In the United States, weight loss medications and the availability of non-alcoholic beverages have led to a decline in soda purchases.
Despite this trend, Coca-Cola reported strong earnings for the second quarter, benefiting from global demand for its beverage offerings, which prompted the company to raise its financial outlook for the year.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, noting solid growth in revenue and operating income despite the challenging environment.
Nevertheless, sales volume in North America dropped by 1% during the quarter. Quincey explained that this decline was attributed to weakened sales in “away-from-home channels,” which includes water, sports drinks, coffee, tea, and sodas.
To mitigate the impact of declining soda sales, Coca-Cola saw some success with its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth for the period.
Quincey indicated that the company is collaborating with restaurant chains to incorporate sodas into meal combos, specifically noting efforts to support McDonald’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola’s performance surpassed Wall Street predictions. The company recorded $12.4 billion in revenue during the second quarter, equating to approximately $0.84 per share, whereas analysts had anticipated revenues of $11.76 billion or about $0.81 per share.
Coca-Cola has also revised its forecast for organic revenue growth, now estimating an increase of 9% to 10%, compared to its prior projection of 8% to 9%.
PepsiCo has faced similar challenges, struggling to engage U.S. consumers who are increasingly prioritizing healthier options and weight-loss products. In early July, Pepsi noted that a series of product recalls contributed to its lackluster performance in the second quarter.