Weight loss medications and non-alcoholic alternatives are leading U.S. consumers to reduce their soda purchases.
Despite this trend, Coca-Cola announced strong second-quarter earnings, which were bolstered by solid global demand for its beverages. Following these results, the company has raised its full-year guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter performance, highlighting the successful topline and operating income growth amidst shifting market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained that this drop was primarily due to weaker sales in away-from-home categories, which encompass water, sports drinks, coffee, tea, and soda.
The decline was somewhat mitigated by growth in Fairlife milk and notable sales for Coca-Cola’s sodas, which ranked first and second in retail sales growth for the quarter.
To counteract the volume dip, Coca-Cola is collaborating with food chains to integrate its soda into combo meals, including a partnership with McDonald’s aimed at enhancing the fast-food chain’s $5 meal deal.
Overall, Coca-Cola exceeded Wall Street’s expectations for the quarter, reporting revenues of $12.4 billion, or approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion and $0.81 per share.
The company has revised its forecast for organic revenue growth to between 9% and 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi is finding it challenging to engage U.S. consumers who are gravitating towards healthier and weight-focused options. In a separate announcement earlier in July, Pepsi cited a series of product recalls as a factor contributing to its lackluster second-quarter performance.