Weight loss drugs and non-alcoholic alternatives are leading consumers in the U.S. to reduce soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its beverages, and subsequently raised its full-year financial guidance.
CEO James Quincey expressed optimism about the second-quarter performance, highlighting solid revenue and operating income growth despite the industry’s challenges. However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, attributed to weaker sales in “away-from-home channels” such as water, sports drinks, coffee, tea, and sodas.
This decline was partially offset by sales from Fairlife milk and the company’s flagship soda, Coke, which ranked first and second in retail sales growth for the quarter. To combat the drop in soda sales, Coca-Cola is collaborating with fast-food chains to incorporate its sodas into combo meals, notably working with McDonald’s on its $5 meal deal that includes a soft drink.
Coca-Cola surpassed Wall Street’s expectations, reporting $12.4 billion in revenue for the quarter, equating to about $0.84 per share, while analysts had anticipated $11.76 billion in revenue or roughly $0.81 per share. The company has revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Meanwhile, Pepsi is facing similar challenges in capturing the interest of U.S. consumers, who are increasingly focused on health-conscious products and reducing alcohol consumption, as indicated by a Gallup poll. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.