Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the rise of weight loss medications and non-alcoholic beverage choices. Despite this trend, Coca-Cola announced strong earnings for the second quarter on Tuesday, bolstered by high global demand for its beverages, leading the company to revise its full-year forecast upward.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, citing significant growth in both revenue and operating income during a challenging market. However, volume sales in North America fell by 1% during the quarter. Quincey attributed this decline to reduced sales in away-from-home channels, including water, sports drinks, coffee, tea, and soda.
The company noted that this decline was somewhat mitigated by strong sales of Fairlife milk and its flagship product, Coca-Cola, which ranked first and second in retail sales growth in the quarter. To counteract volume losses, Coca-Cola is collaborating with fast-food restaurants to include its sodas in combo meals, specifically partnering with McDonald’s to enhance its $5 meal deal that features a soft drink.
Coca-Cola performed better than analysts had anticipated, reporting revenues of $12.4 billion, equating to approximately $0.84 per share, while Wall Street had predicted $11.76 billion in revenue, or about $0.81 per share. The company has now increased its forecast for organic revenue growth from a previous range of 8% to 9% to a new range of 9% to 10%.
Pepsi is also facing challenges in capturing the interest of U.S. consumers who are leaning more toward healthier options focused on weight management. Additionally, Pepsi cited a number of recalls as a factor affecting its modest second-quarter performance.