Consumers in the U.S. are delaying soda purchases due to the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, fueled by robust global demand for its beverages, which led the company to raise its full-year forecasts.
CEO James Quincey expressed optimism about the company’s performance, highlighting solid growth in revenue and operating income amid a changing market landscape. Nonetheless, Coca-Cola experienced a 1% decline in volume sales in North America for the quarter, attributed to weakened performance in away-from-home channels, including water, sports drinks, coffee, tea, and soda.
The downturn was somewhat mitigated by successes in Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth. Quincey mentioned that the company is collaborating with food chains to include its beverages in combo meal deals, specifically highlighting efforts with McDonald’s to enhance its $5 meal deal offering.
Overall, Coca-Cola’s performance exceeded Wall Street expectations, with the company reporting $12.4 billion in revenue for the second quarter, translating to approximately $0.84 per share, surpassing forecasts of $11.76 billion in revenue and $0.81 per share. The revised forecast now anticipates organic revenue growth of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, PepsiCo is facing challenges as U.S. consumers increasingly favor products focusing on weight loss and healthier lifestyles. Additionally, Pepsi cited several product recalls as contributing factors to its lackluster second-quarter performance.