In the U.S., the rise of weight loss medications and non-alcoholic beverage alternatives has led to a decline in soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by high global demand for its products, which prompted the company to raise its full-year financial forecasts.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s overall performance, highlighting solid growth in sales and operating income amidst changing market conditions. However, the company’s North American volume sales dipped by 1% during the quarter. Quincey attributed this decline primarily to reduced consumer activity in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The sales drop was somewhat mitigated by the popularity of Coca-Cola’s Fairlife milk and its flagship soda, which showed strong retail sales growth in the same period. To combat the sales decline, Coca-Cola is collaborating with food chains to incorporate its soft drinks into combo meal deals, specifically noting efforts with McDonald’s to enhance their $5 meal deal that includes a beverage.
Overall, Coca-Cola exceeded Wall Street forecasts, reporting $12.4 billion in revenue and earnings of approximately $0.84 per share, compared to analyst expectations of $11.76 billion in revenue and $0.81 per share. The company also raised its forecast for organic revenue growth to between 9% and 10%, up from a prior estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly favoring products aligned with weight loss and wellness. In early July, Pepsi cited a series of product recalls as a factor impacting its lackluster second-quarter performance.