Consumer interest in weight loss medications and non-alcoholic alternatives is impacting soda sales, particularly in the U.S. market.
Despite this trend, Coca-Cola reported strong second-quarter earnings, buoyed by solid global demand for its products, and subsequently increased its full-year revenue forecast.
Coca-Cola CEO James Quincey 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, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed the downturn in the U.S. division to “softness in away-from-home channels,” which encompasses water, sports drinks, coffee, tea, and soda.
This decline was partially offset by growth in Fairlife milk sales and strong performances from Coca-Cola’s namesake soda, which ranked first and second in retail sales growth, respectively.
To mitigate the decline, Coca-Cola is collaborating with restaurant chains to include its sodas in combo meal deals. Reports indicate that Coca-Cola is working with McDonald’s to enhance the fast-food chain’s $5 meal deal that includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, which translates to approximately $0.84 per share. Analysts had anticipated revenue of $11.76 billion or about $0.81 per share.
The company adjusted its forecast for organic revenue growth to between 9% and 10%, up from the prior expectation of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are increasingly leaning towards products that support healthier lifestyles and weight loss. Additionally, Pepsi cited a series of product recalls as a contributing factor to its sluggish second-quarter performance.