Weight loss medications and non-alcoholic alternatives are causing U.S. consumers to hesitate before purchasing sodas. Despite these trends, Coca-Cola reported strong second-quarter earnings, bolstered by substantial global demand for its beverages, leading the company to increase its annual forecast.
James Quincey, the CEO of Coca-Cola, expressed optimism about the company’s performance, stating, “We are encouraged with our second-quarter results, which delivered solid topline and operating income growth in an ever-changing landscape.”
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this downturn in their U.S. business stemmed from “softness in away-from-home channels,” affecting their water, sports drinks, coffee, tea, and soda categories.
The decline was partially mitigated by the success of Fairlife milk and the Coca-Cola brand itself, which managed to secure top positions in retail sales growth during the quarter. To further address this decline, Quincey mentioned that Coca-Cola is collaborating with food chains to integrate its soda offerings into combo meals. A partnership with McDonald’s is reportedly underway to enhance the fast food chain’s $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue, translating to approximately $0.84 per share, against analysts’ predictions of $11.76 billion or about $0.81 per share, according to FactSet. The company has revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Like Coca-Cola, Pepsi is also facing challenges in attracting U.S. consumers, who are leaning more towards weight loss products and healthier choices. In early July, Pepsi attributed its lackluster second quarter to a series of product recalls.