In the United States, consumer preferences are shifting due to the rise of weight loss medications and non-alcoholic beverage options, leading to a slowdown in soda purchases.
Despite these trends, Coca-Cola reported strong second-quarter earnings, benefiting from solid global demand for its products. This performance prompted the company to raise its full-year revenue projections. CEO James Quincey stated in a report that the results demonstrated substantial growth in both sales and operating income amid a changing market landscape.
However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to reduced sales in away-from-home channels, which include water, sports drinks, coffee, tea, and soda. Yet, Coca-Cola’s Fairlife milk and its flagship soda, Coke, showed positive performance, ranking first and second in retail sales growth, respectively.
To address the decline in other areas, Coca-Cola is collaborating with food chains to incorporate its beverages into combo meal options. The company is notably working with McDonald’s to enhance its $5 meal deal, which includes a soft drink.
Coca-Cola’s financial performance surpassed Wall Street’s expectations, reporting revenue of $12.4 billion for the second quarter, equating to about $0.84 per share. This exceeded the anticipated revenue of $11.76 billion or roughly $0.81 per share, as projected by FactSet.
The company has now revised its forecast for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is finding it challenging to engage U.S. consumers, who are increasingly focusing on healthier options and weight loss products. Additionally, Pepsi cited a series of product recalls as a contributing factor to its disappointing second-quarter results.