In the United States, the rise of weight loss medications and non-alcoholic beverage choices is leading consumers to reduce their soda purchases.
Despite this trend, Coca-Cola announced strong second-quarter earnings, buoyed by solid global demand for its beverages, which has resulted in the company raising its full-year forecasts. CEO James Quincey expressed optimism about the company’s results, noting significant topline and operating income growth amid a shifting market.
However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey explained that the decrease was due to weaker sales in away-from-home channels, which encompass water, sports drinks, coffee, tea, and soda. The sales drop was somewhat mitigated by success from its Fairlife milk brand and the Coca-Cola soda line, which achieved notable retail sales growth.
To counterbalance the drop in soda sales, Coca-Cola is collaborating with restaurant chains to incorporate its products into combo meals. The company is reportedly partnering with McDonald’s to enhance the fast-food chain’s $5 meal deal, which includes a soft drink.
Coca-Cola’s financial performance exceeded Wall Street expectations, generating $12.4 billion in revenue during the second quarter, equating to about $0.84 per share, compared to analysts’ estimates of $11.76 billion and approximately $0.81 per share. The company has adjusted its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, PepsiCo is facing challenges in attracting U.S. consumers, who are increasingly embracing health-focused products, including weight loss options. In early July, Pepsi cited a series of product recalls as a factor affecting its subdued second-quarter performance.