In the U.S., the popularity of weight loss drugs and non-alcoholic beverages is impacting soda sales, yet Coca-Cola has reported strong second-quarter earnings, prompting the company to revise its full-year forecast upwards.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, highlighting solid revenue and operating income growth despite the challenging market. However, the company did experience a 1% decline in volume sales in North America during the quarter. Quincey attributed the drop in the U.S. division to decreased performance in away-from-home channels, which encompass water, sports drinks, coffee and tea, as well as sodas.
This decline was somewhat mitigated by the success of Coca-Cola’s Fairlife milk and its flagship soda, Coca-Cola, which led and followed in retail sales growth for the quarter. To counteract the volume decrease, the company is partnering with food chains to incorporate its soda into combo meals, including a collaboration with McDonald’s aimed at enhancing the $5 meal deal that comes with a soft drink.
Coca-Cola’s financial performance exceeded Wall Street expectations, reporting revenues of $12.4 billion and earnings of about $0.84 per share, surpassing forecasts of $11.76 billion and $0.81 per share according to FactSet. The company has now raised its forecast for organic revenue growth to between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in attracting U.S. consumers who are increasingly drawn to weight-conscious and healthier options. This trend includes a notable decline in alcohol consumption among young adults, as reported by Gallup. In July, Pepsi cited a series of product recalls as contributing factors to its lackluster second-quarter results.