Consumers in the U.S. are increasingly hesitant to purchase sodas, influenced by the popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, largely due to a high demand for its beverages, leading the company to increase its annual guidance.
Coca-Cola’s CEO, James Quincey, expressed optimism regarding the second-quarter results, highlighting significant growth in both revenue and operating income amidst a shifting market landscape. However, the company experienced a 1% decline in volume sales in North America during the quarter. Quincey noted that this downturn was attributed to decreased sales in away-from-home channels, which encompass its water, sports drinks, coffee, tea, and soda products.
The decline in North American volume was somewhat balanced by gains in Coca-Cola’s Fairlife milk product as well as the strong performance of its flagship soda, which ranked first and second in retail sales growth for the quarter. To counteract the volume drop, Coca-Cola is collaborating with food chains to incorporate its sodas into combo meals, notably working with McDonald’s to enhance its $5 meal deal that includes a soft drink.
Coca-Cola’s performance exceeded Wall Street projections, reporting $12.4 billion in revenue for the second quarter, equating to approximately $0.84 per share. Analysts had anticipated revenue of around $11.76 billion, or approximately $0.81 per share. The company has now adjusted its forecast for organic revenue growth to between 9% and 10%, up from a previous estimate of 8% to 9%.
PepsiCo is facing similar challenges, as U.S. consumers are increasingly opting for health-conscious products. The company has cited several product recalls as a reason for its lackluster second quarter results.