Consumers in the U.S. are hesitating to purchase sodas due to weight loss medications and non-alcoholic beverage options gaining popularity, yet Coca-Cola reported strong earnings for the second quarter. This robust performance has led the beverage company to revise its full-year projections upwards.
Coca-Cola CEO James Quincey expressed satisfaction with the quarter’s results, highlighting solid revenue and operating income growth amid changing market conditions. However, the North American segment saw a 1% decline in volume sales, mainly attributed to weak performance in away-from-home channels that include water, sports drinks, coffee, tea, and sodas.
Notably, Coca-Cola’s Fairlife milk and its flagship soda, Coke, contributed positively, leading retail sales growth in their respective categories. To combat the decrease in volume, Quincey mentioned that Coca-Cola is collaborating with restaurant chains to incorporate its sodas into combo meals, specifically noting efforts to enhance McDonald’s $5 meal deal which includes a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street predictions, reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share, surpassing the anticipated $11.76 billion and $0.81 per share. The company has increased its forecast for organic revenue growth to a range of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing difficulties attracting U.S. consumers, who are increasingly favoring health-conscious and weight-loss friendly products. Additionally, Pepsi recently pointed to a series of product recalls as a contributing factor to its lackluster second quarter results.