Consumers in the U.S. are delaying soda purchases, influenced by weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings, which led the company to raise its projections for the year.
Coca-Cola CEO James Quincey expressed optimism regarding the quarter’s performance, noting significant growth in both revenue and operating income amidst changing consumer preferences. However, the company experienced a 1% decline in volume sales in North America, attributed to weaker demand in away-from-home categories, including water, sports drinks, coffee, tea, and soda.
The decrease in volume was somewhat mitigated by the popularity of Fairlife milk and Coke itself, both of which performed well in retail sales growth rankings. To counter falling sales, Coca-Cola is collaborating with restaurant chains to include its soda in combo meal deals, particularly focusing on enhancing promotions with McDonald’s for its $5 meal offering.
Overall, Coca-Cola surpassed Wall Street’s predictions with second-quarter revenues reaching $12.4 billion, translating to approximately $0.84 per share. Analysts had anticipated revenues of about $11.76 billion, or $0.81 per share. The company has adjusted its forecast for organic revenue growth, now expecting an increase between 9% and 10%, an improvement from its earlier expectation of 8% to 9%.
Similarly, Pepsi is also facing challenges in attracting U.S. consumers, who are increasingly leaning towards healthier options and weight loss-focused products. In July, Pepsi attributed its lackluster second-quarter performance to multiple product recalls.