Consumers in the U.S. are hesitating to purchase sodas due to the rise of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola announced strong second-quarter earnings, driven by significant global demand for its beverages, leading the company to revise its full-year earnings guidance upward.
CEO James Quincey expressed optimism about the results, noting the solid growth in revenue and operating income amidst a changing market environment. However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter, primarily attributed to decreased demand in away-from-home channels that include water, sports drinks, coffee, tea, and soda.
This decline was partially countered by sales from its Fairlife milk brand and the Coca-Cola soda, which ranked first and second in retail sales growth, respectively. To address the sales drop, the company is collaborating with fast food chains to incorporate its sodas into combo meals, particularly with McDonald’s to enhance its $5 meal deal that includes a soft drink.
In financial performance, Coca-Cola exceeded Wall Street expectations by reporting $12.4 billion in revenue for the quarter, equating to approximately $0.84 per share. Analysts had projected the company would bring in $11.76 billion, or roughly $0.81 per share. Due to these results, Coca-Cola has raised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Similarly, Pepsi has faced challenges in the U.S. market, where consumers are increasingly favoring healthier options focused on weight loss. The company, in early July, attributed its modest second-quarter performance to several product recalls.