Consumers in the U.S. are increasingly turning to weight loss medications and non-alcoholic alternatives, resulting in a slowdown in soda purchases. Despite this trend, Coca-Cola reported strong second-quarter earnings, citing significant global demand for its beverage offerings. This performance led the company to raise its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the company’s results, highlighting the solid growth in revenue and operating income amidst a changing market. However, the company did experience a 1% decline in volume sales in North America, attributed to reduced activity in away-from-home channels that encompass water, sports drinks, coffee, tea, and sodas.
The decline in soda sales was somewhat balanced by strong performance from Fairlife milk and its flagship product, Coke, which ranked highly in retail sales growth for the quarter. To combat the sales decrease, Coca-Cola is collaborating with fast food chains to integrate its sodas into combo meals, specifically working with McDonald’s to enhance its $5 meal deal.
The company exceeded Wall Street’s expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, surpassing the anticipated $11.76 billion or $0.81 per share. Coca-Cola has also revised its organic revenue growth forecast upward to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers as they shift toward healthier habits and weight loss products. In early July, Pepsi pointed to several product recalls as a factor contributing to its lackluster performance in the second quarter.