In the U.S., the rising popularity of weight loss medications and non-alcoholic beverages is leading consumers to reconsider their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, primarily due to robust global demand for its products, which prompted the company to revise its full-year outlook upward.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s performance, noting solid revenue and operating income growth in a changing market. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed this decrease to lower sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and soda.
The decline in soda sales was somewhat mitigated by increased sales of Fairlife milk and strong retail performance of Coca-Cola’s signature beverage, which ranked first and second in sales growth for the quarter, respectively. To combat declining soda sales, Coca-Cola is collaborating with fast-food chains to incorporate its drinks into combo meals, with a particular focus on McDonald’s $5 meal deal, which includes a soft drink.
Despite these challenges, Coca-Cola exceeded Wall Street estimates, reporting $12.4 billion in revenue, which translates to approximately $0.84 per share. Analysts had expected the company to generate $11.76 billion in revenue, or about $0.81 per share, according to FactSet.
Coca-Cola has now adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its prior estimate of 8% to 9%. Similarly, Pepsi is facing difficulties attracting U.S. consumers, who are increasingly favoring products associated with weight loss and healthier lifestyles. In early July, Pepsi attributed its lackluster second-quarter performance to a series of product recalls.