Consumers in the U.S. are becoming more cautious about soda purchases, influenced by the rising popularity of weight loss medications and non-alcoholic alternatives. Despite this trend, Coca-Cola reported strong earnings for the second quarter, buoyed by robust global demand for its beverages, which led the company to raise its full-year outlook.
Coca-Cola’s CEO, James Quincey, expressed optimism about the company’s performance, stating that the results reflected solid growth in revenue and operating income amid a changing market. However, the company experienced a 1% decline in volume sales in North America. Quincey attributed this drop to reduced sales in “away-from-home channels,” which encompass its beverage offerings such as water, sports drinks, coffee, tea, and sodas.
The decline in volume sales was partially counteracted by strong sales from Fairlife milk and its flagship soda, Coke, which reportedly secured top positions in retail sales growth. To combat the downward trend, Coca-Cola is strategizing with food chains to incorporate its sodas into combo meals, highlighting efforts to support McDonald’s $5 meal deal, which features a soft drink.
Despite the volume drop, Coca-Cola surpassed Wall Street’s expectations with second-quarter revenue of $12.4 billion, approximately $0.84 per share, compared to analysts’ predictions of $11.76 billion, or about $0.81 per share.
As a result of this performance, the company has revised its forecast for organic revenue growth, now predicting an increase between 9% and 10%, up from the earlier estimate of 8% to 9%.
Similar to Coca-Cola, Pepsi is facing challenges as U.S. consumers shift toward products that emphasize weight control and healthy choices. Additionally, Pepsi attributed a lackluster second quarter to a series of product recalls.