcohol than before. Earlier in July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.