Weight loss medications and non-alcoholic alternatives are causing American consumers to hesitate in purchasing sodas.
Despite this trend, Coca-Cola reported solid earnings for the second quarter, benefitting from strong global demand for its beverages, which led the company to revise its full-year forecasts upward. CEO James Quincey expressed optimism about the results, highlighting solid growth in revenue and operating income amid changing market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the same quarter. Quincey explained that this downturn was largely due to decreased performance in away-from-home channels, which include water, sports drinks, coffee, tea, and sodas.
The decline was somewhat mitigated by the popularity of Fairlife milk and Coca-Cola’s own soda, which ranked first and second in retail sales growth for the quarter. To compensate for this downward trend, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meal offerings. The company is reportedly working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded Wall Street’s expectations, reporting revenues of $12.4 billion for the second quarter, translating to earnings of about $0.84 per share. Analysts had predicted $11.76 billion in revenue and earnings of approximately $0.81 per share.
Furthermore, Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, revised from an earlier estimate of 8% to 9%.
Meanwhile, Pepsi is facing similar challenges as it struggles to engage U.S. consumers who are increasingly favoring products focused on weight loss and healthier lifestyles. Additionally, a series of product recalls contributed to Pepsi’s lackluster performance in the second quarter.