Weight loss medications and non-alcoholic drink options are leading U.S. consumers to hesitate in their soda purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely fueled by robust global demand for its beverage products, prompting the company to revise its full-year projections upward.
Coca-Cola CEO James Quincey expressed optimism about the second quarter results, which showcased solid growth in both revenue and operating income amidst a shifting market landscape.
Despite this success, the company’s North American volume sales took a hit, declining by 1% in the quarter. Quincey attributed this downturn to weaker sales in “away-from-home channels” including its water, sports drinks, coffee, tea, and soda offerings.
The volume decline was partially mitigated by sales from its Fairlife milk brand and Coca-Cola itself, both of which ranked among the top growth products in retail sales for the quarter.
To counteract the volume decrease, Quincey revealed that Coca-Cola is collaborating with food service chains to include its sodas in combo meal offerings. The company is reportedly working with McDonald’s to enhance the appeal of its $5 meal deal, which features a soft drink.
Overall, Coca-Cola exceeded Wall Street predictions, generating $12.4 billion in revenue during the second quarter, equating to roughly $0.84 per share, surpassing the expected $11.76 billion and $0.81 per share as projected by analysts from FactSet.
The company has now raised its forecast for organic revenue growth to between 9% and 10%, an increase from its earlier estimate of 8% to 9%.
Similarly, Pepsi has been facing challenges in engaging U.S. consumers, who are increasingly opting for products that emphasize weight loss and healthier lifestyles. In early July, Pepsi noted that a series of recalls contributed to its lackluster performance in the second quarter.