Consumers in the U.S. are holding back on soda purchases, influenced by the popularity of weight loss drugs and non-alcoholic beverages. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, capitalizing on strong global demand for its offerings, which led the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about their second-quarter results, highlighting solid revenue and operating income growth amid a changing market. However, the North American market saw a 1% decline in volume sales during the quarter, attributed to decreased performance in “away-from-home channels,” including water, sports drinks, coffee, tea, and soda.
The decline in volume sales was partly mitigated by growth in its Fairlife milk brand and Coca-Cola, which ranked first and second in retail sales growth, respectively. To address the reduction in sales, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its sodas into combo meal deals. For instance, they are reportedly working with McDonald’s to enhance the value of its $5 meal deal, which includes a drink.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue for the quarter, translating to approximately $0.84 per share, compared to the expected $11.76 billion and $0.81 per share. The company now anticipates organic revenue growth between 9% and 10%, up from its earlier prediction of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are leaning more towards products that favor healthy habits and weight management. Additionally, Pepsi has attributed its lackluster second-quarter performance to several product recalls.