Consumers in the U.S. are increasingly holding back on soda purchases due to the growing popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong second-quarter earnings driven by global demand for its beverages, leading the company to raise its full-year outlook.
CEO James Quincey expressed optimism about the company’s quarterly results, highlighting significant growth in revenue and operating income amidst a shifting market landscape. However, the company did experience a 1% decline in volume sales in North America. During the earnings call, Quincey noted that this decline was attributed to softness in away-from-home channels, which encompasses various products, including soda, water, sports drinks, and coffee.
To mitigate this drop, Coca-Cola is enhancing partnerships with food chains to integrate its sodas into combo meals. Notably, the company is collaborating with McDonald’s to enhance the appeal of its $5 meal deal that features a soft drink.
Despite the volume decline, Coca-Cola exceeded Wall Street expectations with reported revenues of $12.4 billion for the second quarter, translating to about $0.84 per share. Analysts had predicted revenues of $11.76 billion, or approximately $0.81 per share.
Coca-Cola has now adjusted its forecast for organic revenue growth, projecting an increase of 9% to 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in the U.S. as consumers lean towards healthier products and weight loss options. The company cited a series of product recalls as a contributing factor to its subdued performance in the second quarter.