Consumer preferences for weight loss medications and non-alcoholic beverages are leading to a slowdown in soda sales, particularly in the United States. Despite these challenges, Coca-Cola reported strong second-quarter earnings, buoyed by robust global demand for its beverages, prompting the company to upgrade its full-year financial outlook.
Coca-Cola CEO James Quincey expressed optimism regarding the company’s performance, highlighting solid growth in both revenue and operating income during a time of significant market change.
However, Coca-Cola’s sales volume in North America fell by 1% during the quarter. Quincey attributed the decline primarily to decreased sales in away-from-home venues, which encompass beverages like water, sports drinks, coffee, tea, and soda.
To mitigate the drop in sales, the company noted that its Fairlife milk product and Coke itself performed well, ranking first and second in retail sales growth respectively. Quincey mentioned that Coca-Cola is strategizing with food chains to incorporate its beverages into combo meals, with initiatives reportedly taking place with McDonald’s to enhance their $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded analyst expectations, reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share. This surpassed the market’s forecast of $11.76 billion, or roughly $0.81 per share.
The company has adjusted its forecast for organic revenue growth to between 9% and 10%, increasing from the earlier estimate of 8% to 9%.
Similarly, PepsiCo is facing difficulties in attracting U.S. consumers who are increasingly drawn to weight-loss-focused and healthier alternatives. In a recent report, Pepsi attributed its subdued second-quarter performance to a series of product recalls.