Weight loss medications and non-alcoholic beverage alternatives are causing consumers in the U.S. to buy fewer sodas. Despite this trend, Coca-Cola reported strong earnings for the second quarter, enhanced by robust global demand for its products, prompting the company to increase its full-year forecast.
Coca-Cola CEO James Quincey expressed optimism about the company’s second-quarter performance, which showcased solid growth in revenue and operating income amid changing market dynamics.
However, volume sales in North America fell by 1% during the same period. Quincey attributed this decline to a reduction in sales through away-from-home channels, which includes products like water, sports drinks, coffee, tea, and soda.
The drop in sales was somewhat mitigated by the success of Fairlife milk and strong growth in Coca-Cola’s flagship beverage, which ranked first and second in retail sales growth for the quarter. To combat the downturn in soda sales, Coca-Cola is collaborating with fast-food chains to incorporate its products into combo meals, notably with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Overall, Coca-Cola surpassed Wall Street forecasts, reporting revenues of $12.4 billion for the second quarter, or approximately $0.84 per share, contrasting with analysts’ expectations of $11.76 billion and about $0.81 per share.
The company has raised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier prediction of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly drawn to products that emphasize weight loss and healthier lifestyles. Recently, Pepsi cited a series of product recalls as a factor contributing to its lackluster performance in the second quarter.