Weight loss medications and the rising popularity of non-alcoholic beverages have led consumers in the U.S. to refrain from purchasing sodas. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its beverage products, prompting the company to increase its full-year guidance.
James Quincey, Coca-Cola’s CEO, stated, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
Nonetheless, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey explained to investors that the dip in its U.S. division was attributed to “softness in away-from-home channels,” which encompasses its offerings of water, sports drinks, coffee, tea, and sodas.
This decline was slightly mitigated by sales from its Fairlife milk brand and its flagship soda, Coke, which ranked first and second in retail sales growth during the quarter.
To counteract the sales drop, Quincey mentioned that Coca-Cola is collaborating with food chains to include its beverages in combo meals. The company is reportedly working with McDonald’s to enhance the fast-food chain’s $5 meal deal, which features a soft drink.
Overall, Coca-Cola surpassed Wall Street’s expectations, generating $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had predicted the company would report revenues of $11.76 billion, or around $0.81 per share.
Coca-Cola has now projected organic revenue growth between 9% and 10%, raising its earlier forecast of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are increasingly favoring products associated with weight loss and healthier lifestyles. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.