Consumers in the U.S. are becoming more selective about their beverage choices, often opting for weight loss drugs and non-alcoholic alternatives, leading to a slowdown in soda sales.
Despite this trend, Coca-Cola reported strong second-quarter earnings, benefiting from robust global demand for its beverages, which prompted the company to increase its full-year forecast.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s performance, noting solid growth in revenue and operating income despite a challenging market. However, the company did experience a 1% decline in volume sales in North America. Quincey attributed this drop to weaker sales in venues outside the home, including water, sports drinks, coffee, tea, and sodas.
The decline was partially balanced by gains in the company’s Fairlife milk products and the success of its flagship beverage, Coke, which ranked highly in retail sales growth during the quarter. To address the volume decrease, Coca-Cola is collaborating with food chains to incorporate its sodas into meal deals, notably working with McDonald’s to enhance its $5 meal option that includes a soft drink.
Coca-Cola’s financial results surpassed analysts’ expectations, reporting $12.4 billion in revenue for the second quarter, equating to $0.84 per share, while Wall Street had predicted $11.76 billion in revenue, or approximately $0.81 per share.
In response to the evolving market, Coca-Cola has updated its forecast for organic revenue growth to a range of 9% to 10%, an increase from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in capturing consumer interest in the U.S., as many shoppers lean towards healthier habits and weight loss products. The company reported lackluster results for its second quarter, partly due to a series of product recalls earlier in July.