In the United States, consumers are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, fueled by robust global demand for its beverage products, leading the company to enhance its full-year forecast.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second quarter, citing solid growth in both revenue and operating income amid a fluctuating market. However, the company experienced a 1% decline in volume sales in North America, attributed to decreased demand in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda.
This decline was somewhat mitigated by the success of its Fairlife milk brand and Coke, which ranked high in retail sales growth during the quarter. To counteract the downturn, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meal offerings, including a partnership with McDonald’s to enhance its $5 meal deal, which features a soft drink option.
Overall, Coca-Cola exceeded Wall Street’s expectations with second-quarter revenues reaching $12.4 billion, or approximately $0.84 per share. Analysts had projected revenues of $11.76 billion, equating to roughly $0.81 per share, according to FactSet.
The company has raised its forecast for organic revenue growth to between 9% and 10%, adjusting its earlier estimate of 8% to 9%. In a similar vein, Pepsi is facing challenges in attracting U.S. consumers, who are gravitating towards products that emphasize weight loss and healthier lifestyles. Additionally, Pepsi cited a series of product recalls as a factor contributing to its subdued performance in the second quarter.