In the U.S., consumers are increasingly delaying soda purchases due to the popularity of weight loss drugs and non-alcoholic beverages. Despite this trend, Coca-Cola reported strong earnings for the second quarter, supported by robust global demand for its products, leading the company to raise its full-year financial outlook.
Coca-Cola CEO James Quincey expressed optimism about the company’s performance, citing significant growth in topline and operating income amidst changing market conditions. However, the company noticed a 1% decline in volume sales in North America during the quarter. Quincey attributed this drop to weakness in away-from-home channels, which encompass soda, water, sports drinks, coffee, and tea sales.
This decline was partially balanced by the success of Coca-Cola’s Fairlife milk and flagship soda products, which ranked first and second in retail sales growth, respectively. To combat the drop in sales, Coca-Cola is collaborating with restaurants to include its soda in combo meals, with reports indicating a partnership with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s overall performance exceeded Wall Street’s expectations, with revenues hitting $12.4 billion in the second quarter, translating to about $0.84 per share, outperforming the anticipated $11.76 billion and $0.81 per share. The company revised its forecast for organic revenue growth to a range of 9% to 10%, an increase from its previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in engaging U.S. consumers as preferences shift towards healthier options and weight loss initiatives. In July, Pepsi attributed its lackluster second quarter performance to several product recalls.