Consumers in the U.S. are increasingly turning to weight loss drugs and non-alcoholic alternatives, leading to a slowdown in soda purchases. However, Coca-Cola reported strong earnings for the second quarter, bolstered by robust global demand for its beverages, prompting the company to raise its full-year projections.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s second-quarter results, highlighting significant growth in both revenue and operating income in a changing market.
Despite overall success, Coca-Cola’s volume sales in North America experienced a 1% decline during the quarter. Quincey attributed this dip to decreased sales in “away-from-home channels,” which encompass water, sports drinks, coffee, tea, and sodas.
This decline was partially mitigated by the performance of Fairlife milk and Coca-Cola’s flagship soda, which ranked first and second in retail sales growth for the quarter. To combat the sales decrease, Coca-Cola is collaborating with fast-food chains to integrate its soda into combo meal offerings, including partnerships with McDonald’s to enhance its $5 meal deal.
Overall, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue, approximately $0.84 per share, compared to the forecast of $11.76 billion, or roughly $0.81 per share, according to FactSet.
The company has now updated its forecast for organic revenue growth to between 9% and 10%, a revision from the previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in attracting U.S. consumers who are more focused on weight loss and healthier options. Recently, Pepsi cited product recalls as a reason for its lackluster performance in the second quarter.