In the United States, the rise of weight loss drugs and non-alcoholic beverages has led to a decrease in soda sales, impacting major beverage companies. Despite this trend, Coca-Cola reported strong second-quarter earnings on Tuesday, fueled by robust global demand for its products, which prompted the company to raise its full-year financial outlook.
CEO James Quincey expressed optimism regarding the company’s performance, which showed significant growth in revenue and operating income despite a shifting market landscape. However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this decline to “softness in away-from-home channels,” which encompasses its offerings in water, sports drinks, coffee, tea, and sodas.
The decline in soda sales was slightly mitigated by the success of Fairlife milk and Coca-Cola’s signature beverage, which ranked first and second in retail sales growth, respectively. To counter the downward trend, the company is collaborating with fast-food chains to include its sodas in combo meals. Notably, Coca-Cola is working with McDonald’s to enhance the appeal of its $5 meal deal, which comes with a soft drink.
Despite the challenges, Coca-Cola exceeded Wall Street expectations, reporting $12.4 billion in revenue for the second quarter, translating to about $0.84 per share. Analysts had predicted revenue of $11.76 billion, or approximately $0.81 per share. The company has also revised its forecast for organic revenue growth to between 9% and 10%, up from the previous estimate of 8% to 9%.
Pepsi is facing similar difficulties in attracting U.S. consumers, who are increasingly opting for healthier, weight-conscious options. The company attributed its lackluster performance in the second quarter to a series of product recalls.