Consumers in the U.S. are increasingly opting for weight loss medications and non-alcoholic beverages, which is impacting soda sales.
Despite this trend, Coca-Cola reported strong second-quarter earnings, bolstered by global demand for its products, and subsequently raised its full-year forecasts.
CEO James Quincey expressed optimism about the company’s performance, highlighting solid revenue and operating income growth amidst evolving market conditions.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this decline was attributed to reduced sales in certain “away-from-home” channels, including water, sports drinks, coffee, tea, and soda products.
This decrease was somewhat countered by the success of its Fairlife milk brand and its flagship soda, Coca-Cola, which led in retail sales growth during the quarter.
To mitigate the volume decline, Coca-Cola is collaborating with restaurant chains to integrate its sodas into combo meals. The company is reportedly working with McDonald’s to enhance their $5 meal deal, which includes a soft drink.
Overall, Coca-Cola exceeded Wall Street expectations with second-quarter revenues of $12.4 billion, translating to about $0.84 per share, outperforming forecasts of $11.76 billion and $0.81 per share, according to FactSet.
The company’s revised forecast now anticipates organic revenue growth of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers, who are increasingly leaning towards health-conscious and weight loss-oriented products. Earlier this month, Pepsi attributed its underwhelming second-quarter performance to a series of product recalls.